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6-month time extension for property developers, homeowners affected by Covid-19

SINGAPORE — Singaporean married couples who bought a second residential property will now have one year instead of six months to sell their first residential property in order to get a remission of the Additional Buyer’s Stamp Duty (ABSD).

6-month time extension for property developers, homeowners affected by Covid-19

Property analysts said that the time extensions for property developers and homeowners with regards to housing projects and regulations should not be a one-off measure since the Covid-19 crisis is still evolving.

SINGAPORE — Singaporean married couples who bought a second residential property will now have one year instead of six months to sell their first residential property in order to get a remission of the Additional Buyer’s Stamp Duty (ABSD).

They had to pay the duty that is 12 per cent of the purchase price or valuation of their second property, whichever is higher.

The Government also announced on Wednesday (May 6) that it is giving a six-month time extension for property developers affected by construction schedules and sales of housing units that are disrupted because of the Covid-19 pandemic.

In a joint press release issued by the Ministry of National Development, Ministry of Finance, Ministry of Law and Ministry of Trade and Industry, they said that the temporary relief measures for developers that take effect immediately are:

  • An extension of the project completion period by six months for residential, commercial and industrial development projects

  • An extension of time by six months for the start and completion of residential developments, and for the sale of housing units in relation to the ABSD remission

  • An extension of the time needed to complete the project or to sell all housing units or both, by up to a total of six months for residential development projects under the qualifying certificate regime for foreign housing developers

Before the extensions, developers are to finish building all housing units in a residential development within five years from the date of issue of the qualifying certificate or a collective sale order, and they must sell all housing units within two years from the issue of the Temporary Occupation Permit or Certificate of Statutory Completion.

These extensions address, in particular, issues arising from the two-month circuit breaker period from April 7 to June 1, when work at construction sites, operations at housing developers’ sales galleries and viewings of properties are suspended.

However, they do not change the other existing residential property market cooling measures, the ministries said, because the intent is to continue to ensure that prices for private residential properties remain broadly consistent with economic fundamentals.

“All housing developers, as well as Singaporean married couples who wish to seek ABSD remission for their second residential properties, will continue to be subject to the prevailing ABSD regime, albeit with an increase in remission condition timelines for qualifying (parties),” they said.

While there were no announcements targeting contractors, the ministries said that they expect developers to similarly provide relief and support to their main contractors, especially during the circuit breaker period. 

“The Government will continue to closely monitor the impact of the Covid-19 pandemic on the progress of work within the construction industry and on the property sector, and will adjust our policies as necessary,” they added.

ABSD REMISSION FOR INDIVIDUALS

A Singaporean married couple jointly buying a second home must sell their first home within a specified time frame, failing which they will not be eligible for an ABSD remission paid on their second home.

They have to sell the first home:

  • Six months after the date of purchase of the second home, if it is a completed property; or

  • Six months after the issue date of the Temporary Occupation Permit or Certificate of Statutory Completion, whichever is the earlier, if the second property was not completed at the time of purchase

To qualify, two conditions must be met:

  • The second home was jointly bought on or before June 1, 2020

  • The original schedule for sale of the first home expired on or after Feb 1, 2020

They have to apply for the remission of ABSD within six months after the date of sale of the first home. For more details, they may refer to the website of the Inland Revenue Authority of Singapore.

ABSD REMISSION FOR DEVELOPERS

Developers, on the other hand, need not apply for time extensions for they are automatically granted.

However, if they are seeking to extend their existing completion or deadline for sales or both, but are being charged extension charges, then they will need to apply for a waiver of the charges by writing to the Singapore Land Authority (SLA) through its email SLA_LDU [at] sla.gov.sg by Dec 1, the ministries said.

The qualifying certificate or SLA approval requiring the completion and sale of all units in the residential development must be issued on or before June 1, and the original schedule for completion and sale of these units must have expired on or after Feb 1.

WHAT ANALYSTS SAY

Responding to the latest announcements, the Real Estate Developers’ Association of Singapore (Redas) said that it was a timely, pragmatic decision to help relieve the near-term concerns and needs of eligible couples who need more time to sell their first home.

However, given that the ongoing crisis is “still very volatile” and is likely to be long-drawn and “coupled with major disruption and economic fallout”, the association urged the Government to “provide flexibility” and assist the built environment sector’s return to normalcy.

Property analysts similarly said that the extension should not be one-off since the situation is still evolving with potential second and subsequent waves or even lockdowns in the foreseeable future.

Ms Christine Li, head of research at real estate firm Cushman & Wakefield, said that even if businesses regain some form of normalcy after the circuit breaker, safe distancing regulations are expected to continue. This will affect showflat activities and buyer sentiments in view of the bleak economic climate.

The Government should thus continue to engage the stakeholders such as developers, Redas and individuals who are affected by the sales and ABSD remission, and to provide much-needed help if the pandemic is protracted, she said.

Mr Lee Sze Teck, head of research at property firm Huttons Asia, said that the extension should be for a 12-month period instead of six months, since the pandemic could last until the end of the year.

Mr Nicholas Mak, head of ERA Realty’s research and consultancy department, pointed out that the extension merely act to neutralise the negative impact of the two-month circuit breaker period.

Pressure, he said, has been mounting for Singaporean homeowners who must sell their first home to get their ABSD remission and they would likely reduce selling prices sharply, leading to a season of “fire sales”. When there are many fire sales, property prices will drop.

Hopefully, the six-month extension will give these homeowners more time to find buyers and avoid this eventuality, he added.

Related topics

Covid-19 coronavirus property ABSD property developer construction

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