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The Singapore property market has gone through an illustrious cycle and seen through its fair share of troughs, recovery, peaks and recession. The government has learnt from history and have started introducing a string of cooling measures since 2009. As a matter of fact many other measures have been constantly been put in place by the government even before 2009 but in recent times these measures have started making an impact on the industrious Singapore property market.

Following is a brief description of the latest measures since 2011 that has made an impact so far:

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MAS Introduces Total Debt Servicing Ratio (TDSR) framework for Property Loans w.e.f. from 29 June 2013

The Monetary Authority of Singapore (MAS) have introduced a Total Debt Servicing Ratio (TDSR) framework for all property loans granted by financial institutions to individuals.

A standardised set of guidelines to assess property buyers’ ability to borrow. This will require financial institutions to take into consideration borrowers’ other outstanding debt obligations when granting property loans. His total monthly repayments of his debt obligations should not exceed 60 per cent of his gross monthly income. The TDSR will apply to loans for the purchase of all types of property, loans secured on property and the re-financing of all such loans.

MAS will also refine rules related to the application of the existing Loan-to-Value (LTV) limits on housing loans. These refinements seek to ensure the effectiveness of the LTV limits that were put in place to cool investment demand in the housing market. In particular, they aim to prevent circumvention of the tighter LTV limits on second and subsequent housing loans.

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In particular, MAS will require:

  • borrowers named on a property loan to be the mortgagors of the residential property for which the loan is taken;
  • “guarantors” who are standing guarantee for borrowers otherwise assessed by the financial institutions at the point of application for the housing loan not to meet the TDSR threshold for a property loan to be brought in as co-borrowers; and
  • in the case of joint borrowers, that financial institutions use the income-weighted average age of borrowers when applying the rules on loan tenure

12 January 2013

Additional Buyer’s Stamp Duty (ABSD)

Cooling Measures for the Residential Property Market

The following measures will take effect on 12 January 2013:

  • Additional Buyer’s Stamp Duty (ABSD) rates will be:
  • Raised between five and seven percentage points across the board.
  • Imposed on Permanent Residents (PRs) purchasing their first residential property and on Singaporeans purchasing their second residential property.
  • Loan-to-Value limits on housing loans granted by financial institutions will be tightened for individuals who already have at least one outstanding loan, as well as to non-individuals such as companies.
  • Besides tighter Loan-to-Value limits, the minimum cash down payment for individuals applying for a second or subsequent housing loan will also be raised from 10% to 25%.
  • For corporate Entities, revised from 40% to 20%

Cooling Measures Specific to Public Housing

  • Tighter eligibility for loans to buy HDB flats:
  • MAS will cap the Mortgage Servicing Ratio (MSR) for housing loans granted by financial institutions at 30% of a borrower’s gross monthly income.
  • For loans granted by HDB, the cap on the MSR will be lowered from 40% to 35%.
  • PRs who own a HDB flat will be disallowed from subletting their whole flat.
  • PRs who own a HDB flat must sell their flat within six months of purchasing a private residential property in Singapore.
  • An additional measure will take effect on 1 July 2013 to tighten the terms for granting HDB loans and the use of CPF funds for the purchase of HDB flats with remaining leases of less than 60 years.

Cooling Measures for Executive Condominium Developments

  • The maximum strata floor area of new EC units will be capped at 160 square metres (about 1722sqft)
  • Sales of new dual-key EC units will be restricted to multi-generational families only.
  • Developers of future EC sale sites from the Government Land Sales programme will only be allowed to launch units for sale 15 months from the date of award of the sites or after the physical completion of foundation works, whichever is earlier.
  • Private enclosed spaces and private roof terraces will be treated as gross floor area (GFA). The GFA of such spaces in non-landed residential developments, including ECs, will be counted as part of the ‘bonus’ GFA of a residential development and subject to payment of charges. This is in line with the treatment of balconies under URA’s current guidelines.

Cooling Measure for the Industrial Property Market: Seller’s Stamp Duty

The following SSD rates will be imposed on industrial properties and land bought and sold within three years of the date of purchase:

  • SSD at 15% if the property is sold in the first year of purchase, i.e. the property is held for one year or less from the date of purchase
  • SSD at 10% if the property is sold in the second year of purchase, i.e. the property is held for more than one year and up to two years from the date of purchase.
  • SSD at 5% if the property is sold in the third year of purchase, i.e. the property is held for more than two years and up to three years from the date of purchase.

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6 October 2012

MAS Restricts Loan Tenure for Residential Properties

  • The maximum tenure of all new residential property loans will be capped at 35 years
  • Loans exceeding 30 years tenure will face significantly tighter loan-to-value (LTV) limits. This will apply to both private properties and HDB flats.

New rules on loan tenure

  • The new MAS rules impose an absolute limit of 35 years on the tenure of all loans for residential property. This will apply to loans to both individual and non-individual borrowers, as well as refinancing loans1, from 6 October 2012.2
  • In addition, MAS will lower the LTV ratio for new residential property loans to borrowers who are individuals, if:
  • the tenure exceeds 30 years; or
  • the loan period extends beyond the retirement age of 65 years
  • For these loans, the LTV limit will be:
  • 40% for a borrower with one or more outstanding residential property loans3; and
  • 60% for a borrower with no outstanding residential property loan.
  • MAS will also lower the LTV ratio for residential property loans to non-individual borrowers from 50% to 40%.

8 December 2011

  • Foreigners and non-individuals (corporate entities) buying any residential property will pay an ABSD ( Additional Buyer’s Stamp Duty ) of 10%
  • Permanent Residents (PRs) owning one and buying the second and subsequent residential property will pay an ABSD ( Additional Buyer’s Stamp Duty ) of 3%; and
  • Singapore Citizens (Singaporeans) owning two and buying the third and subsequent residential property will pay an ABSD (Additional Buyer’s Stamp Duty) of 3%.

Foreigners under Free Trade Agreements (FTAs)

Foreigners of certain nationalities who fall within the scope of the respective FTAs will be accorded with the same treatment as Singapore Citizens.

Nationals of:-

  • United States of America
  • Switzerland
  • Liechtenstein
  • Norway
  • Iceland

Such buyers are required to submit an application for remission so as to enjoy the same treatment as Singapore Citizens.

14 January 2011

  • Increase the holding period for imposition of Seller’s Stamp Duty (SSD) from the current three years to four years.
  • Raise the SSD (seller stamp duty) rates to 16%, 12%, 8% and 4% of consideration for residential properties which are bought on or after 14 January 2011, and are sold in the first, second, third and fourth year of purchase respectively.
  • Lower the Loan-To-Value (LTV) limit to 50% on housing loans granted by financial institutions regulated by MAS for property purchasers who are not individuals.
  • Lower the LTV limit on housing loans granted by financial institutions regulated by MAS from 70% to 60% for property purchasers who are individuals with one or more outstanding housing loans at the time of the new housing purchase.