Land betterment charge rates for non-landed residential use raised by 0.3% on average

Rates increased by average of 0.4% for landed residential use, and 1% for hotel/hospital use group; no changes for commercial and industrial use groups

Mar 01, 2023

THE government has announced muted increases in land betterment charge (LBC) rates for non-landed and landed residential uses, as well as for hotel use, reflecting the current flat land values and growing caution in property investment sentiment amid rising interest rates and uncertainty.

LBC rates for the commercial and industrial use groups were left untouched.

Developers pay an LBC for the right to enhance the use of some sites or to build bigger projects on them. For non-landed residential use, the government has raised LBC rates by an average of 0.3 per cent for the next half year, in sharp contrast to the 12.9 per cent hike in LBC rates during the September 2022 revision.

It has also raised the LBC rates for landed residential use by an average of 0.4 per cent for Mar 1 to Aug 31 this year. This follows the 10.2 per cent increase in the previous review exercise.

JLL’s head of research and consultancy for Singapore, Tay Huey Ying, said: “This is in character with the stabilising price growth observed for landed homes alongside slowing sales activity.”

For the use group that covers hotels and hospitals, LBC rates have been raised 1 per cent on average – making this the first increase since March 2019.

Said Edmund Tie’s head of research and consulting Lam Chern Woon: “During the pandemic, LBC rates for this use group were generally left unchanged, save for a 7.8 per cent downward adjustment in September 2020.

“With border restrictions and safe-distancing measures fully, or all but fully lifted, the hospitality industry has been the main beneficiary as pent-up leisure-travel demand boosted room and occupancy rates,” he added.

Business travel will also likely recover further with the string of meetings, incentives, conferences and exhibitions events scheduled this year, as a result of agreements inked between the Singapore Tourism Board and global event organisers last October, Lam said.

The latest LBC rates were announced on Tuesday (Feb 28), following a review by the Singapore Land Authority (SLA) in consultation with the taxman’s chief valuer (CV).

The LBC rates are based on the CV’s assessment of land values and take into consideration recent land sales. They are stated according to use groups across 118 geographical sectors in Singapore.



Tan Hong Boon, executive director of capital markets for Singapore at JLL, said: “As expected, LBC rates for the majority of the geographical sectors and use groups are unchanged, and the overall increases are moderate. This is in line with the current flattish trend of land values generally across locations. Any impact from the latest LBC revisions is likely to be minimal on the land sale market.”

Commenting on the potential for collective sales, he noted that of the nine such sites now being handled by JLL, none is affected by the LBC rate revision this round. “Eight of these sites come with inherently high development baseline, with no LBC payable. For the remaining site, LBC rates for the location remain unchanged,” he added.

Chia Mein Mein, head of capital markets (land and collective sale) at Knight Frank, said: “With slight or no increase in the LBC rates for most estates in this latest revision compared to the previous one, the impact on the collective sale market is also minimal and therefore, developers may be more willing to evaluate collective sale sites to replenish their depleting land bank.”

For non-landed residential use, LBC rates were raised in 13 of the 118 sectors by between 2 per cent and 5 per cent; there is no change to the rates in the remaining 105 sectors, said SLA.

The biggest rate increase (5 per cent) is for Sector 97 (Bedok South Avenue 1/New Upper Changi Road/Bedok Road/Upper East Coast Road). JLL’s Tay said: “This could have been underpinned by the Bagnall Court collective-sale deal, which was transacted at a land rate (not accounting for the utilisation of bonus gross floor area) estimated to be 16 per cent above its land value implied from the September 2022 LBC rate.

Lam of Edmund Tie noted that residential LBC rates were raised minimally on the back of a few factors, such as the property cooling measures of September 2022, fairly limited and moderate land bids (whether at state land tenders or private-sector collective sales), revisions to floor area definitions (which could eat into developers’ saleable area and margins), and the recent buyer stamp duty increases in Budget 2023.

“This would be a reprieve for developers looking to acquire land sites to shore up their land bank,” he added.





For landed residential use, LBC rates have been raised in 12 out of the 118 sectors by between 3 per cent and 4 per cent. There has been no change in the rates for the remaining 106 sectors.

According to JLL’s analysis, the biggest increase of 4.3 per cent was in sectors 99 (which includes Pasir Ris and Loyang) and 100 (including Punggol).
The rates in five sectors will go up by 3.8 per cent each. They are:

• Sector 58 (Bukit Timah Road/Central Expressway/Balestier Road/Tessensohn Road/Race Course Road);
• Sector 59 (Thomson Road/Pan-Island Expressway/Central Expressway/Mandalay Road/Irrawaddy Road);
• Sector 60 (Thomson Road/Irrawaddy Road/Tan Tock Seng Link/Mandalay Road/Central Expressway);
• Sector 98 (Kaki Bukit/Bedok/Xilin Avenue/Simei/Changi South area);
• Sector 105 (Ang Mo Kio/Yio Chu Kang/Seletar area).

For the hotel/hospital use group, the LBC rates in 18 of the 118 sectors will rise by between 4 per cent and 10 per cent; rates in the remaining 100 sectors will stay the same, SLA said in its statement.

JLL’s analysis shows that the biggest hike of 10.2 per cent was for sectors 3, 5, 6, 12, 43, 41 and 42 – including the High Street/Coleman Street, Marina Centre, Fullerton Road, Bayfront, Tanglin/Cuscaden, Orchard and Somerset areas.

Under the Land Betterment Charge Act, which took effect on Aug 1, 2022, charges for the enhancement of land value were consolidated under the SLA. The LBC regime replaced the development charge, temporary development levy, and differential premium regimes. The DC Table of Rates were correspondingly replaced with the LBC Table of Rates, which will continue to be revised on a half-yearly basis.

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