The Singapore government has announced further increases to the Additional Buyer’s Stamp Duty (ABSD) rates that are intended to promote a sustainable property market and prioritise housing for owner-occupation by pre-emptively managing investment demand.
“The implementation of the property market measures in December 2021 and September 2022 have had a moderating effect,” said a Ministry of Finance statement. “However, in the first quarter of 2023, property prices showed renewed signs of acceleration amid resilient demand.
“Demand from locals purchasing homes for owner-occupation has been especially strong, and there has also been renewed interest from local and foreign investors in our residential property market. If left unchecked, prices could run ahead of economic fundamentals, with the risk of a sustained increase in prices relative to incomes,” said the statement.
New ABSD rates.
The specific raised ABSD rates, which came into effect as of 27 April 2023, are as follows:
- From 17% to 20% for Singapore Citizens (SCs) purchasing their second residential property.
- From 25% to 30% for SCs purchasing their third (and any subsequent) residential property, and Singapore Permanent Residents (SPRs) purchasing their second residential property.
- From 30% to 35% for SPRs purchasing their third (and any subsequent) residential property.
- From 30% to 60% for foreigners purchasing any residential property.
- From 35% to 65% for entities or trusts purchasing any residential property, except for housing developers.
The government said that, based on 2022 data, the above ABSD rate increases would affect about 10% of residential property transactions. The ABSD rates for SCs and SPRs purchasing their first residential property, which constitutes about 90% of residential property transactions based on 2022 data, remain at 0% and 5% respectively.
For acquisitions made jointly by two or more parties of different profiles, the highest applicable ABSD rate will apply.
Married couples with at least one SC spouse, who jointly purchase a second residential property, can continue to apply for a refund of ABSD, subject to conditions. These conditions include selling their first residential property within six months after either the date of purchase of the second residential property if this is a completed property, or the issue date of the Temporary Occupation Permit (TOP) or Certificate of Statutory Completion (CSC) of the second residential property, whichever is earlier, if the second property is not completed at the time of purchase.
The Additional Conveyance Duties for Buyers (ACDB), which applies to qualifying acquisitions of equity interest in property holding entities (PHEs), is also to be raised from up to 46% to up to 71%.
The ABSD currently does not affect those buying a Housing & Development Board (HDB) flat or Executive Condominium unit from housing developers with an upfront remission, if any of the joint acquirers/purchasers is a SC. There is no change to this policy.
The revised ABSD rates will apply to all residential properties acquired on or after 27 April 2023 but there was a transitional provision under which the previous ABSD rates continued to apply for cases that meet all the following conditions:
- An Option to Purchase (OTP) was granted by sellers to potential buyers on or before 26 April 2023.
- This OTP was exercised on or before 17 May 2023, or within the OTP validity period, whichever was earlier.
- This OTP was not varied on or after 27 April 2023.
Singapore to increase residential property supply
The government said it was also taking steps to ramp up supply, to alleviate the tight housing market for both owner-occupation and rental. It is to continue to maintain a steady pipeline, to cater to growing housing demand.
It has increased the supply of private housing on the Confirmed List to 4,100 units for the first half of 2023 Government Land Sales (GLS) programme, from 3,500 units for the second half of 2022. For public housing, it launched more than 23,000 flats in 2022 and will launch up to 23,000 flats in 2023. We are also prepared to launch up to 100,000 new flats in total between 2021 to 2025.
“While COVID-19 had led to severe delays across private and public housing projects, we have made good progress to get back on track,” said the statement. “With almost 40,000 public and private residential property completions in 2023, and near 100,000 units expected to be completed from 2023 to 2025, there will be significant housing supply coming onstream over the next few years.”