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After the National Day Rally speech by Prime Minister Lee Hsien Loong on 29 Aug 2010, the Singapore Government announced further measures to cool the property market.
Singapore increased down payments for second mortgages to curb speculation after home prices continued to surge. Buyers of residential properties, who hold more than one residential property mortgage, can now only borrow up to 70% of a property’s value, as compared to 80% previously. In addition, these buyers need to pay 10% of the property’s value in cash, up from 5% previously.
The Second measure concerns the payment by sellers of a seller’s stamp duty (SSD). Owners who sell residential properties after 30 August 2010 (which are bought or acquired on or after 30 August 2010) will have to pay a SSD if these residential properties are sold or disposed within three years of purchase. Previously, the seller of a residential property must pay SSD if the residential property was bought or acquired on or after 20 February 2010 and sold or disposed within one year from the acquisition date.
The payment of the SSD upon sale or disposal within one year of the purchase is now extended to three years. SSD will be payable on the property’s consideration or market value, whichever is higher. SSD is calculated in the same way as that applicable to be paid by a buyer of a residential property, that is, 1% for the first $180,000 of the property’s consideration, 2% for the next $180,000, and 3% for the balance of the property’s consideration.
A seller will have to pay the full SSD rate if his residential property is sold within the first year of purchase. If the property was held for more than 1 year and up to 2 years, 2/3rd of the full SSD rate will have to be paid. If the property was held for more than 2 years and up to 3 years 1/3rd of the full SSD rate will have to be paid. No SSD will be payable by the seller if his property is sold more than 3 years after it was acquired.
A last measure concerns the concurrent ownership of Housing and Development Board (“HDB”) flats and Private Residential Properties. Anyone who owns a Private Residential Property cannot purchase a HDB flat, whether bought new from HDB or on the resale market. If a person owns a Private Residential Property and purchases a HDB resale flat, that person would need to sell off their Private Residential Property within 6 months.
In addition, a purchaser of a HDB flat from the resale market will have to reside in this flat for a minimum period (“Minimum Occupation Period” or “MOP”) of 5 years, up from 3 years previously, before he can sub-let or re-sell the HDB flat. This HDB flat purchaser can only invest in a Private Residential Property after a MOP of 5 years, which restriction was not existent previously.
It remains to be seen whether a Capital gains tax will be imposed, as a further measure, to make sure prices don’t get out of hand. Capital gains are not subject to tax in Singapore. However, to curb speculation in the property market, in May1996, Singapore had imposed income tax on gains which individuals made from selling properties within three years of purchase. This rule was lifted in 2001.
For further information, visit the following links:
http://www.iras.gov.sg/irasHome/page04.aspx?id=10212
http://www.hdb.gov.sg/fi10/fi10296p.nsf/PressReleases/895204E2295BDC394825778E007FA919?OpenDocument
