New property cooling measures announced: ABSD is raised, LTV tightened

In a joint press release by the Ministry of Finance (MOF), Ministry of National Development (MND) and the Monetary Authority of Singapore (MAS), it has been announced today (5th July 2018) that the Additional Buyers Stamp Duty (ABSD) rates will be raised, and that Loan-to-Value (LTV) limits will be tightened. This is part of an effort to “cool the property market and keep prices in line with economic fundamentals”.

Additional Buyers Stamp Duty (ABSD)

ABSD rates will be raised by 5% for Singapore citizens and permanent residents buying second and subsequent homes, and 10% for entities. The changes are illustrated in the table below:

CategoryPropertiesRates on or before 5 July 2018Rates on or after 6 July 2018 (Revised)
Singapore Citizen1st residential property0%0% (no change)
2nd residential property7%12%
3rd and subsequent residential property10%15%
Singapore Permanent Resident1st residential property5%5% (no change)
2nd and subsequent residential property10%15%
ForeignersAny residential property15%20%
EntitiesAny residential property15%25% (Additional 5% for developers)

Developers will be subjected to an additional 5% ABSD, on top of the 25% ABSD that all entities have to pay. Unlike the 25% ABSD, the 5% ABSD cannot be remitted, and the developer must pay this upfront upon the purchase of residential property.

Homebuyers currently in the process of a property transaction need not worry unduly. The current ABSD rates will apply instead of the revised ABSD rates as long as the seller has granted the homebuyer an Option to Purchase (OTP) on or before 5th July 2018, and no amendments have been made to the OTP on or after 6 July 2018. However, the homebuyer must exercise the OTP on or before 26th July 2018 or the OTP validity period, whichever is earlier.

 Loan-to-Value

All housing loans granted by financial institutions will henceforth have a 5% lower LTV limit. HDB loans are not affected by this revision. The adjustments are presented in the table below:

Individual Borrowers
LTV Limit (Existing Rules)LTV Limit (Revised Rules)
1st Housing Loan80%, or 60% if loan tenure is more than 30 years (25 years for HDB) or extends past age 6575%, or 55% if loan tenure is more than 30 years (25 years for HDB) or extends past age 65
2nd Housing Loan50%, or 30% if loan tenure is more than 30 years (25 years for HDB) or extends past age 6545%, or 25% if loan tenure is more than 30 years (25 years for HDB) or extends past age 65
From 3rd Housing Loan40%, or 20% if loan tenure is more than 30 years (25 years for HDB) or extends past age 6535%, or 15% if loan tenure is more than 30 years (25 years for HDB) or extends past age 65
                                                     Non-Individual Borrowers
LTV Limit (Existing Rules)LTV Limit (Revised Rules)
All Housing Loans20%15%

The revised LTV limits will apply to loans for residential property purchases where the OTP is granted on or after 6th July 2018.

Mortgage equity Withdrawal Loans (MWLs) will also face a similar tightening of LTV limit:

LTV Limit (Existing Rules)LTV Limit (Revised Rules)
Borrower with no outstanding housing loan80%75%
Borrower with an outstanding housing loan60%45%

The revised LTV limits will similarly apply to MWL applications made on or after 6th July 2018. For the refinancing of MWLs applied before 6th July 2018, the current LTV limits will still apply.