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View attachment Pty Curb 2.pdfView attachment Pty Curb 1.pdfHefty stamp duty hike targets foreign buyers
08 Dec_ST
Title: Hefty stamp duty hike targets foreign buyers
Source: Straits Times
Author: Esther Teo
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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New measures
From today:
•All foreigners buying their first home: Additional 10 per cent stamp duty based on purchase price or market value, whichever is higher
•PRs buying their second and subsequent property: Additional 3per cent stamp duty
•Singaporeans buying third and subsequent property: Additional 3per cent stamp duty
•For purchases made by two or more parties such as a Singaporean with a PR, the higher rate will be imposed.
NOTE: These buyer's stamp duty rates are on top of the existing rates of 1 per cent on the first $180,000, 2 per cent on the next $180,000 and 3 per cent on the remaining amount. There is also a separate seller's stamp duty.
Source: Straits Times © Singapore Press Holdings Ltd. Permission required for reproduction.
