Developers may reassess bids for enbloc sites due to revised LBC rates: analyst
The revised rates is from 23 September 2022 to 28 February 2023.
Property analyst, Huttons, advised home developers to reevaluate their potential bids for enbloc sites after the government modified the land betterment charges (LBC) rates.
The Singapore Land Authority (SLA) implemented changes in LBC rates, which takes effect from 23 September 2022 to 28 February 2023.
Recently, en-bloc activities picked up strongly with eight residential and two commercial sites sold. This made non-landed development charge rates increase compared to the review in March.
Huttons said Sector 113 saw the biggest rise of 20% because of the sale of Lakeside Apartments, Park View Mansions and a government land sales programme site at Dairy Farm Walk.
Also, Huttons said Sector 93 and Sector 104 "saw adjustments as both sectors each saw two enbloc sites sold."
SLA is also modifying upwards the rate for remnant land from 1 September, which will affect en-bloc sites that are proposing to secure remnant land to increase gross floor area.
"From 1 September, all residential, commercial and industrial land where the sale would result in gross floor area transfer, the rate is doubled to 100%. The State is creaming off 100% of the land value," said Huttons.
Aside from this, there are revisions on how gross floor area is computed, such as aircon ledge being part of the gross floor area.
Which is why cost to developers may rise and "eat into the margins of developers."
"Developers may re-assess potential bids for enbloc sites. This may affect the success rate of some en-bloc sites," Huttons Asia warned.