A more nuanced, fairer property tax
February 26, 2010
SINGAPORE: From next year, if the flat or private property you live in and own has an annual value of S$65,000, you will pay up to S$240 less in property taxes.
The new progressive property tax system, announced on Monday to the surprise of many, will see owner-occupiers exempted from tax on the first S$6,000 of the annual value - that is, the estimated rent - of their homes.
The trade-off? The S$25-to-S$150 in GST rebates, which owners of properties with lower annual values have been enjoying since 1994, will be scrapped.
The more nuanced tax system for owner-occupied residential properties will benefit all Singaporeans except the ultra-rich - those living in properties with over S$77,000 annual value. They comprise only 0.4 per cent of all owner-occupied homes in Singapore, and only 3 per cent of private owner-occupied homes here, said Finance Minister Tharman Shanmugaratnam, who also noted that the change would cost the Government S$230 million initially.
Currently, all owner-occupied residences are taxed a flat rate of 4 per cent, while investment residential properties are taxed at 10 per cent.
This “does tax the wealthy more than others”, said Mr Shanmugaratnam, but there was “scope” for a more progressive system.
One reason for the rethink: HDB homes have been appreciating in value over the years, meaning a growing tax bill for flat-owners, and while rebates over the years - the latest being in January - have helped mitigate this increase, “we need a longer-term solution that provides a fair and balanced system for all property owners”, said the Finance Minister.
Homes with an annual value of about S$80,000, therefore, will see a tax increase of “slightly less than S$100″ a year.
“However, our property tax rates, even for the high-end, will remain lower than in most international cities,” Mr Shanmugaratnam stressed.
“That is as it should be, so that we remain a vibrant and attractive place for businesses and individuals alike.”
Binjai Park resident Mr Philip Goh, 61, said that as a retiree, “anything helps”. His semi-detached house’s annual value is about S$31,000, and he forked out S$1,250 in property tax last year.
The change in tax structure will have minimal impact on the property market, analysts believe, given the tiny minority that will be negatively affected.
Those likely to be taxed “slightly more” were the luxury properties priced above S$4 million in prime districts, said real estate lecturer Nicholas Mak of Ngee Ann Polytechnic. And as taxes for non-owner-occupied residential properties remain at 10 per cent, he added, there should be no impact on those who buy for investment.
Nonetheless, as annual values continue to go up, “the question is whether the Government will increase the upper limit of the annual value bracket where the property tax is 4 per cent”, said Mr Mak.
Does this signal that the Government might go further down the path of taxing the rich more, something it has argued against overdoing? NUS Business School Associate Professor Ho Yew Kee: “What the Government probably thinks is that the extremely asset-rich … have to carry a little bit of burden, and contribute a bit more. 0, 4, 6 per cent is trivial - if I have an S$8-million house, I’d pay S$2,000 more in property tax a year. It’s not a lot.”
Source: Channelnewsasia.com
Real estate developers to bring forward property launches
February 26, 2010
SINGAPORE : Singaporeans can look forward to more property launches. The Real Estate Developers’ Association of Singapore (REDAS) on Thursday announced that its members will be bringing forward property launches.
REDAS added that its efforts are only limited by the land available and hence the long-term solution to a stable market is still adequate supply.
The association celebrated the Lunar New Year, riding on an upbeat mood.
Joining in its Spring Festival was Finance Minister Tharman Shanmugaratnam, and the association shared with him its views on his recent Budget Statement.
Simon Cheong, president, Real Estate Developers’ Association of Singapore, said: “REDAS was hoping for more cash in our ang pows (red packets) from you, Minister. But when we opened the ang pow, we were disappointed there was not much inside for developers.
“Nonetheless, we are happy with your long-term productivity ang pow, as what is good for Singapore’s economy in the long run must also be good for the Singapore property market. It is what REDAS calls a deferred payment ang pow.”
REDAS said that its members are surprised with the speed with which Singapore’s property market has recovered. But they added that they are prepared to live with the current problems rather than the problems faced by the property market last year.
However, in the interest of a stable property market, REDAS said its members are committed to a fast-track supply to satisfy demand. This would also minimise excessive speculation in the property market.
Mr Cheong said: “Given the unexpected return of an active property market, developers over the next few months would also be actively bidding for more land to position for the future supply.
“As such, REDAS, unlike the situation in the preceding 12 months, is now looking forward to more sites in the confirmed list for developers to replenish their land bank.”
Just last week, the government introduced two more measures to cool the property market and pre-empt a bubble from forming in the private homes sector.
Source: channelnewsasia.com - Real estate developers to bring forward property launches
Measures to cool property market needed to avoid drastic measures
February 24, 2010
SINGAPORE : There may be no property bubble yet, but Prime Minister Lee Hsien Loong on Sunday said recent moves to curb speculation were necessary to avoid more drastic action later on.
Packed showrooms and fast-rising prices have become a concern for authorities, who introduced new measures on Friday to cool the property market before things got out of hand.
A Seller’s Stamp Duty is imposed on all residential properties sold within one year of purchase, while loans from financial institutions are capped at 80 per cent.
At a Lunar New Year dinner at Teck Ghee in his constituency of Ang Mo Kio, Mr Lee said that while the government cannot control property prices, it can ensure prices remain affordable.
