Additional buyer's stamp duty for private property from Dec 8

[Musicwhiz]

Hot from the oven!

ChannelNewsAsia
Additional buyer's stamp duty for private property from Dec 8
07 December 2011 2003 hrs (SST)

SINGAPORE: The government has imposed an Additional Buyer's Stamp Duty (ABSD) for private property of between 3 per cent and 10 per cent for Singaporeans, Permanent Residents and foreigners to moderate investment demand for private residential property and promote a more stable and sustainable market.

The changes take effect on December 8.

Foreigners will pay 10 per cent Additional Buyer's Stamp Duty (ABSD) for any residential property.

Permanent Residents owning one and buying second and subsequent properties will pay 3 per cent ABSD.

Singaporeans owning two and buying a third and subsequent residential properties will pay 3 per cent Additional Buyer's Stamp Duty.

The ABSD will be imposed over and above the current Buyer's Stamp Duty, which are 1 per cent on the first $180,000 of purchase consideration or market value of the property (whichever is higher), 2 per cent on the next $180,000 and 3 per cent for the remainder.

In a joint statement on Wednesday, the Finance and National Development ministries say the government's objective is to promote a sustainable residential property market where prices move in line with economic fundamentals.

They said prices of private residential properties have continued to rise, albeit more slowly in the last two quarters.

Prices are now 13 per cent above the peak in the second wuarter of 1996, and 16 per cent above the more recent peak in the second quarter of 2008.

They said that even with the current economic uncertainties, the demand for private residential property remains firm.

Given the uncertainty in stock markets and with interest rates remaining low, private property in Singapore continues to attract local and foreign investors.

They added that excessive investment demand will make the property cycle more volatile, and thus increase the risks to Singapore's economy and banking system.

The government said the higher ABSD rate for foreign buyers in particular is necessary, in view of the large pool of external liquidity and strong buying interest from abroad, and the relatively small size of the Singapore market.

The government said foreign purchases account for 19 per cent of all private residential property purchases in the second half of 2011, up from 7 per cent in the first half of 2009.

For purchases made jointly by two or more parties (eg a Singaporean with a PR, or a PR with a foreigner), the higher applicable ABSD rate will be imposed.

For example, if a citizen purchases a property with a foreigner, the ABSD of 10 per cent will apply.

In the case of a joint purchase by Singaporeans, who each already owns properties, the ABSD of 3 per cent will apply as long as one of the purchasers already owns two properties.

Deputy Prime Minister and Minister for Finance Tharman Shanmugaratnam, said: "We have always had open markets and must keep them that way. However, the reality is that investment flows into our property market are now larger than before, and unlikely to recede as long as interest rates remain low. The additional buyer's stamp duty should help cool investment demand, and avoid the prospect of a major, destabilising correction further down the road."

Minister for National Development Khaw Boon Wan said: "We are ramping up the supply of new Executive Condominium units through the Government Land Sales Programme. This will help higher-income Singaporeans own private condominium units in an affordable way, as the sale of new EC units is restricted to Singaporean households only."

Singaporean first-time buyers and upgraders, and buyers of HDB flats will not be affected by the new measure.

Certain reliefs will be provided so that the measure will not impact home occupation demand by residents.

For example, relief will be provided for Singaporean-foreigner/PR married couples buying their homes.

Reliefs will also be provided for qualifying developers and for purchases falling within the scope of Singapore's international trade agreements.

The government will continue to ensure an adequate supply of private housing to meet-medium term demand.

There are 41,000 unsold private housing units in the pipeline.

The government will inject sites that can potentially yield a total of 14,100 units in the 1H2012 Government Land Sales (GLS) Programme, similar to the supply in previous GLS programmes.

Of these, about 7,000 units will be from sites on the Confirmed List.

These numbers take into account the ample pipeline supply and the dampening effect of the ABSD.

The government will also expand the supply of executive condominiums (ECs) in 2012 and is prepared to release sites that can potentially yield 5,000 EC units for the entire year.

Sites for 3,500 EC units will be made available in 1H2012, including 3,000 EC units on the Confirmed List.

