The Ministry of National Development (MND) recently announced changes to the Additional Buyer’s Stamp Duty (ABSD) regime for licensed housing developers. The revisions will take effect on March 6.
The ABSD remission timeline for developers undertaking complex projects will also be extended from six to 12 months. This move is intended to incentivize developers to undertake urban transformation developments, optimize land use, rejuvenate older estates, and adopt new construction technologies.
The six to 12-month extension will apply to projects such as en bloc redevelopments that will yield at least 700 units upon completion and have at least 1.5 times the number of homes of the existing development. Other projects eligible for the extension include those with complex technical or instructional requirements, such as those integrated with major public transport facilities.
Additionally, projects approved under the Strategic Development Incentive (SDI) scheme and those aiming to achieve higher productivity targets through the adoption of new construction technologies, methodologies, or practices will also receive the extension. If a project meets the criteria in more than one category, it will be granted a one-year extension. These changes will apply to all residential land acquired on or after March 6.
Currently, licensed housing developers purchasing residential redevelopment sites are subject to an upfront 5% ABSD, which is non-remittable, and another 35% ABSD, which is remittable when all units in the project are completed and sold within five years.
The latest revisions build upon changes announced in February last year, which offered a lower clawback rate for residential developments with at least 90% of units sold.
CEO of PropNex Realty Ismail Gafoor says, “Such extensions will give developers more flexibility and may help to mitigate development risks to some extent, as they have more time to sell units, particularly for mega projects.”
Senior Director of Data Analytics at Huttons Asia Lee Sze Teck believes that the ABSD revisions will provide a much-needed boost to the en bloc market, especially for bigger projects. However, Christine Sun, Chief Researcher and Strategist at OrangeTee Group, notes that developers may still face challenges despite the deadline extension, as other factors, such as buyer and seller negotiations, can affect the success of en bloc sales.
Meanwhile, Tay Liam Hiap, Managing Director of Capital Markets and Investment Sales at ERA, points out that the extension could benefit older projects with expansive land areas, such as Braddell View and Pine Grove. These projects may yield around 2,000 new homes, which could take more time to sell. However, he also warns that the six to 12-month extension may not be sufficient for developers to sell out these projects.
Overall, the policy change is expected to have a positive impact on the en bloc market. However, Gafoor suggests that developers may remain cautious due to the high cost of redevelopment, upcoming private housing supply, and potential policy risks.