Heads up: Gov’t raises ABSD rates to manage property investment demand
The rates increased to 60% for foreigners whilst 65% for entities or trusts.
Singapore declared that it implemented an increase on the Additional Buyer’s Stamp Duty (ABSD) rates to mitigate the property investment demand.
In a statement, the government said the revised property market measure begins on 27 April 2023.
Specifically, the government increased ABSD rates from 17% to 20% for Singapore citizens (SCs) who will buy their second residential property.
It also raised the ABSD rate from 25% to 30% for SCs buying their third and subsequent residential property and Singapore permanent residents buying their second residential property.
The government also raised ABSD rate from 30% to 35% for SPRs purchasing their third and subsequent residential property.
It also raised ABSD rate from 30% to 60% for foreigners purchasing any residential property.
The ABSD rate also went up from 35% to 65% for entities or trusts purchasing any residential property, except for housing developers.
According to the government, the new ABSD rate increases will impact about 10% of residential property transactions.
The ABSD rates for SCs and SPRs purchasing their first residential property, which constitutes about 90% of residential property transactions based on 2022 data, will remain at 0% and 5% respectively.
For acquisitions made jointly by two or more parties of different profiles, the highest applicable ABSD rate will apply.
For married couples with at least one SC spouse, who jointly purchase a second residential property, they can continue to apply for a refund of ABSD, subject to conditions.
These conditions include selling their first residential property within six months after (a) the date of purchase of the second residential property if this is a completed property, or (b) the issue date of the Temporary Occupation Permit (TOP) or Certificate of Statutory Completion (CSC) of the second residential property, whichever is earlier, if the second property is not completed at the time of purchase.
Currently, the ABSD does not affect those buying an HDB flat or Executive Condominium unit from housing developers with an upfront remission, if any of the joint acquirers/purchasers is a SC. There will be no change to this policy.
The amended ABSD rates will apply to all residential properties acquired on or after 27 April 2023.
There will be a transitional provision, where the ABSD rates on or before 26 April 2023 will apply for cases that meet all the conditions below:
a. The Option to Purchase (OTP) was granted by sellers to potential buyers on or before 26 April 2023;
b. This OTP is exercised on or before 17 May 2023, or within the OTP validity period, whichever is earlier; and
c. This OTP has not been varied on or after 27 April 2023.
Correspondingly, the Additional Conveyance Duties for Buyers (ACDB), which applies to qualifying acquisitions of equity interest in property holding entities (PHEs)6 will be raised from up to 46% to up to 71%.
Property market measures
The government also explained that the cooling measures, which they implemented twice during December 2021 and September 2022, have had a moderating impact.
But in the early months of the year, property prices were accelerating again amidst resilient demand.
“Demand from locals purchasing homes for owner-occupation has been especially strong, and there has also been renewed interest from local and foreign investors in our residential property market,” read the statement.
“If left unchecked, prices could run ahead of economic fundamentals, with the risk of a sustained increase in prices relative to incomes,” it added.