The Confirmed List quantum is comparable to the 3,000 EC units from 5 sites sold for the whole of 2011. More details will be provided in the press release for the 1H2012 GLS Programme on MND's website.

The Government will continue to monitor the property market and adjust our property policies in step with changes in the market and the economy.

- CNA/de

[dydx]

These are indeed pragmatic but draconian demand/market-cooling measures! The simple message to foreigners still planning to buy a condo unit in Singapore: We think foreigners have bought enough of local properties and caused enough havoc to our property market and prices already, so please stop buying anymore. But if you really still want to buy one or more properties in Singapore, just pay 10% extra to our government treasury, O.K.?

I bet prices of many property stocks will have to fall tomorrow and in the next few days.

[pianist]

just for info...my neighbor next door last week just sold his business for more than S$70 million, and he is buying 5 private residental units at one shot at city fringe area. i feel such scratching measure will not have an impact to him.

not only i see GO - General Offer on sgx's listed companies, i also see it real life at the private arena. i can just say with sg as a wealth magnet, is going to drive up many asset prices hard.

[sgd]

Government make money from fees, banks make money from loans in the end the foreigners are scammed. why?

Once these measures bite properties will start to sink and if interest rate also start hiking then it will be worse.

Property value sink means foreign property owners will be out of pocket and still have to service loans for their properties they overpaid that could be underwater by then so they stuck here indefinitely, 3yr, 5yr maybe 10years they will be stuck here.

Between 90-94 there was a superbull run property prices went crazy from 94 market crashed in between there was markets spurts, starts and stops like internet boom but all the way to 2006 is abt 12 long years.

So 2006 property prices recovered went crazy peaking in 2010 again so based on that calculation we assume the worst another 12 bear years from 2011 onwards till maybe 2022

They will stuck here for so long by the time the property market recover again their kids will be going for national service they will learn this painful lesson maybe quickly sell off pack up and go.

but you know what? tomorrow there will always be another one to step into the same shoes again because people will not remember yesterday's lesson

[weijian]

How is this 10% or 3% calculated?
If i had to pay BSD of 10k, does that from 8th dec, i have to pay 1k (10%) or 300(3%) more, OR
is the 10% and 3% calculated by using the same formula as BSD?

If it is the former, it looks pretty 'peanuts' actually..

[yeokiwi]

How is this 10% or 3% calculated?
If i had to pay BSD of 10k, does that from 8th dec, i have to pay 1k (10%) or 300(3%) more, OR
is the 10% and 3% calculated by using the same formula as BSD?

If it is the former, it looks pretty 'peanuts' actually..

Well, info from the most efficient tax collecting agency on this planet.
http://www.iras.gov.sg/irasHome/page04.aspx?id=12818

Illustration of Computation of BSD and ABSD

Mr C, a foreigner, paid the actual price of $2 million, which is a fair market value.
Computation of BSD : -
1% on first $180,000 ($180,000 x 1%) $1,800
2% on next $180,000 ($180,000 x 2%) $3,600
3% on remainder ($1,640,000 x 3%) $49,200
BSD $54,600

The price paid or value has to be rounded up to the nearest $100 before applying the rate.

Computation of ABSD : -
10% of $2,000,000 $200,000
ABSD $200,000

Total Stamp Duty Payable = $54,600 + $200,000
= $254,600

[Musicwhiz]

The Straits Times
Dec 8, 2011
Hefty stamp duty hike targets foreign buyers

By Esther Teo

THE Government unveiled a set of unprecedented stamp duty taxes last night, in what many industry watchers have called the toughest round of curbs yet on Singapore's private property market.

The changes take effect today.

Hardest hit are foreigners, who have been snapping up a rising share of non-landed homes in recent years. They now must pay a hefty additional buyer's stamp duty of 10 per cent on any purchase of a residential property here.

This is on top of the existing buyer's stamp duty of about 3 per cent and applies to the purchase price or market value of the property, whichever is higher.

Corporate entities, including companies, trusts and collective investment schemes, are now also subjected to the new 10 per cent tax. They were active buyers in the last property boom in 2007 and 2008.

Singaporeans and permanent residents (PRs) who invest in property are also affected.

