SINGAPORE: The Real Estate Developers’ Association of Singapore (REDAS) is seeking a reprieve on the Additional Buyer’s Stamp Duty (ABSD) rates to avoid the “land grab” situation in the last two years.
Its president Chia Ngiang Hong said this on Tuesday (Feb 19) at a REDAS Chinese New Year event where Finance Minister Heng Swee Keat attended as the guest of honour.
Since July last year, property developers have had to pay 30 per cent ABSD on acquired land, up from 15 per cent previously. Out of the 30 per cent, 5 per cent is non-remittable.
Additionally, the time frame to deliver and sell the developed property is capped at five years.
As a result, the surprise cooling measures rattled the Singapore financial market and property stocks were "severely punished", Mr Chia said.
"With a subdued outlook for the market and a 15 (percentage point) hike in ABSD to 30 per cent for land acquisition, developers' appetite for land in Singapore is likely to be severely curtailed as evidenced by recent en bloc tenders where many closed without any bids," he added.
“This policy has pushed all developers to exhaust their inventory at around the same time, and could partly account for the land price escalation in 2017 and 2018 because everyone basically ran out of inventory at the same time,” Mr Chia said.
Excessive land-banking, Mr Chia said, should be discouraged but some flexibility in the time frame to sell projects can help avoid a "bundling of the project development cycle", which results in many developers rushing to replenish their land bank.
“If the ABSD is not reviewed, we can expect a repeat of the 2017 to 2018 ‘land grab’ situation in four to five years’ time. When the price of the raw material goes up, we can expect the price of the end product to increase as well,” Mr Chia said.
He also called on the Government to review the loan-to-value limits for first-time property buyers. These refer to loans where buyers borrow against the value of their properties.
Loan-to-value limits were tightened by 5 percentage points at the same time as the higher ABSD rates were announced. This does not apply to loans granted by the Housing and Development Board (HDB).
“I strongly believe that it is the intention of the Government to assist to fulfil the aspirations of many young Singaporeans to own a private home. Hence, it may be timely to review and tweak some existing policies and measures to help Singaporeans, particularly first-timers, to achieve their objective," he said.
The Government can also make it easier for HDB home owners looking to upgrade to a private property by reviewing the upfront payment of ABSD so as to ease their cash flow planning, Mr Chia added.