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Redas calls for ABSD deferment for first-time HDB upgraders to private property

Redas calls for ABSD deferment for first-time HDB upgraders to private property

Source: Business Times
Article Date: 30 Sep 2020
Author: Kalpana Rashiwala & Siow Li Sen

Upgraders to ECs currently get ABSD remission; they are given six months to dispose of their HDB flats after getting key to new EC unit.

The head of the Real Estate Developers' Association of Singapore has urged the government to urgently consider allowing first-time upgraders from an HDB flat to a private property to defer payment of the additional buyer's stamp duty (ABSD) till six months after the completion of the private property.

This follows the government's clampdown on Monday on the re-issuance of options to purchase (OTPs) by private housing developers.

Currently, HDB upgraders who buy a new executive condominium (EC) unit get ABSD remission. (ECs are a public-private housing hybrid.) This group is given six months to dispose of their HDB flats after having collected the key to their new EC home.

If Redas president Chia Ngiang Hong's suggestion comes to fruition, HDB upgraders buying a private home would not face the pressure of having to pay up the ABSD within 14 days of signing the sale and purchase agreement.

"This will help a lot; it will ease the cashflow of the genuine first-time upgraders and hence reduce the need to ask for extension of the OTPs," said Mr Chia on Tuesday.

Buyers of private property have to pay 12 per cent ABSD if they have not sold their existing home.

This ABSD rate applies to Singaporeans buying their second residential property. However, if the purchase is being made by a married couple (which must include a Singapore citizen) they are eligible for a refund of the ABSD if they sell their first residential property within six months of the completion of the second property (assuming it was uncompleted at the time of purchase). Singaporean couples buying a completed second property have to sell their first property within six months of the date of purchase of the second property.

In a reply to queries from The Business Times last week, the Ministry of Finance (MOF) said on Monday that ABSD is intended to moderate the demand for residential properties.

"Any changes to the ABSD regime will have an impact on the residential property market and therefore, should not be looked at in isolation. The government continues to monitor the residential property market closely, to ensure a stable and sustainable residential property market in Singapore," said an MOF spokesperson.

Buyers who need more time to sell their existing homes have been asking for OTPs to be reissued.

On Monday, the government imposed new conditions in sale licences issued to housing developers.

These include restricting developers from providing upfront agreements to buyers to re-issue the OTPs, restricting developers from re-issuing OTPs to the same buyers for the same unit within 12 months after the expiry of the earlier OTP, and requiring developers to inform buyers of this condition upfront.

However, upon application, the authorities are prepared to extend the three-week validity period of the OTP up to 12 weeks from the OTP date. In the past, OTP validities could be extended for up to eight weeks; or the OTP could be re-issued upon expiry.

Mr Chia, in his speech at Redas's Mid-Autumn celebration, urged the government to consider extending additional reliefs and flexibility to assist the real estate and built environment sector, given the economic slowdown.

"This will allow all parties affected to better plan ahead and work out revised contingency plans," he said at the event.

"We have recently conveyed our members' grave concerns to the minister and provided feedback and suggestions for a more sustainable property market for the near and longer term," Mr Chia added.

Minister for National Development Desmond Lee was the guest of honour at the event. In his response, Mr Lee said: "We will continue to monitor closely the impact of the pandemic on the sector, and will adjust our policies as necessary."

Some of the government initiatives currently in place include giving developers a six-month extension on the project completion period and ABSD remission timelines.

Mr Lee also said that the pandemic has shown the importance of building resilience in the system. "We need to be ready to take on future 'black swan' events that may occur... We could, for example, look at how we approach the procurement and management of construction supplies, driving digitalisation, and adopting more advanced building technologies."

He added: "More than anything else, this pandemic has strengthened our collective resolve to quicken the transformation of our entire construction and built environment sector, so that we become more integrated and resilient. This will also help us to enhance productivity, allow us to build and maintain our city more effectively and sustainably."

Developers have a key role in this by continuing research and innovation efforts, and promoting the adoption of new processes, technology and designs.

Mr Lee also highlighted that in planning and building the city, "we will need to consider the extent to which Covid-19 may permanently impact the way we live, work and play".

An example is working from home. "But when Covid-19 eventually passes, and it will, it may well be that some companies choose to retain significant flexible work arrangements, for business resilience. The mindset and expectations of employees may also change. With more people working from home, we can expect there to be changes to their commuting, retail consumption and lifestyle patterns.

"Some of these changes are short-term, while others may well be permanent structural shifts, and we will have to be responsive as far as infrastructure and facilities are concerned. All of this needs to be carefully studied, as the pandemic continues to unfold ahead of us, so that we can see how our urban landscape might need to change and evolve," he added.

Source: Business Times © Singapore Press Holdings Ltd. Permission required for reproduction.

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