PRs who buy a second and subsequent residential property will pay 3 per cent in additional stamp duty. Overseas properties will be excluded from this count.

Singaporeans who already have two residential properties will have to pay the additional 3 per cent on their third and subsequent home purchases.

Concern over investment demand

Options granted yesterday or earlier and exercised within three weeks will not be subjected to the new rules.

This is the first time in 15 years that foreign buyers have been targeted by a set of measures to cool the property market.

Until yesterday, they faced only certain restrictions in buying landed homes.

In a statement, Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam said that Singapore had always had markets open to foreign investment and must keep them that way.

'However, the reality is that investment flows into our property market are now larger than before, and unlikely to recede as long as interest rates remain low,' he warned.

'The additional buyer's stamp duty should help cool investment demand, and avoid the prospect of a major destabilising correction further down the road.'

Despite four previous rounds of property market cooling measures, private home prices have continued climbing for the past two years.

And even though price gains moderated to just 1.3 per cent in the three months to September, property prices are now at a record high - 13 per cent above the 1996 peak and 16 per cent above the most recent peak in 2008.

Sales of new private homes hit a record 16,292 last year. This year looks to be another banner year with 13,688 units sold in the first 10 months.

The numbers have clearly been given a boost by foreign buyers who accounted for 19 per cent of all private residential property purchases in the second half of this year, up from 7 per cent in the first half of 2009. And these figures exclude purchases by PRs.

Property experts said they expect the new measures to reduce demand for homes by up to 25 per cent in certain segments of the market.

'It will curb investment demand for private homes drastically. In the next one to two months, the home-buying demand from non-resident foreigners will almost dry up,' warned SLP International research head Nicholas Mak.

Credo Real Estate's research and consultancy head Ong Teck Hui said that the measures will have a stronger impact on the 'prime and mid-prime' markets - where foreigners accounted for nearly a quarter of transactions in the third quarter.

The Real Estate Developers' Association of Singapore (Redas) had sharp words for the Government last night.

In a statement, it said that it was disappointed by 'the lack of consultation' on the latest measures, and called the measures 'untimely' given the expected slowdown in the economy next year.

'(The measures) came as a surprise as the current market outlook is uncertain,' it said.

'The good take-up rate in the primary market is driven by the increased number of new launches and unique selling points of certain projects. It is not indicative of a return to a speculative market.'

Meanwhile, the Government also announced yesterday the release of 41 new sites under the government land sales programme for the first half of next year.

The 14 sites on the confirmed list and 27 on the reserve list site are in popular areas like Farrer Road, Tiong Bahru and Tampines and can potentially yield about 14,100 private homes.

On the list are six sites for executive condominiums (ECs), which have seen robust demand in recent launches.

Commenting on this, Minister for National Development Khaw Boon Wan said the supply of new EC sites will 'help higher-income Singaporeans own private condominium units in an affordable way', since foreigners and PRs cannot buy EC units.

First-time home buyer Yang Sue Ann, 25, a civil servant, welcomed the measures as she and her fiance had been holding off buying a home in the hope that prices would fall.

'These measures will help us greatly in getting our first home. We were thinking of buying at the end of next year but hopefully if prices drop, we can get something by early next year before we get married in June,' she said.

esthert@sph.com.sg

[RBM]

Indeed the website that yeokiwi refers to is crystal clear. I always find it a good reference.

I don't think this is a "peanuts" measure. Me thinks that this time it will work. i.e. I would bet that this will reduce real estate prices by some measure, particularly at the high end. Just think ............ almost S$ 1.3 Mln stamp duty on a S$ 10 Mln property!

[freedom]

it depends. If the developers or the buyers have deep pocket, at most, there will few transactions, not necessarily lower price.

[dydx]

For the latest I begin to like Tharman and raise my admiration for Khaw Boon Wan. They are courageous and have good brains, and have shown in this case to look after Singaporeans' interest first.

Frankly, the developers have had it too good for way too long already. I want to see the day that developers must first finish constructing the projects before they can sell the units in them. This is the most proper, fair and safe way to protect buyers of residential properties most of whom have to borrow a huge amount of money to do so in our system.