The entire market was taken aback by the sudden new cooling measures of the Government. However, that is seen as a necessary step to avoid a huge plunge in the country’s economy.
New Additional Buyer’s Stamp Duty (ABSD) Rates
Before the cooling measures, the natives were required to pay nothing as ABSD for their first residential property, 7% for the second property and 10% for all subsequent purchases.
After the cooling measures, they are still required to pay nothing for the first property, but 12% for the second property and 15% for all subsequent properties purchased.
The Permanent Residents (PRs) on the other hand, were required to pay 5% for their first property and 10% for their subsequent purchases.
After the cooling measures, they are required to pay the same 5% for their first property, but 15% for the subsequent purchases.
For foreign homebuyers, it increased from 15% to 20% and for entities, it increased from 15% to 25%.
The Developers, on the other hand, incurred an additional 5% ABSD apart from the 25% refundable deposit.
Loan-To-Value Limit (LTV Limit)
Unlike ABSD, the LTV Limit, which applies common to all buyers, fell from 80% to 75% for the first-time buyers. For their second purchase, the previous 50% limit fell to 45%. While for the third purchase, it fell from 40% to 35%.
These limits are still lower for loans periods up to 30 years. It is also lower for purchasers turn 65 years during the loan period.
Both the revised ABSD and LTV Limit contributed to the dampening of the once hot En Bloc market.
However, Agents, Developers, Investors and Owners are still working out different strategies for the success of En Bloc sales.
Such initiatives include Marketing Agents requesting URA for change of use, Owners lowering asking price etc.
Several En Bloc sites have especially applied for change of use to Serviced Apartments, to keep in line with the consistently growing hospitality industry, enabling the success of En Bloc in the process.
High Jump Hurdles
Next to the long jump cooling measures, URA has issued fresh guidelines on the maximum number of dwelling units (DUs) for non-landed residential developments.
These new guidelines would come into effect from 17th January 2019, after about seven years of the previous circular. These are some additional high jump hurdles that the developers would need to overcome in the coming days.
Firstly, the maximum number of dwelling units (DUs) has been reduced. The new formula GFA/85 sqm has been introduced for determining the number of units.
Due to this, around 18% less units are likely to be built by the developers in the redevelopments outside Core Central Region (CCR).
These maximum number of DUs is further reduced to GFA/100 sqm for nine areas namely – Telok Kurau-Jalan Eunos, Marine Parade, Stevens-Chancery, Joo Chiat-Mountbatten, Balestier, West side-Pasir Panjang, East-side Kovan-How Sun, Shelford and Loyang.
The other guidelines include the first of a kind bonus 1% GFA for indoor entertainments and introduction of 1.5 meters minimum width for balconies.
These are in line with URA’s vision to encourage multigenerational living, to ensure standard livelihood and to reduce the strain on the existing infrastructure.
While the Homebuyers stand to benefit from these measures, the En Bloc Owners, Investors and Developers would need to bear the brunt of this exercise.