[url]http://www.straitstimes.com/PrimeNews/Story/STIStory_624294.html[/url]

Jan 15, 2011

[B]property measures[/B]

[B][SIZE="5"]Stamp duty: Mixed views from analysts[/SIZE][/B]

By Cheryl Lim


THE dramatic ramping up of the stamp duty applicable to property sellers has drawn mixed reactions from analysts.

Some say the new regulations provide useful protection against the excesses of an unfettered market, which could lead to spiralling foreclosures. Others worry that sellers switching homes for legitimate reasons will be hurt.

Under the new rules - part of the Government's latest property cooling measures, unveiled on Thursday - sellers must pay stamp duty if they sell their homes within four years of the purchase.

The rate is 16 per cent of the selling price in the first year, 12 per cent in the second, 8 per cent in the third and 4 per cent in the fourth.

Previously, stamp duty was imposed if the property was sold within three years of the purchase. Also, the rates were considerably lower at 3 per cent of the selling price in the first year, 2 per cent in the second and 1 per cent in the third.

Credo Real Estate managing director Karamjit Singh said the new changes might seem harsh, especially to buyers planning to relocate for personal reasons during the period subject to stamp duty.

'If they want to move so they can be closer to schools, work or relatives, they would not be considered speculators. Yet, they would still be penalised for selling their property,' he said.

Some analysts likened the seller's stamp duty to the five-year minimum occupation period instituted for owners of Housing Board flats.

Mr Singh said public sector housing is heavily subsidised, but private homes are not, so they should not be controlled to such an extent.

However, Mr Donald Han, the vice-chairman of property consultancy Cushman & Wakefield, said: 'If you give free rein to the market, investors who have dabbled too heavily in real estate could fall into a spiral of foreclosures. This revision protects those who might otherwise over-indulge and buy real estate in a bigger way.'

Mr Colin Tan, a research and consultancy director at Chesterton Suntec International, said property is an emotional issue for Singaporeans. 'Everyone has property dreams and dreams are emotional.'

He said owners thinking of selling their property might be disconcerted by the limitations, but he noted that they could actually prove to be a 'blessing in disguise'.

Mr Singh said that while buyers and sellers will need to rethink their housing plans in view of the new regulations, the measures will help solve the short-term problem of demand outstripping supply.

'It could be another one or two years before the system finds some sort of balance... and the Government could withdraw the measures when they are no longer perceived as necessary.'