Budget 2018

Singapore Budget 2018: Stamp duty hike unlikely to put off property upgraders, say experts

With effect from yesterday, the stamp duty on the value or price of a home above $1 million was raised from 3 per cent to 4 per cent.
With effect from yesterday, the stamp duty on the value or price of a home above $1 million was raised from 3 per cent to 4 per cent.ST PHOTO: KUA CHEE SIONG

The higher Buyer's Stamp Duty introduced in this year's Budget is unlikely to put a dent in any aspiring upgrader's dreams, observers said, but it will mean more for the government coffers to pay for rising expenditure in such areas as healthcare and infrastructure.

Finance Minister Heng Swee Keat said on Monday that the stamp duty on the value or price of a home above $1 million would be raised from 3 per cent to 4 per cent. The hike took effect yesterday.

JLL national research director Ong Teck Hui said that based on last year's transactions, the extra duties collected would have been around $200 million.

But going forward, Cushman & Wakefield research head Christine Li estimates that with higher expected transaction values and land acquisitions, an extra $411 million could be raised.

She said the higher stamp duty would not derail the recovering private property market, which rebounded in the second half of last year after three years of decline.

While two-thirds of properties transacted last year were above $1 million, observers said most of the extra revenues will come from the sale of "ultra-luxurious" properties above $5 million, whose buyers have the ability to meet "marginal" increases of $40,000 and upwards in stamp duty, observers said.

A spokesman for developer CDL said: "We believe discerning buyers will see the strong potential of property investment in Singapore compared with other global cities like Hong Kong, where prices have increased significantly."

Colliers International research head Tricia Song noted that the median transaction value of non-landed private homes was around $1.2 million last year, which would mean about $2,000 extra in taxes - not significant enough to put buyers off a purchase.


Ms Li said the cut-off at $1 million strikes a balance, noting: "If the cut-off is too high or too low, you might not generate the right amount of tax revenue, or you may affect most of the population.

"And if you increase the margin to 5 per cent, it may destabilise a residential market that has only just embarked on its recovery."

Political scientist Derek da Cunha said the new rates help to address the issue of income and wealth inequality.

"Those with the means pay more in taxes, which are then eventually redistributed through subsidised programmes to those lower in the pyramid," he said, noting that the top 10 per cent includes Singaporeans and foreigners.

Property agents said home buyers caught by surprise when the announcement was made have asked whether they can avoid paying the higher stamp duty by changing the date on legal documents.

They were told it is an offence that carries a fine of up to $10,000, a maximum jail term of three years, or both.

A version of this article appeared in the print edition of The Straits Times on February 21, 2018, with the headline 'Stamp duty hike unlikely to put off upgraders: Experts'. Subscribe