How are they going to affect you?
Why you should know before you buy?
All that is happening here in Singapore Property Market 2013 !
The Latest Round of Cooling Measures w.e.f. 12
Jan 2013
With property buyers losing the correct
sense of proportion with the advent of more hot money, the Singapore Government
has introduced Round 7 of curbing measures (dubbed as CM 7) in bid to cool the red-hot
property market with heavier dosage of ABSD, lower loan-to-value (LTV), and higher
minimum Cash Down Payment. This time round even the public housing and industrial property
segments are not spared.
ENHANCING THE ADDITIONAL BUYER’S STAMP DUTY (ABSD)
First of all, the
Additional Buyer’s Stamp Duty (ABSD) rates have been raised on foreigners and
non-individuals, permanent residents (SPR), and Singaporeans; and from 12
January 2013 onwards the following enhancements to ABSD have been made:
(i)
PRs purchasing their first residential property pay an ABSD at a
rate of 5%; and
(ii)
Singaporeans purchasing their second residential property at a
rate of 7%.
The ABSD structure is enhanced as follows:
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Citizenship
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ABSD RATE
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on First Purchase
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on Second Purchase
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on Third & Subsequent Purchase
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|
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Singaporeans
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Not Applicable
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Raised to 7%
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Raised to 10%
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Permanent Residents (SPR)
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Revised to 5%
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Raised to 10%
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Raised to 10%
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Foreign buyers and Non-individuals
(corporate entities)
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Raised to 15%
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Raised to 15%
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Raised to 15%
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Source of information: MND
Singaporean
first-time buyers and Singaporean buyers of HDB flats will not be affected by
the new measure.
No change in taxation
principles of ABSD
For
purchases made jointly by two or more parties, the higher applicable ABSD rate
will be imposed. For example, if a Singaporean purchases a property with a
foreigner, the ABSD rate of 15% will apply regardless of the number of properties
each owns. If two Singaporeans jointly purchase
a property with one of them already owning a residential property at the time
of purchase, the ABSD rate of 7% will apply.
Married couples enjoy
ABSD relief
When
there is at least a Singaporean spouse in between the married couple, ABSD
relief will be provided for their joint purchases (i.e. a married couple with a
Singaporean spouse and PR / foreigner spouse). If both spouses do not own any
other property at the time of purchase, the marital home that they purchase
will not be subject to ABSD.
ABSD Refund
Eligible
married couples with at least one Singaporean spouse who have purchased a
second private residential property and will dispose their existing residential
property will enjoy ABSD refund as follows:
(i)
The ABSD paid will be refunded if these
Singaporean married couples dispose their first property within six months of
the purchase of the second property, if the latter property is a completed
unit.
(ii)
If the second property is an uncompleted
unit, the refund will be given if the first property is disposed within six
months of the Temporary Occupation Permit (TOP) or Certificate of Statutory
Completion (CSC) date of the second property, whichever is earlier.
(iii)
These Singaporean couples must also not
acquire any other residential property before the disposal of the first
residential property, if they wish to avail themselves of the refund on ABSD
paid on the second property.
The
revised ABSD structure will take effect on residential property purchased on or
after 12 January 2013. If a buyer of a residential property has been granted
Option to Purchase on and before 11 January 2013 and exercises it thereafter on
or before 1 February 2013 (without any extension of the option validity
period), the buyer can apply to the Inland Revenue Authority of Singapore
(IRAS) for remission so that the old ABSD rate will apply.
LOWERING LOAN-TO-VALUE (LTV) RATIO AND UPPING CASH DOWN PAYMENT ON
HOUSING LOANS
If a
property purchaser has currently had one or more outstanding housing loans and is
getting second or subsequent mortgage loans to acquire a residential property,
the LTV limits for that purchaser are 60%, or 40% if the loan term stretches
beyond 30 years, or extends beyond his official retirement age of 65.
A. LOWER LOAN-TO-VALUE (LTV) RATIO
|
With effect from 12 January 2013, the following LTV
limits on housing loan have been implemented:
[A1] LTV LIMITS OF 50% OR 30%
This is for individual borrowers getting a second housing loan and when
the loan term (amortisation period) exceeds 30 years or the repayment period
stretches beyond the borrower's retirement age of 65.
[A2] LTV LIMITS OF 40% OR 20%
This is for individual borrowers getting a third or subsequent housing
loans and when the loan term (amortisation period) exceeds 30 years or the
repayment period stretches beyond the borrower's retirement age of 65.
[A3] LTV LIMITS OF 20% FOR NON-INDIVIDUAL BORROWERS
The
current LTV limit of 40% for non-individual borrowers has been further capped
at 20%.
