Recent Adjustments to Additional Buyer’s Stamp Duty (ABSD) Rates
To keep price hikes in line with economic fundamentals in Singapore, the government recently announced adjustments to the Additional Buyer’s Stamp Duty (ABSD) rates and Loan to Value (LTV) limits on residential property purchases.
According to reports, private residential property prices began rising in the third quarter of 2017 following a decline in the last four years.
Prices have apparently risen by about 9.1 per cent while the demand for private residential property has also witnessed a strong recovery. Transaction volumes also continue to increase.
With rising interest rates and the strong pipeline of housing supply, there are concerns that if the sharp increase was left unchecked, it could well run ahead of economic fundamentals and raise the risk of a destabilising correction later.
In view of all these concerns, the government had therefore decided to raise the ABSD rates and also tighten LTV limits for residential property purchases.
As for entities, the ABSD rates will be increased by 10 per cent-points, while an additional ABSD of five per cent will be introduced that is non-remittable under the Remission Rules 1. This is payable on the purchase price or market value for developers purchasing residential properties for housing development.
The current ABSD rates for all Singapore citizens (SC) and Singapore permanent residents (SPR) who purchase their first residential property will be retained at 0 and five per cent respectively.
The highest applicable ABSD rates will be imposed on purchases made jointly by two or more parties of different profiles.
The good news is that remissions will be given for joint purchases of the first residential property by married couples with at least one SC spouse.
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. This is as long as they sell their first residential property within six months after the date of purchase of the second residential property or the issue date of the Temporary Occupation Permit (TOP) or Certificate of Statutory Completion (CSC) of the second residential property – whichever is earlier.
For cases where an Option of Purchase (OTP) has been given by sellers to potential buyers on or before July 5, 2018, there will be a transitional provision. This OTP must not be varied on or after July 6, 2018 and for such cases, the current ABSD rates will apply. This is so long as the OTP is exercised within three weeks of this announcement or the OTP validity period – or whichever is earlier.
Summary Table: Adjustments to ABSD Rates for Residential Property
| Rates on or before 5 Jul 2018 | Rates on or after 6 Jul 2018 | |
| SCs buying first residential property | 0% | 0% (No change) |
| SCs buying second residential property | 7% | 12% (Revised) |
| SCs buying third and subsequent residential property | 10% | 15% (Revised) |
| SPRs buying first residential property | 5% | 5% (No change) |
| SPRs buying second and subsequent residential property | 10% | 15% (Revised) |
| Foreigners buying any residential property | 15% | 20% (Revised) |
| Entities buying any residential property | 15% | 25% (Revised)# |
| Plus additional 5% for developers^ (New, non-remittable)* |
# As entities, developers will also be subject to the ABSD rate of 25% for entities. Developers may apply for remission of this 25% ABSD, subject to conditions (including completing and selling all units within the prescribed periods of 3 years or 5 years for non-licensed and licensed developers respectively). Details are provided under the Stamp Duties (Non-licensed Housing Developers) (Remission of ABSD) Rules and the Stamp Duties (Housing Developers) (Remission of ABSD) Rules.
^ Developers refer to entities which engage in the business of construction and sale of housing units.
* This new 5% ABSD for developers is in addition to the 25% ABSD for all entities. This 5% ABSD will not be remitted, and is to be paid upfront upon purchase of residential property.
