24/02/2024
Summary real estated related matters for Budget 2024
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Key Announcements:
1) ABSD concession to extended to single Singaporean aged 55 and above, when โright-sizingโ to lower-value property
2) For residential developments that have sold at least 90 per cent of units within five years of the land acquisition, the ABSD clawback rate will be lowered.
3) Lower property tax bills for homeowners from 2025, with revised annual value bands
4) Families waiting for BTO can soon get voucher to rent flat in open market.
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Detailed Breakdown:
1) Single Seniors concession on ABSD
Single Senior Singapore citizens aged 55 and above to get the additional buyer's stamp duty (ABSD) refund to help them in right sizing their property. To qualify, these buyers will need to sell their first property within six months of purchasing a lower priced replacement private property.
โThe ABSD concession extended to single senior Singaporeans is timely, providing this group of Singaporeans another option to right size their properties, helping them to unlock some monies from their existing property that could support their retirement. The punitive 20% ABSD have previously deterred this group to look into the private property segment, restricting them to only HDB resale flats; but they will now have another housing alternative."
"However, for those who are unable to foot the 20% ABSD first will still have to sell their existing property before buying. For a $1.2 million property, the ABSD is $240,000 and this is payable within 14 days of exercising the Option to Purchase the private property."
2) Lower ABSD Clawback Rate for Developers if They Sell 90% of Units within 5 Years
Housing developers will have more flexibility with the ABSD clawback if they sell at least 90% of their units. Developers will pay the full 25% or 35% (depending on when the site is purchased) as long as there are unsold units. From 16 February 2024 onwards, the clawback rate will be reduced if they manage to sell at least 90% of units. This provides them with more flexibility while ensuring that the supply of units is released in a timely manner.
โThe recent GLS biddings drew more muted responses as developers are cautious amid the elevated interest rate environment and slower new home sales rates. By lowering the ABSD clawback based on the proportion of units sold, this will give developers some respite and confidence to continue to bid for upcoming GLS sites, allowing them more time to sell their balance units. Some of the larger units, due to their higher price quantum, typically take a longer time to sell. For a 700-unit development, 1% unsold units equals 7 units. But the ABSD savings could be pretty substantial. To illustrate, a $1 billion site that has 1% units unsold can now save up to $100 million.โ
3) 2025 Property Tax Relief: Enhanced Annual Value Band for Owner-Occupier Residential Properties
โOwner-occupier residential properties will pay lower property tax from 2025 with the higher annual value band. The earlier tax was meant to be a wealth tax, but with annual values rising amid the surge in rents, owner-occupier residential properties were impacted by a significant jump in their property tax. This move will be a relief for the majority of homeowners. For example, an OCR 3 bedroom private apartment with an annual value of $40,000 can enjoy a property tax saving of $360. This is a 24% reduction compared to 2024.โ
4) Families waiting for BTO can soon get voucher to rent flat in open market:
To help young couples who are ready to settle down, the Government will provide a voucher under the Parenthood Provisional Housing Scheme (PPHS) so that eligible families waiting for their Build-To-Order (BTO) units can rent a Housing Board flat on the open market. The voucher will be available for a year.
The PPHS provides interim rental housing to families with a monthly household income of $7,000 or below, and have an uncompleted flat from HDBโs sales exercises.
There are no details yet on the amount of the voucher and the mechanics of the scheme.
