Straits Times: Fri, Jul 13
THE Government is studying a proposal from the Real Estate Developers' Association of Singapore (Redas) to extend the two-year period in which developers must sell units in new projects after they have been completed.
The Ministry of Law said in a statement that it was 'considering the feedback' from Redas.
The Straits Times understands that developers of about half a dozen projects have sought extensions to the two-year window. Of the six, extension charges have been paid by three.
Developers pay 8 per cent, 16 per cent and 24 per cent of the property purchase price for the first, second and third extra years, respectively. The amount is pro-rated based on the proportion of unsold units.
Experts said the projects needing extensions are likely to be high-end ones in prime areas rather than mass-market homes, which have been selling well due to cheaper absolute prices.
Under the Residential Property Act, housing developers whose shareholders and directors are not all Singaporeans have to get a Qualifying Certificate (QC) to buy residential property.
'QC holders are given permission to purchase residential land and property solely for development and sale of the units, and not for investment purposes. These conditions are imposed to control foreign ownership of land in Singapore,' the Singapore Land Authority said.
This requires them to sell all units within two years of obtaining the temporary occupation permit (TOP). They are not allowed to rent out unsold units.
Redas president Wong Heang Fine told reporters yesterday on the sidelines of a Redas seminar at Mandarin Orchard hotel that since 'projects are getting bigger', it is 'quite reasonable' to expect them to take longer to sell.
One of those that requested an extension is believed to be Lafe (Emerald Hill) Development, whose Residences at Emerald Hill received its TOP in June last year. It has until June next year to sell all its units.
The developer, listed Lafe Corp, had recently posted an announcement on the Singapore Exchange saying that the SLA had not granted its request to rent out its unsold units.
A check on the Urban Redevelopment Authority website shows that none of its 33 units has been sold.
'Projects that have unsold units are mostly high-end properties targeted at high-net-worth buyers, who include many foreigners,' said Mr Lee Liat Yeang, a partner at Rodyk & Davidson's Real Estate Practice Group.
'The prices of such properties are so high that a mere reduction in price may not draw in buyers immediately,' he added.
R'ST Research director Ong Kah Seng said lowering prices too much would 'affect goodwill' with previous buyers and place the developer at risk of not recovering its investment.
'Companies are cautious in expatriates' housing allowances, hence leasing demand is experiencing some soft landing,' he added.
The Law Ministry said in its statement: 'Variations in market conditions are generally not considered as valid grounds for waiver of the charge for extension of time to sell the units.'
Cushman & Wakefield managing director John Stinson said lengthening the sales window for developers would stabilise the market.
'Developers will sell their property in a more orderly manner... I think what the Government would like to do is remove the speculation element.'
Foreigners and firms account for just 7 per cent of total private home purchases now, a significant drop from last year when the proportion was 20 per cent, National Development Minister Khaw Boon Wan said on Tuesday.
The Straits Times understands that developers of about half a dozen projects have sought extensions to the two-year window. Of the six, extension charges have been paid by three. Developers pay 8 per cent, 16 per cent and 24 per cent of the property purchase price for the first, second and third extra years, respectively.
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