Wednesday, January 10, 2018
There are a few major residential property cooling measures that has affected the local property market the most in the past few years.
The Singapore Government relaxed the Seller Stamp Duty regulations on 11th March 2017. Properties bought after the date of 11/03/2017 will adhere to the new regulations which lowered the length that the stamp duty is in effect from 4 years to 3 years.
In addition to that, the payable seller stamp duty is adjusted to 12%, 8% and 4% if the property is sold within its first year, second year and third year respectively.
HDB Cooling Measures
The HDB sales process changed excessively for both sellers and buyers on March 2014. In the present times, valuation requests are solely accepted after a price is agreed upon by both parties and an OTP is exchanged. Earlier, a valuation was obtained before deciding on a price to sell.
Using the updated version of the HDB OTP, the option period will also increase from the previous 14 days to a longer period of 21 days. Valuation requests can only be made by the buyer and must be done within one day from the date of the OTP. Each valuation report is unique to the OTP. It cannot be transferred or reused after the option period lapses. If there are any changes made to the OTP or price, a new valuation report has to be made. The valuation report will take around 5-10 working days to process from the date of request.
Three brand new measures were introduced to the EC property sector in December 2013.
The first change lowers the cancellation fees of EC purchases from the original 20% to 5%.
The second change was the introduction of a resale levy for 2nd-timers who are applying directly from the EC developer and had already enjoyed a Government subsidy through the BTO process.
As per the third measure, purchasers who buy executive condos direct from the developer and who are taking a loan from financial institutions will have a Mortgage-Servicing-Ratio (MSR) for EC cap of 30%.
There were mainly three major property cooling measures in Singapore that were enforced by the Government in August 2013.
As per the first ruling,Singapore Permanent Resident households are only allowed to purchase a resale HDB flat three years from the date after they achieve their permanent residency status.
According to the second ruling, the maximum term for housing loans for HDB is 25 years. This is lowered from the previous ruling of 30 years. The Mortgage Servicing Ratio (MSR) limit has also been scaled down to 30%of the borrower’s gross monthly income, from the previous 35%.
Also, the new maximum term for housing loans has been modified. The new tenure financial institutions can grant for new housing loans and re-financing facilities for buyers of HDB flats (this includes DBSS flats) is now 30 years. It is reduced from 35 years from earlier rulings.
Loans that have been granted with tenure of more than 25 years and up to 30 years are open to tighter Loan-To-Value limits.
There were two brand new Singapore property rules that were put in place by the Government in June 2013. The first rule was a ruling that was associated with the Total Debt Servicing Ratio (TDSR).It states that it is compulsory for financial institutions to take into consideration the current debt obligations of their borrowers in the event of granting property loans.
They need to make sure that the total monthly amount their borrowers have to repay on their debt obligations is equal or less than 60% of their gross monthly income.
Singapore Property Loan Rules Change
As per the second ruling, the Monetary Authority of Singapore (MAS) required debtors, whose names have been declared on their property loans, to be the ones to mortgage their residential property for the property loan which they have been granted.
“Guarantors” act as standing guarantees for borrowers and are otherwise assessed by financial institutions during a housing loan application. They are not to fulfill the TDSR threshold for the loan that is to be introduced as co-borrowers. In this event of joint-borrowing, financial institutions are required to rely on the income-weighted average age of the borrowers while they apply the terms & conditions of the length of the loan.
Four new measures were put into action in January 2013.
The first ruling was associated with the Additional Buyer’s Stamp Duty (ABSD) on residential property. It mainly states that Singapore residents are now needed a fee of 7/10% (previously 0/3%) of the purchase price on their second or third property. Permanent Residents now require paying a fee of 5/10% of the purchase price on their first or second property. Foreigners and non-individuals are required to pay 15%.
The Loan-To-Value (LTV) for loans granted to Singapore citizens or PRs on their second or third property has also been re-designed. It is now reduced from 60% to 50/40%.Just like the same way, the newly established Loan-To-Value for non-individuals is 20%, down from 40%.
The new cap for the Mortgage Servicing Ratio (MSR) on housing loans for HDBs is 35% of gross monthly income; fell from the previous cap of 40%. The new MSR cap on loans provided by financial institutions is 30%.
Also, Permanent Residents (PRs) are currently not able to make use of their entire HDB flat for rental purposes.
The Government introduced three new measures in October 2012. The new cap on the period of mortgages is currently 35 years. Loans with a tenure of more than 30 years or those that last longer than the borrower’s retiring age of 65 years, their Loan-To-Value is now reduced to 60% on their first mortgage. For their second and successive mortgages, the Loan-To-Value is 40%. The Loan-To-Value has also been lowered to 40% for non-individuals.
In December 2011, a couple of new policies were implemented. This was at the time when the Additional Buyer’s Stamp Duty (ABSD) was first enforced.
The ruling needs foreigners and non-individuals to pay a fee of 10% on the purchase of their property; Permanent Residents (PRs) to pay 3% on their second or successive properties. Also, Singapore citizens were required a fee of 3% when purchasing their third or successive properties.
The Additional Buyer’s Stamp Duty ruling also impacted developers.
Their ABSD fee would not be considered if they buy residential units exceeding 4 units and must also include plans to establish these units for residential purposes and selling. Also, they must provide evidence of these plans in the next 5 years.
Four Singapore property cooling measures were implemented in January 2011. Firstly, the holding period for imposing the Seller’s Stamp Duty (SSD) has been reset. The period is now extended to 4 years, from the previous length of 3 years.
The SSD rates have also been increased to 16%, 12%, 8% and 4% of consideration.
Secondly, the Loan-To-Value (LTV) for buyers buying second property in Singapore has been cut down from 70% to 60%. A new cap on the Loan-To-Value for non-individuals buying residential units has also been introduced; the cap is set at 50%.
ThreeSingapore cooling measures were introduced by the Government in August 2010.
The first measure was all about the holding period for imposing the Seller’s Stamp Duty (SSD). The holding period has been extended from 1 year to 3 years. As stated before, this measure was modified later on in January 2011, where the holding period was further increased to 4 years.
The new ruling also needed the minimum cash payments of property purchasers with one or more outstanding housing loans to be increased from 5% to 10%. The Loan-To-Value was also lowered from 80% to 70% for buyers of their second property.
The Seller’s Stamp Duty (SSD) was first implemented and it applied to all residential property and land which were sold within a year of the sale transaction in February 2010.
The Loan-To-Value was also cut down from 90% to 80%, this ruling was applicable to all housing loans with the exception of loans on HDBs.
In September 2009, the scheme that absorbs interest for installments soar to the TOP and for interests as well. This event brought about a change in the rules for buying condo in Singapore.