Hefty stamp duty hike targets foreign buyers

[reporter2]

http://www.straitstimes.com/PrimeNew...ry_742351.html

Hefty stamp duty hike targets foreign buyers

Published on Dec 8, 2011

By Esther Teo, Property Reporter


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.

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[reporter2]

http://www.todayonline.com/Business/...rty-from-Dec-8

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

by Joanne Chan

10:23 PM Dec 07, 2011


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 quarter 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 five 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 its property policies in step with changes in the market and the economy.

[cl0ver]

will this mean foreigners will rent now instead hence, push up rentals!

[kane]

will this mean foreigners will rent now instead hence, push up rentals!

That would be most welcomed by the landlords.

[Geylang OKT]

will this mean foreigners will rent now instead hence, push up rentals!

dead wrong.

The rental market will surely drop. Cos desperate owners who cannot sell their units will turn to renting out their apts instead. So guess what happens when supply outstrips demand?

Already 41,000 units pte apts/condos are currently in the market with no takers and the govt is releasing another 41,000 more units in 1H of 2012!

[cl0ver]

chicken and egg lah

[devilplate]

Now better pray hard eu crisis soft landing hor.....if not it will be lost century for sg liao

[teddybear]

What you said didn't make any sense at all. It is a chicken and egg thing, have chicken first or egg first?
Owners cannot sell will turn to rent, why rent will drop?
See, when owner sell, somebody buy, they either own-stay or rent out right? What is the difference between current owner rent out by himself/herself and sell then get rented out by buyer? The correct answer is: ZERO.....

dead wrong.

The rental market will surely drop. Cos desperate owners who cannot sell their units will turn to renting out their apts instead. So guess what happens when supply outstrips demand?

Already 41,000 units pte apts/condos are currently in the market with no takers and the govt is releasing another 41,000 more units in 1H of 2012!

[kane]

What you said didn't make any sense at all. It is a chicken and egg thing, have chicken first or egg first?
Owners cannot sell will turn to rent, why rent will drop?
See, when owner sell, somebody buy, they either own-stay or rent out right? What is the difference between current owner rent out by himself/herself and sell then get rented out by buyer? The correct answer is: ZERO.....

and if the market is not buoyant, new build slows, and if they don't stop bringing in more people, that wouldn't be a good mix.

[Jadey]

What you said didn't make any sense at all. It is a chicken and egg thing, have chicken first or egg first?
Owners cannot sell will turn to rent, why rent will drop?
See, when owner sell, somebody buy, they either own-stay or rent out right? What is the difference between current owner rent out by himself/herself and sell then get rented out by buyer? The correct answer is: ZERO.....

cant be zero. When property prices are moving up and transaction volumes are high, some owners will rather keep their newly TOP unit vacant than to rent it out. When times are bad and prices are falling these people might be force for put their unit up for rental instead, and this will increase supply.

And when supply exceed demand, owners will be more willing to accept lower rent in order to secure tenants.

How can that be zero?

[devilplate]

cant be zero. When property prices are moving up and transaction volumes are high, some owners will rather keep their newly TOP unit vacant than to rent it out. When times are bad and prices are falling these people might be force for put their unit up for rental instead, and this will increase supply.

And when supply exceed demand, owners will be more willing to accept lower rent in order to secure tenants.

How can that be zero?

Less sales volume=less biz=more retrenchment=less rental demand=px drop

[Geylang OKT]

What you said didn't make any sense at all. It is a chicken and egg thing, have chicken first or egg first?
Owners cannot sell will turn to rent, why rent will drop?
See, when owner sell, somebody buy, they either own-stay or rent out right? What is the difference between current owner rent out by himself/herself and sell then get rented out by buyer? The correct answer is: ZERO.....

I donch understand what you are saying. Basically, the point I am making is that your rentals will suffer when more supply comes into the market.

The increase in supply comes from those desperate owners who cannot sell their properties and resort to renting out their units instead. As more and more owners rent out, the supply outstrips demand. And we are not even talking about lessening demand when the FTs go home.

Let's say now got 100 vacant units and 100 tenants. Price is stable. But if supply goes up.

Say now got 150 vacant units due to desperate owners and still 100 tenants, the owners will undercut each other in order to secure a tenant.

And this they will surely do as they have mortgages to pay to the bank. Understand?

[devilplate]

I donch understand what you are saying. Basically, the point I am making is that your rentals will suffer when more supply comes into the market.