Mr Lee said: “Please take good care of it. Do not think of selling it prematurely, or making a quick buck. Because if you sell it and you can’t find another house to stay or you do not have a nest egg for your old age, that is big trouble.”
Mr Lee said that one’s home is a long-term investment, whether as a buffer against old age, or to be passed on to one’s children or grandchildren.
But this brought him to another concern - that Singaporeans are not reproducing enough.
Mr Lee noted that Singapore’s low birth rate is a reflection of fundamental changes taking place across Asia.
The Total Fertility Rate fell to 1.23 last year - with the rate among Chinese Singaporeans even lower at 1.09.
In China for instance, some young adults even advertise for make-believe girlfriends and boyfriends to hold off family pressure over the Lunar New Year.
Mr Lee said: “It is amusing but it is also sad. I am relieved that I have not heard of any reports of boyfriends or girlfriends for rent in Singapore. I hope it does not happen. But I know that young people do feel some pressure.”
Mr Lee added that some social pressure may be useful, but it is family support that will give young Singaporeans a nudge in the right direction.
Source: Channelnewsasia.com
Home buyers still flock to showrooms despite new property measures
February 24, 2010
SINGAPORE: New measures kicked in on Saturday to curb speculation in the property market.
A Seller’s Stamp Duty will be imposed on all residential properties bought on Saturday and sold within one year, while housing loans from financial institutions will be capped at 80 percent of property value.
Are they taking the buzz out of the property market? Not yet - at least not for those who are buying for the long-term.
It was business as usual at one property showroom on Saturday, as a steady stream of visitors checked out the units available.
Sales of units at the Altez condominium - located just opposite Tanjong Pagar MRT station - are moving fast.
One woman in her 30s snapped up four units - two to stay in and two to rent out.
The condominium’s developer said they could still sell an entire floor of units within an hour.
Some home buyers said the reduction in the home loan limit did not make much of a difference.
Home buyer Raphael Tan said: “The banks have been very strict, anyway. So I think we will still be on track for our financing.”
And those who are buying for the long-term are not worried about the new Seller’s Stamp Duty.
Doris Chia, another home buyer, said: “Although it’s quite pricey now, I think this is a good location and for long-term investment.”
Analysts expect developers to launch more high-end properties in the first half of this year.
These properties typically sell at S$2,000 per square foot and attract buyers and investors who are less price-sensitive.
Donald Han, managing director of Cushman and Wakefield, said: “A lot of the high-end investors are typically not bound by any limitation. They don’t go for maximum loan-to-value ratio. In some cases, they just go for 40 to 50% of loan-to-value ratio. In some cases, they even buy on a cash basis.”
Analysts said the mood to buy won’t change much as the measures are meant to flush out speculators, who make up a small percentage of the market.
Meanwhile, Senior Minister of State for National Development Grace Fu said that now is the time to introduce measures to control the private property market.
She said the authorities have been studying the property market closely and that it is best to introduce the measures before the property bubble forms.
“We would think that it may deter speculative buying and we want our investors to basically be on the more solid ground when they invest in properties. It should not deter genuine buyers who have the financial resources to hold the property.”
Source: Channelnewsasia.com
Government announces 2 measures to cool property market
February 24, 2010
SINGAPORE: The Government has introduced two new measures to cool the property market and pre-empt a bubble from forming in the private homes sector. They come into effect Saturday.
The Ministry of National Development said this will help ensure a stable and sustainable property market, and to curtail the HDB resale market where prices tend to track private property movements.
From Saturday, it will be more difficult and expensive for speculators to own and flip properties. A Seller’s Stamp Duty will be imposed on all residential properties and residential land bought after Friday, and sold within one year from the date of purchase.
The housing loan limit will also be capped at 80 per cent - down from the current 90 per cent.
This new loan limit will apply to all housing loans granted by financial institutions for private homes, executive condominiums, HUDC flats and HDB flats, including those sold under the Design, Build and Sell Scheme. But loans granted by the Housing and Development Board (HDB) for flats, will still have a cap of 90 per cent.
Last September, the Government introduced anti-speculative measures to cool the private homes market. While these helped initially, there were signs the market was heating up again.
The new measures come as demand for private homes continues to soar. The number of units sold by developers in January was three times more than December. It was also the highest monthly total since September last year.
The Ministry said the objective of these measures is to discourage short-term speculative activity that could distort underlying prices. It is not targeted at the purchase of properties for owner occupation or longer term investment.
Market watchers said the measures are easiest to implement, without causing the market to come to a standstill.
Eugene Lim, associate director, ERA Asia Pacific said: “We are recovering. The economy is recovering and the market is picking up so what they want to do is to make sure the property market is moving up in tune together with the economy and not faster than the economic recovery.”
Analysts added that the prices and volume of private property homes are unlikely to be significantly impacted.
Donald Han, managing director, Cushman & Wakefield said: “It has got a fairly minimal impact to the market, mainly because a lot of investors from our records are buying for the medium term, at least for a period of two to three years.
“Some investors will probably stand by the sidelines and see how sales progress into February and March. It will take some wind out of the market; potentially it could be around 10-15 per cent in terms of the numbers of new home sales taken out of the equation.”
The Real Estate Developers’ Association of Singapore said the reduced mortgage cap is unlikely to have significant impact on genuine buyers and investors, as lending institutions have already been more prudent in the aftermath of the global financial crisis.
Source: Channelnewsasia.com