The Singapore government has continued its efforts to review the ongoing conditions in the property market’s residential segment, following Minister of National Development and also 2nd Minister of Finance, Mr Lawrence Wong’s comments on Bloomberg TV week ago, stating that property cooling measures are expected to stay in place.
It has been determined that the existing set of cooling measures will be essential in promoting sustainability in the residential property market and also to ensure households remain financially prudent.
Property cooling measures eased by MND. Video: Channel NewsAsia
However, the Ministry of National Development (MND) of Singapore has decided to make the following adjustments and tweaks to the current Seller’s Stamp Duty (SSD) and also the Total Debt Servicing Ratio (TDSR), taking effect from March 11, 2017 onwards.
Based on the current SSD guidelines, a stamp duty rate between the tiers of 4% to 16% (of the selling price) will be payable for those who sell their residential property within the first 4 years from its purchase date. The following revision will be made:
Seller’s Stamp Duty (SSD)
- Reducing the holding period of 4 years, down to 3 years.
- Lowering the SSD rates by 4% in each tier – with the new set of SSD rates ranging from 4% (properties sold in the 3rd year from purchase date) to 12% (property sold within the 1st year from purchase date).
Total Debt Servicing Ratio (TDSR)
In order to encourage financial prudence of households and strengthening the credit underwriting standards of all banks (or financial institutions), the existing framework has limited property loans by not exceeding the 60% threshold.
However, feedbacks were received from borrowers, saying that the existing TDSR framework has put a limitation on monetizing their real estate assets during retirement – such as re-mortgaging based on the properties’ value to churn out additional cash.
Thus, MAS has mentioned that the TDSR framework shall not be applicable to mortgage equity withdrawal loans with a Loan-To-Value ratio of 50% or less.
Stamp Duties applicable for Transfers of Equity Interest in Entities whose Primary Tangible Assets Are Singapore Residential Properties
As highlighted by the Second Minister of Finance, for properties which are being transacted via the transfer of equity interest (for entities which are holding onto residential properties), it shall be treated similarly to properties which go through a direct transaction.
The government’s intent is not to create any impact to the ordinary or usual selling and buying of shares in these entities (listed on SGX) by specific investors in the retail segment, however significant entity owners of residential PHEs (property-holding entities) will incur stamp duties at the similar to a direct property transaction when they transfer equity interest in these entities.
For the official release, please check http://app.mnd.gov.sg/Newsroom/News-Page/ID/2625/year/2017/RA1/RA2/RA3?category=Press%20Release