Could this be one of the most untimely Singapore cooling measures? For some time this year, it seemed like the property market was on the road to ?recovery? and buying sentiment was on a brighter note before the news was released.

So ever since the recent cooling measures was announced, as expected, there has been a ton of news and reactions to it. Unsurprisingly, shares in property stocks took quite a hit after the news was released. The news even affected an en bloc sale, with Tee Land deciding against exercising its option to purchase Teck Guan Ville. Developers are also up in arms against the move, with the Real Estate Developers? Association of Singapore (Redas) saying there is ?no rationale? for the property cooling measures imposed. Not only that, they maintained that there was no need for the additional cooling measures on developers, which is in reference to the raising of ABSD to 25% and the extra 5% ABSD that cannot be waived.

In other words, if you are looking to buy for your own stay or to invest, the Government?s intervention of cooling measures in Singapore can really be a make or break with regards to your purchasing decisions. So to make an informed decision, it is always best to keep abreast of all property news and happenings in Singapore. Hence, we have compiled a history of all Singapore cooling measures since the first introduction in 2009.

2009 Singapore Cooling Measures

14 September 2009
? Interest Absorption Scheme (IAS) and Interest-Only Housing Loans (IOL) programs were abolished

2010 Singapore Cooling Measures

20 February 2010
? Introduction of Seller?s Stamp Duty (SSD) for properties sold within 1 year of purchase, this was up to 3% of the sales price
? Lowered the loan-to-value ratio (LTV) to 80% for all housing loans

30 August 2010
? SSD holding period increased to properties sold within 3 years of purchase, which resulted in the following
? 3% for properties sold within the first year
? 2% for 2 years
? 1% for 3 years
? For buyers that have more than one outstanding loan (including HDB) the minimum cash downpayment was increased from 5% to 20% of the purchase price
? LTV lowered from 80% to 70%

2011 Singapore Cooling Measures

14 January 2011
? SSD increased to 4 years, with higher tax as follows
? 16% for properties sold within the first year
? 12% for 2 years
? 8% for 3 years
? 4% for 4 years
? LTV was lowered to 50% for purchases that were not individuals or households
? For individuals and households with one or more outstanding loans, the LTV was lowered to 60%

8 December 2011
? Additional 10% duty for foreigners implemented
? Permanent Residents (PR) that are buying the second and subsequent property will have to pay ABSD of 3%
? Singapore Citizens (SC) that own two properties and are buying their third and subsequent properties have to pay ABSD of 3%
? How the ABSD is computed is as follows:
? 1% on the first $180,000
? 2% on the next $180,000
? 3% on the remainder

2012 Singapore Cooling Measures

6 October 2012
? Max tenure of residential loans was capped at 35 years
? Loans with terms in excess of 30 years would have higher LTV requirements, for both HDB and private properties

2013 Singapore Cooling Measures

12 January 2013
? PRs first property will now have a 5% ABSD
? Second property at 10% ABSD
? SC second property at 7% ABSD
? Third property at 10% ABSD
? Foreigners and company 15% ABSD
? LTV rates were tighter, if second housing loan this is at 50%
? For third housing loan this was set at 40%
? For housing loan tenures past 30 years this was even stricter at 30% and 20% respectively
? Minimum cash downpayment for individuals applying for a second and subsequent housing loan raised to 25% from 10%

There were also measures specific to HDB
? Introduction of Mortgage Service Ratio (MSR) for HDB loans and refinancings
? This means for private loans this is capped at 30% of a borrower?s gross monthly income
? For HDB loans this is lowered from 40% to 35%
? PRs that own a HDB flat will not be allowed to sublet their whole flat
? PRs that own a HDB flat must sell it within six months of purchasing a private property in Singapore

29 June 2013
? Introduction of Total Debt Service Ratio (TDSR) that is capped at 60% for housing loans for local and overseas properties
? For join borrowers, banks must use the income-weighted average age of borrowers when applying for a housing loan

28 August 2013
? Maximum HDB loan tenure reduced from 35 to 30 years

9 December 2013
? Reduction of cancellation fees for ECs from 20% to 5% to relive financial burden of buyers
? Second-timer applicants who buy EC units direct from developers will now have to pay a resale levy
? MSR for housing loans for EC bought direct from developers will be capped at 30%

This was the last round of cooling measures for some time until 2017.

