Govt imposes additional tax for private property

The government has implemented additional cooling measures intended to curb excessive investment in the property market.

From today, foreigners and corporate entities will have to pay an additional 10 percent ‘Additional Buyers Stamp Duty’ (ABSD) , the government said in a statement issued last night. The extra levy will be three percent for Permanent Residents (PRs) purchasing a second home, as well as for Singaporeans buying their third residential property.

In a joint statement, the Finance and National Development ministries said the move is to promote a sustainable residential property market where prices move in line with economic fundamentals.

“We have always had open markets and must keep them that way,” said Finance Minister Tharman Shanmugaratnam. “However, the reality is that investment flows into our property market are now larger than before, and unlikely to recede as long as interest rates remain low. The additional stamp duty should help cool investment demand, and avoid the prospect of a major, destabilising correction further down the road.”

The ABSD will apply in addition to the existing buyer's stamp duty on property purchases, which will be applied at the following rates: one percent on first S$180,000 of purchase consideration or market value of the property (whichever is higher), two percent on the next S$180,000 and three percent for the remainder.

In the case of a joint purchase by Singaporeans who each already owns property, the ABSD of three percent will apply as long as one of the purchasers already owns two properties. Singaporean first-time buyers and upgraders, and buyers of HDB flats will not be affected by the new measure.

The Real Estate Developers Association of Singapore (REDAS) said it was disappointed at the lack of consultation, adding that the measures came as a surprise as the current market outlook is uncertain.

Colin Tan, Head of Research at Chesterton Suntec International, writing in TODAY, said: “Already people are asking me whether the new measures will induce a price correction? It really depends on the reaction of developers and how much of the current purchases are investment buys. If the majority of buyers have been investors, the measures have the equivalent effect of a sudden price increase of 3 percent or more on the market.”

Andrew Batt, Regional Group Editor of PropertyGuru, said the latest round of cooling measures which were introduced earlier this year had an immediate impact, and market watchers and analysts will be paying careful attention to the market over the coming days and weeks.