Developers facing penalties over unsold housing stock will not be allowed to offload these units before they are completed.
Property firm SingHaiyi had asked the Controller of Residential Property to agree to its proposed sale of City Suites - a condominium in Balestier. The developer said last week that its application was rejected, as was a subsequent appeal.
The transaction was to have taken place through the sale of its stake in Corporate Residence, the developer of City Suites, to Ang Cheng Guan Construction, the project's main contractor and an unrelated third party.
SingHaiyi said in April that it intended to sell its holding for $16.38 million "in view of the possible levy as a result of the Qualifying Certificate on unsold units".
"The development has 56 units and the sales progress has been slow, at approximately 10 per cent since it was launched in May 2013," it said at the time.
The Singapore Land Authority (SLA) told The Straits Times that the application was rejected "to ensure that the developer fulfils its obligations to complete the development under the Qualifying Certificate (QC)". The rule states that the developer must complete a development and obtain the Temporary Occupation Permit (TOP) within five years from the date of issue of the QC, which foreign developers must obtain to buy private residential land here.
It is not the first time such an application has been rejected, an SLA spokesman noted.
The estimated TOP for City Suites is this year. "We are working closely with the main contractor to come up with the project timeline," a SingHaiyi spokesman said.
Mr Lee Liat Yeang, partner at Rodyk & Davidson, noted that under QC conditions, there can be no transfer of a developer's shares without the prior approval of the Controller of Residential Property until the TOP has been issued or when all the units have been sold, whichever comes later.
This condition is similar to that applied to Government Land Sales (GLS) sites, which are exempted from QC requirements.
On these sites, the shares of the developer cannot be transferred without the prior consent of the relevant government agency until the TOP has been issued.
And even if consent is given, the original shareholders must retain control of more than 50 per cent of the developer.
This is to uphold a principle of the Residential Property Act, which bars a developer from trading in undeveloped residential land, he said.
Mr Lee noted that there might be a better chance to get approval in a case of extreme financial distress, where the developer is close to or in involuntary liquidation.
This would be to allow another party to come in to develop the site and sell the units, rather than let it lie fallow.