Singapore Government has just announced the latest series of major cooling measures that the property experts expect some adjustment in the property prices, both in HDB and private property. So what are the measures?
If you register your purchase of property from 30 August 2010 onwards, the following rules apply to you. If you have purchased the property before this date, they are not applicable. However, you still need to take note as it will affect you when you subsequently sell your current or/and buy another new property.
1. If you want to buy a second property while still servicing an existing mortgage
a. You must pay 30% of the valuation, with at least 10% using cash, the rest from CPF.
b. You can only take a maximum loan of 70% of valuation.
Previously, the upfront payment was minimum 20%, including at least 5% in cash
Implication: This will curb speculation activities on the private property as you will need to own more cash and CPF before you are allowed to purchase another private property while still servicing an existing mortgage. However, HDB upgraders/downgraders are also affected if they are still servicing their existing mortgage.
However, HDB or private property upgraders/downgraders are also affected if they are still servicing their existing mortgage. The process will be more cumbersome and you will need to get your timing right. To avoid the stricter financing rules for your new home, you will need to sell your current house first and provide proof of the sale.
· For sellers of private property, the signed sale and purchase agreement for the house being sold, as well as a certificate from the Inland Revenue Authority of Singapore (IRAS) stating that the buyer of the house has paid the stamp duty.
· For sellers of HDB flats, an approval letter from the HDB within two weeks from the date of the first sales appointment.
2. If you are an HDB owner who wants to invest in private property
a. You must have lived in your HDB flat for at least 5 years before you can buy a private property.
Previously, there is no restriction.
Implication: You will need to think twice before upgrading/downgrading to another HDB flat if you have the intention to buy private property in the near future. You will have to wait a full 5 years before you are allowed to buy private property.
3. If you are a private property owner who wants a HDB resale flat
a. You must sell your private home within 6 months of buying the HDB flat.
Previously, there is no restriction.
Implication: If you are a HDB dweller and also own a private property for investment purpose, you will be required to sell your existing private property if you buy another HDB flat. So, if you want to keep your private property, do not move house.
And if you already own property overseas and now intend to purchase a HDB flat, you will need to sell your all your local and overseas private properties within 6 months. So probably it is better to stay in private property in order to keep your overseas property.
4. For all private property sellers,
a. Those who sell any private property within 3 years of buying it must pay stamp duty of up to 3% of the sale price. The stamp duty is staggered in the 3 years, with first year attracting full stamp duty, second year attracts 2/3 of the stamp duty and the third year attracts 1/3 of the stamp duty.
Previously, seller’s stamp duty applied only for resale within one year of purchase.
Implication: This is to curb speculation activities as any flipping of properties will reduce the profit substantially.
So who are not affected? The first-time buyers, and property owners with no outstanding mortgage will not subject to the new financing rules. They still pay 20% of the valuation as downpayment, including 5% in cash. And they can still take bank loans of up to 80% of valuation.