[A4] LTV LIMITS OF 80% OR 60%
For individual borrowers who have no outstanding housing loans, the LTV
limit remains at 80%, or 60% if the loan term exceeds 30 years or the loan
period stretches beyond the borrower's retirement age of 65.
B.
MINIMUM CASH DOWN
PAYMENT
The minimum
cash down payment for individuals applying for a second or subsequent housing
loan has been raised from 10% to 25%.
There is no change to the existing minimum cash down payment requirement
for individual borrowers having no outstanding housing loans and are applying
for a housing loan.
For such borrowers, the cash down payment required is 5%, or 10% if the
loan tenure exceeds 30 years or the loan period stretches beyond the borrower's
retirement age of 65.
Illustration below
is provided by Ministry of National Development (MND).
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FIRST HOUSING LOAN
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SECOND HOUSING LOAN
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FROM THIRD HOUSING LOAN
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LTV LIMIT
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Existing rules 80%; or 60% if the loan tenure is more than 30 years or
extends past age 65
Revised Rules No change
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Existing Rules 60%;
or 40% if the loan tenure is more than 30 years or extends past age 65
Revised Rules 50%;
or 30% if the loan tenure is more than 30 years or
extends
past age 65
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Existing Rules 60%;
or 40% if the loan tenure is more than 30 years or extends past age 65
Revised Rules 40%;
or 20% if the loan tenure is more than 30 years or
extends
past age 65
|
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MIN.
CASH DOWN PAYMENT
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Existing
Rules
5%
(for LTV of 80%)
10%
(for LTV of 60%)
Revised
Rules
No change
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Existing
Rules
10%
Revised
Rules
25%
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Existing Rules
10%
Revised Rules
25%
|
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NON-INDIVIDUAL BORROWERS
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Existing LTV Limit
40%
Revised LTV Limit
20%
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Source of information: MND
RELIEFS FROM LOWER
LTV LIMIT AND HIGHER MINIMUM CASH DOWN PAYMENT
Borrowers
who are upgrading to an Executive Condominium (EC) purchased directly from a
property developer or to a HDB flat will not be subject to the lower LTV limit
and higher minimum cash down payment requirement when he obtains another
housing loan. This is because it is compulsory for the individuals to dispose
of the existing private homes within six months of taking possession of the EC unit
or the public flat.
RESTORING THE ORIGINAL
POLICY INTENT OF EXECUTIVE CONDO (EC)
With the latest measures, the government is giving the signal that Executive
Condominium (EC) is meant for the ‘sandwiched class’ and not the wealthy. As
such, with effect from 12
January 2013, the following measures have been put in place with regards to the
ownership of Executive condo (EC):
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(a)
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No new EC units
shall be larger than 160 sq m in floor area
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(b)
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Only multi-generational
families are eligible to own new dual-key units.
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(c)
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Developers of
future EC sale sites from the Government Land Sales programme will only be
allowed to launch units for sale 15 months from the date of award of the
sites or after the physical completion of foundation works, whichever is
earlier.
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(d)
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Private enclosed
spaces (PES) and private roof terraces are now considered part of the ‘bonus’
GFA of a residential development and subject to payment of development charges
(which is a form of enhancement tax to be paid by the developers).
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SSD IMPOSED ON INDUSTRIAL PROPERTIES
Due to the increasing
speculation in industrial properties, the Government has extended the Seller’s
Stamp Duty (SSD) to short-term selling of industrial property in order to snub
out speculative activities there.
Likewise, the
following SSD rates will be imposed on industrial properties and land bought
and sold within three years of the date of purchase:
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(a)
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If the industrial property
is held for one year or less from the date of purchase when it is sold, the seller
will be liable to pay SSD at 15% of sale price.
|
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(b)
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If the industrial property
is held for more than one year and up to two years from the date of purchase
when it is sold, the seller will be liable to pay SSD at 10% of sale price.
|
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(c)
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If the industrial property
is held for more than two years and up to three years from the date of
purchase when it is sold, the seller will be liable to pay SSD at 5% of sale
price.
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MORE STRINGENT CONTROLS FOR SPR
OWNERS OF PUBLIC FLATS
[1] SPR HOUSEHOLDS NOT ALLOWED TO SUBLET WHOLE HDB
FLAT
This is applicable to both aspiring as well as existing
SPR households owning an HDB flat. Subletting
of rooms continues to be allowed.
SPR households who have been approved by the HDB to
sublet their whole flats prior to 12 January 2013 will be allowed to continue
with the subletting arrangement for the remainder of the approved duration.
[2] SPR NOT ALLOWED TO HOLD ON TO THEIR HDB FLAT AFTER
PURCHASE OF PRIVATE RESIDENTIAL PROPERTY IN SINGAPORE
From 12 January 2013, SPR households must dispose of their
HDB flats within six months of purchasing a private residential property in Singapore Singapore Singapore
Rule of Disposing of Existing HDB
flats
In
the event that the SPR flat owners have purchased a completed property, they
must sell away their public flats within six months of legal completion of the transaction.
