Temporary Relief Measures for the Real Estate sector amidst COVID-19

With show flat previews, viewings and construction work ground to a halt amidst tight “Circuit Breaker” measures, the real estate market has begun to feel the tremors of the COVID-19 pandemic. On the 6th of May 2020, the MND released a statement on the provision of temporal relief measures tailored to the slowing real estate scene, for both private developers and even for individuals like yourselves. The objective behind these initiatives is to ensure that prices in the private housing sector remain congruent with economic and financial fundamentals. These measures do not superimpose on existing property market cooling measures. In this article, we will be providing you with a comprehensive breakdown of the various assistive measures made available, and how they might affect you!

Target Audience: Individuals

For individuals, the main relief measure provided concerns the Additional Buyer Stamp Duty (ABSD). For those who may not know, the ABSD is a statutory tax on every additional property purchased after the 1st property. ABSD is targeted at deterring flippant and exploitative purchase of properties which could disrupt market forces in the local market. Current ABSD rates are as seen below:

 

Prior to the COVID-19 relief measures, a Singaporean married couple intending to purchase a second marital property jointly has to first sell off their first marital home within a certain window period, to be eligible for the remission of the ABSD on the second property. In other words, if you are a married couple looking to shift into a new home, and want to avoid the ABSD charges, you must successfully complete a sale of your first property within a preset time period. Only then will you be eligible for the remission of the ABSD. These are the existing rules surrounding ABSD prior to COVID-19:

(i) 6 months after the date of purchase of the second property, if it is a completed property; or

(ii) 6 months after the issue date of the Temporary Occupation Permit (“TOP”) or Certificate of Statutory Completion (“CSC”), whichever is the earlier, if the second property was uncompleted at the time of purchase.

Unfortunately, due to poor market sentiments and a slowing economy, being able to source for a willing buyer for your first property within the grace period may prove to be more difficult than ever. As such, the MND has intervened with the provision of an additional 6 months on the specified sale timeline. This means that you now have exactly 12 months or a year to source for your new buyer. Do take note of the eligibility requirements for this initiative:

(i) The couple’s second residential property was jointly purchased on or before 1 June 2020; and

(ii) The original timeline for sale of the first residential property expired on or after 1 February 2020. 

Applications for the ABSD remissions have to be made within 6 months after the date of sale of the first residential property. For more information on this measure, do check out the IRAS website for more details.

Target Audience: Private Developers

  • Project Completion Period (PCP) for Residential, Commercial and Industrial Developments

With raw materials disrupted and most of the workers in the construction sector isolated in dormitories, the completion of all developmental projects within previously stipulated deadlines under the PCP are practically impossible. Prior to the pandemic, private developers are required to complete the projects by a certain deadline or be liable for taxation and fines. This ensures that there is reliability and trustworthiness in the real estate sector. However, due to current limitation and circumstances, the State has carved a leeway out for private developers. For qualifying residential, commercial and industrial developmental projects on government land sites or on land that was previously alienated/ lease renewed by the Singapore Land Authority (SLA), the PCP timeline will be extended for an additional 6 months. Qualifying eligibilities include:

(i) The land was awarded on or before 1 June 2020, or the land was directly alienated or had their lease renewed by SLA on or before 1 June 2020; and

(ii) The original timeline for the project to be completed was on or after 1 February 2020.

*eligible developers will be directly notified, no further applications are necessary

  • ABSD remissions

Under the ABSD scheme, private developers are required to commence and complete the construction of the residential development, as well as sell 100% of all its housing units within the respective projects within the specified timelines. Failure to complete any of the following during the timeline would result in liability of the ABSD on the purchase of the land. Under the temporal relief measure, these stipulated timelines will be extended by an additional 6 months. Eligibility depends on the following:

  • For extension of specified timeline for commencement of residential development (both requirements are to be met)

(i) The land was purchased on or before 1 June 2020; and

(ii) The original timeline for commencement of the residential development expired on or after 1 February 2020.

  • For extension of the specified timeline for completion of residential development and sale of all housing units in a residential development project (both requirements have to bet met)

(i) The land was purchased on or before 1 June 2020; and
(ii) The original timeline for completion of the residential development and sale of all housing units in the development expired on or after 1 February 2020
.

*eligible developers will be directly notified, no further applications are necessary

  • Qualifying Certificate (QC)

Under the QC scheme, private developers are required to adhere strictly to the rules included under the QC, which includes the completion of all construction works within 5 years from the date of issue of the QC or the collective sale order, and to dispose of all housing units within 2 years from the first issuance of the Temporary Occupation Permit (TOP) or Certificate of Statutory Completion (CSC). This ensures that private developers are kept within deadlines to ensure predictability and fulfilment of obligations to all stakeholders within contractual agreements. Under the new temporary relief measures, private developers can apply for 6 months deferments or be granted a waiver of extension charges for 6 months. Eligibility for this deferment/waivers are as follow:

(i) The QC or SLA approval requiring the completion and sale of all units in the residential development was issued on or before 1 June 2020; and

(ii) The original timeline for completion and sale of units in the residential development expired on or after 1 February 2020.

Eligible private developers seeking relief under these measures can write into SLA’s Land Dealings Approval Unit (LDAU) at SLA_LDU@sla.gov.sg by 1 December 2020 to apply.

Given the uncertainty of the evolving pandemic situation, the best strategy in this time offered by the Government would largely revolve around deferments and waivers. Check out our previous articles on what are some of the other measures you may be eligible for! As Singapore nosedives into a recession and future seem highly uncertain, let us all do our part to stay home and stay safe in the meantime. Just as our PM Lee Hsien Loong rallied, if there is any country that will emerge victorious from this, it is Singapore.

Clive Chng

Clive graduated on the Dean’s list from Nanyang Technological University with an Engineering degree. Prior to joining Redbrick, he not only served as a Project Manager for Keppel Shipyard where he oversaw multi-million dollar marine projects, but was also the Vice President for Keppel Young Leaders, focused on the development of future leaders. Being a fan of low-cost Index Funds, his passion in Investing and strong interest in understanding how financial markets shape economies ultimately fuelled his move from the field of engineering into the financial industry where his personality trait as a servant leader further allows him to service his clients effectively.
Clive Chng

Latest posts by Clive Chng (see all)