2017 Singapore Cooling Measures

10 March 2017
? Revision of SSD to a 3 year holding period, instead of 4 years previously
? SSD rates will be lower by 4% for each tier, so it will began from 12% for properties sold in the first year, to 4% for properties sold in the third year
? TDSR will no longer be applied to mortgage equity withdrawal loans with LTV ratios of 50% and below

2018 Singapore Cooling Measures

6 July 2018

Additional Buyer Stamp Duty: How does this affect you?

additional buyer stamp duty

Unless you have been living under a rock, you would have heard by now of the new cooling measures that were announced on July 5th. Although we cannot say we are surprised that measures have been taken to counter the rise in prices of private property, it must be said that it is still shocking that the moves have been so swift and are actually quite significant. So much so that crowds of potential buyers thronged showflats across Singapore yesterday, in hopes that their purchases can be squeezed in before the new rates come into effect on July 6th.

Additional Buyer Stamp Duty ? So what are the changes?

additional buyer stamp duty

As you can see, for SC buying their first residential property, there will be no additional buyer stamp duty, which is rightly so. So no changes there. Don?t forget additional buyer stamp duty is payable on top of the normal buyers stamp duty. If you have forgotten the existing BSD rates, here you go:

Buyers stamp duty

First $180,000 1%
Next $180,000 2%
Next $640,000 3%
Remaining Amount 4%

For SC buying their second, or third and subsequent properties, the increase of 5% is really substantial. Let us show you an example of how this new cooling measures will affect any future purchases.

SC BUYING SECOND RESIDENTIAL PROPERTY OF $1 MILLION

Before

Buyers stamp duty = $24,600
Additional buyer stamp duty (7%) = $70,000
Total stamp duty = $94,600

After this new round of cooling measures

Buyers stamp duty = $24,600
Additional buyer stamp duty (12%) = $120,000
Total stamp duty = $144,600

This means an increase of $50,000 in ABSD rates.

IMPORTANT:

If you signed your sale and purchase agreement in Singapore, the BSD and ABSD have to be paid within 14 days of the agreement being signed.

If you signed it overseas, you have a bigger leeway of 30 days after the agreement was received in Singapore.

Lastly, and please do not forget this. If the BSD and ABSD is not paid by the due date, the penalties are:

Delay in payment for up to 3 months ? $10 or an amount equal to the BSD and ABSD payable, whichever is higher
Delay in payment exceeding 3 months ? $25 or an amount equal to 4 times the BSD and ABSD payable, whichever is higher

So based on our previous figures, if you are late in payment beyond 3 months, this will result in a maximum penalty of $578,400! Which is clearly not an amount to be trifled with.

So how does the additional buyer stamp duty changes affect me?

With this new round of cooling measures, it is abundantly clear that the Government is looking to put a check on the rising prices in the property market. Prices in Singapore were slated torise 8% in this year and again in 2019. So perhaps in their view, if left unchecked, prices could actually get out of hand.

Not to mention, HDB resale flat prices are falling, and the supply of Build-to-Order (BTO) flats will be cut to about 16,000 from 17,000 previously. So this move was possibly done to combat the dropping resale HDB flat prices. This was also not helped by the earlier announcement that not all old HDB flats will be eligible for the Selective En bloc Redevelopment Scheme (SERS).

So you may be asking here, why would we be talking about HDB?

It?s quite simple.

It matters because if HDB resale flat prices are falling and private homes are rising, this would create a wider and wider price gap, which is not favoured by the Government. This is because should the price gap continue to widen, it will get tougher for Singaporeans to upgrade from an HDB to a private property. Also this would mean a worse income inequality for Singapore, which is already one of the highest in the world. Obviously Singaporeans would not be happy with such a situation which would in turn create problems for the Government.

Lastly, property developers will also be affected by this current round of changes. They will now have to pay 25 per cent on any en bloc purchase based on the land cost instead of the 15 per cent previously. Although this is remissible if they manage to sell all the units within the 5 years. If not, there will be a new additional 5 per cent ABSD tax. This will definitely tamper the enthusiasm for en bloc deals as this means more upfront capital costs for developers as well as more risks in the event all the units are not cleared. So you can expect a more muted response from the developers in this regard.