SINGAPORE - The Real Estate Developers' Association of Singapore (Redas) is asking the Government for "some leeway" as tougher measures to cool the housing market kicked in overnight.
Calling the measures "sudden", Redas said: "The recalibrated tough measures are rather unexpected in view that the property market is just beginning to emerge from the challenging Covid-19 situation."
"Significant uncertainties still persist and the operating environment of many businesses remains challenging," the association said in comments on Thursday (Dec 16).
With effect from Thursday, additional buyer's stamp duty (ABSD) rates were raised, and loan limits for both private homes and Housing Board flats tightened.
In particular, Redas said the higher ABSD on developers will "impose immense additional pressure" on their land acquisition. Developers have to compress the development, sales, project completion period and land replenishment cycle time in order to meet the stringent requirements for the ABSD remission, it said.
The ABSD applies to housing developers when they buy land to build a new project. Before Thursday, this was 30 per cent of the land price, with 25 per cent of the land price remittable if they complete and sell everything within five years.
From Thursday onwards, developers are subject to 40 per cent ABSD, with 35 per cent remittable if they complete their projects in time.
Redas on Thursday called on the authorities to differentiate the remission criteria for projects of different sizes, especially given current challenges in the construction sector to meet project completion timelines.
Some developers were also recently granted the option to purchase (OTP) land subject to certain conditions precedent and were thus given a longer time to exercise their OTP so they could fulfil those conditions.
"We would like to appeal to the Government to consider, on a case-by-case basis, to allow such developers to exercise on the date stipulated in the existing OTP (without amendment)," said Redas. If the period is considered too long, Redas suggested another three-month extension from Dec 16, for the fulfilment of the conditions precedent before the new ABSD rate applies.
"The measures are sudden and we hope the Government will consider some leeway on certain deserving cases," it added.
Redas also said it hopes the Government will consider allowing first-time HDB upgraders to private property to defer the upfront payment of the ABSD until six months after the completion of the new property, as in the case of an executive condominium purchase. This is an appeal made several times before by Redas.
Under the new cooling measures, ABSD rates for Singapore citizens and permanent residents buying their first residential property will remain unchanged, but those buying their second residential property will have ABSD rates raised to 17 per cent and 25 per cent respectively.
Redas also said that the ABSD and total debt servicing ratio (TDSR) mechanisms, in place since 2013, remain a restraining factor for foreign buyers and Singaporeans.
On Thursday, the TDSR threshold was raised from 60 per cent to 55 per cent. This means new mortgages now cannot cause borrowers' total monthly loan repayments to exceed 55 per cent of their monthly income.
"We hope the Government will continue to maintain a sustainable property market when it reviews the cooling measures," said Redas.
Correction note: An earlier version of this article said that developers have to pay 40 per cent additional buyer’s stamp duty upfront. Iras has clarified that while developers are subject to 40 per cent additional buyer’s stamp duty, 35 per cent may be remitted upfront subject to conditions.
