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Friday, 11 January 2013

More property cooling measures announced

SINGAPORE: The Singapore government on Friday announced a comprehensive package of measures to cool the residential property market.

The measures, which will take effect on January 12, include higher buyer's stamp duty, tighter loan-to-value limits, higher minimum cash downpayment for second and subsequent housing loans, as well as an introduction of seller's stamp duty for industrial properties.

The measures are calibrated to be tighter on property ownership for investment, as well as on foreign buyers, the Ministry of National Development said.

To discourage over-borrowing, financing conditions for housing have also been tightened.

In addition, structural measures have been implemented to strengthen the policy intent of public housing and executive condominiums.

The ministry said the additional buyer's stamp duty (ABSD) will be increased between 5 and 7 percentage points across the board.
The ABSD will now be extended to permanent residents buying their first residential property and on Singaporeans buying their second residential property.

Potential buyers who already have at least one existing loan will also have to pay more cash upfront for their purchases and face tighter loan-to-value limits.

To further moderate the demand for HDB flats, the government has introduced several new measures.

It will tighten eligibility for loans to buy HDB flats.

Permanent residents who own a HDB flat will also not be allowed to sublet their entire flat.

Permanent residents who own a HDB flat must sell their flat within six months of purchasing a private residential property in Singapore.

There are also new measures to ensure that executive condominiums (EC) remain affordable for middle-income Singaporean families.

The maximum strata floor area of new EC units will be capped at 160 square metres.

Sales of new dual-key EC units will be restricted to multi-generational families only.
Developers of future EC sale sites from the Government Land Sales programme will only be allowed to launch units for sale 15 months from the date of award of the sites or after the physical completion of foundation works, whichever is earlier.

Private enclosed spaces and private roof terraces will be treated as gross floor area (GFA). The GFA of such spaces in non-landed residential developments, including ECs, will be counted as part of the "bonus" GFA of a residential development and subject to payment of charges.

For the first time, the government has also introduced a seller's stamp duty (SSD) on industrial property to discourage short-term speculative activity which could distort prices and raise costs for businesses.
It will apply to industrial properties and land bought and sold within three years of purchase.

A rate of 15 percent will be imposed on industrial properties sold within the first year of purchase. This will go down to 10 percent for those sold in the second year of purchase, and to 5 percent for those sold in the third year of purchase.
Deputy Prime Minister and Minister for Finance Tharman Shanmugaratnam said in a statement: "The reality we face is that interest rates are extraordinarily low, globally and in Singapore, and continue to add fuel to our property market.

"We have to take this further round of measures now, to check recent market trends and avoid a more serious correction in prices further down the road."

- CNA/al

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