The increase in supply comes from those desperate owners who cannot sell their properties and resort to renting out their units instead. As more and more owners rent out, the supply outstrips demand. And we are not even talking about lessening demand when the FTs go home.

Let's say now got 100 vacant units and 100 tenants. Price is stable. But if supply goes up.

Say now got 150 vacant units due to desperate owners and still 100 tenants, the owners will undercut each other in order to secure a tenant.

And this they will surely do as they have mortgages to pay to the bank. Understand?

Seriously, u dun make sense la unless u r toking abt future TOPed projects coming onstream

Remember residential vacancy rates like 5% for last qtr? Not alot to create an immediate imbalance la

[hopeful]

Seriously, u dun make sense la unless u r toking abt future TOPed projects coming onstream

Remember residential vacancy rates like 5% for last qtr? Not alot to create an immediate imbalance la

What Geylang OKT was saying, with current low yields, owners keep units empty to attract buyers because
1) If buyers see tenanted units at low yields, would not be interested in the tenanted units.
2) buyers for own stay also not interested in tenanted units.

If no potential buyers, the owners would give up hope of selling (and keeping units empty) and start to rent it out. Hence increasing supply of rental units.

[devilplate]

What Geylang OKT was saying, with current low yields, owners keep units empty to attract buyers because
1) If buyers see tenanted units at low yields, would not be interested in the tenanted units.
2) buyers for own stay also not interested in tenanted units.

If no potential buyers, the owners would give up hope of selling (and keeping units empty) and start to rent it out. Hence increasing supply of rental units.

u dun understand wat i trying to say in the above

zzzzzzzzzzzzzzz

[hopeful]

u dun understand wat i trying to say in the above

zzzzzzzzzzzzzzz

really, I dont understand
if you are talking about that 5% vacancy rates, that figure of 5% is total of unoccupied units.
it does not differentiate whether it is unoccupied because owner keeping it empty on purpose, eg weekend home or for selling, or because owner cannot rent it out.

Differs from US unemployment statistics.
If you are no longer looking for a job, you are no longer counted as unemployed. Hence recently, can go down to 8.6%.

[cl0ver]

I donch understand what you are saying. Basically, the point I am making is that your rentals will suffer when more supply comes into the market.

The increase in supply comes from those desperate owners who cannot sell their properties and resort to renting out their units instead. As more and more owners rent out, the supply outstrips demand. And we are not even talking about lessening demand when the FTs go home.

Let's say now got 100 vacant units and 100 tenants. Price is stable. But if supply goes up.

Say now got 150 vacant units due to desperate owners and still 100 tenants, the owners will undercut each other in order to secure a tenant.

And this they will surely do as they have mortgages to pay to the bank. Understand?

hard to say as well....
market is peakish so there are already alot of ppl selling to cash out and rent first.
Again, there are many who still qualify to sell without any SSD.
So, the strategy for most is sell now but don't buy first because of the ABSD and anticipation of prices to fall, hence what do they do? They will rent lah.
Just like Taxi fares up, COE up, so ppl will buy 2nd hand cars or go for car leasing schemes where you could see is a buoyant market.

[devilplate]

really, I dont understand
if you are talking about that 5% vacancy rates, that figure of 5% is total of unoccupied units.
it does not differentiate whether it is unoccupied because owner keeping it empty on purpose, eg weekend home or for selling, or because owner cannot rent it out.

Differs from US unemployment statistics.
If you are no longer looking for a job, you are no longer counted as unemployed. Hence recently, can go down to 8.6%.

ok i try to explain la....

now vacancy rate 5% rite anot??

out of these 5% mabe 50% comprise of those 2nd holiday home owners and some like u said trying to flip and letting it vacant for time being

so wat i m trying to say is tat the numbers r not tat big to cre8 an immediate imbalance of the current rental market la

[Jadey]

ok i try to explain la....

now vacancy rate 5% rite anot??

out of these 5% mabe 50% comprise of those 2nd holiday home owners and some like u said trying to flip and letting it vacant for time being

so wat i m trying to say is tat the numbers r not tat big to cre8 an immediate imbalance of the current rental market la

are you throwing dart in the dark? 5% is how many units we are talking about?

[devilplate]

are you throwing dart in the dark? 5% is how many units we are talking about?

yaya

largi better rite? rental also starts to tumble....wow i tink 50% discount doesnt seem too far fetched hor