In the event that the SPR flat owners purchase an uncompleted
private homes, they must sell away the public flat within six months of the
earlier date of receipt of Temporary Occupation Permit (TOP) or Certificate of
Statutory Completion (CSC).
TOUGHER RULE FOR BORROWING TO
ACQUIRE PUBLIC FLATS
From 12 January 2013, the loan-to-income ratio or mortgage
servicing ratio (MSR) for mortgage loans taken for the purchase of BTO or
resale HDB flats is reduced from 40% of a borrower’s gross household income to
35%.
The cut-off dates for HDB loans are shown in the tabulation
below.
TABLE [B]: CUT-OFF
DATES FOR THE REVISED MSR LIMIT AT 35% OF BORROWER’S GROSS MONTHLY HOUSEHOLD
INCOME FOR HDB LOANS
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TRANSACTION TYPE
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CUT-OFF DATES
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Purchase of BTO flats from the Board
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Application for HDB Loan Eligibility
(HLE) letter and sale exercise launch date both from 12 January 2013.
|
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Purchase of resale flats
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Application for HLE letter received on
or after 12 January 2013.
|
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Taking over ownership of existing flat
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Application for HLE letter received on
or after 12 January 2013.
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Purchase of new DBSS flat
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Loan application received by HDB on or
after 12 January 2013.
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Source of information: MND
Purchasers
of HDB flats who are using private bank loans will have a MSR limit of 30%. For
re-financing of a HDB flat, the rule shall apply if the application date for
the re-financing facility is 12 January 2013 or after.
MINIMUM LEASE PERIOD REQUIREMENT SET
BY CPF BOARD FOR PRIVATE HOMES EXTENDED TO HDB LOANS FROM 1 JULY 2013
Currently,
any private residential property purchased with CPF savings must have at least 60
years of remaining lease. But this CPF rule was not applicable to withdrawal of
funds for the purchase of public flats.
From 1
July 2013 onwards, the requirement of minimum 60 years of remaining lease will
be extended to cover withdrawal of CPF savings to purchase HDB flats. The detailed explanations are as follows:
§
PURCHASE OF PUBLIC FLATS WITH REMAINING LEASE FROM 30 TO 59 YEARS
The
purchasers will be allowed to use their CPF savings, except for buyers for whom
the remaining lease cannot cover them to the age of at least 80, e.g. both
couple who wish to purchase a flat with remaining lease of 40 years are 35
years old. In this scenario, 40 + 35 is 75 which cannot cover them to the age
of at least 80. In this case, the couple is not allowed to their CPF savings in
the purchase of this particular public flat.
On the other hand, in terms of loan taken out to finance
the purchase, the following rule applies. The loan term (duration of amortisation) will be the shortest of either [1]30 years; [2] 65 years minus average age of buyers
(in this scenario is 65 less 35 (the couple’s average age) = 30; or [3]balance lease at the point
of purchase minus 20 years (in this scenario is 40 less 20 =
20 years). As such, the couple’s loan term is 20 years and they are not allowed
to use their CPF savings. They are also subject to the MSR ratio of 35%.
If the couple in
the scenario is older and is allowed to use their CPF savings to finance the
purchase, the total CPF usage by the household will be the pro- rated Valuation
Limit (VL) (lower of market valuation or purchase price) based on the ratio of
the remaining lease when the youngest buyer who can use CPF turns 55 years old,
to the lease at point of purchase.
§
PURCHASE OF PUBLIC FLATS WITH REMAINING LEASE FROM 20 TO 29 YEARS
In this purchase,
no CPF savings can be used.
Housing loan will
be allowed if the remaining lease can cover the buyer up to the age of at least
80 years old. In the above scenario, the same 35 years old couple is not
allowed to take the housing loan as their average age of 35 plus the remaining
lease period of say 29 is only 64.
To be eligible for
housing loan for a flat with 29 years remaining lease period, the average age
of the borrowers must be at least 51 year’s old, and subject to the following
rule on loan term, which is the shortest of either [1]30 years; [2]
65 years minus average age of buyers
(in this scenario is 65 less 35 (the couple’s average age) = 30; or [3]balance lease at the point
of purchase minus 20 years (in this scenario is 29 less 20 =
9 years). As such, the couple’s loan term is 20 years and they are not allowed
to use their CPF savings. They are also subject to the MSR ratio of 35%.
Purchasers of a
public flat with less than 20 years’ remaining lease will not be allowed to
utilise any CPF savings nor be granted any housing loan.
