Property Cooling Measures from 14 January 2011

Singa­pore Gov­ern­ment has announced anoth­er round of major cool­ing meas­ures that has sur­prised many includ­ing the experts in the field. The main reas­on is that the last cool­ing meas­ures were just imple­men­ted less than 5 months ago on 30 August 2010.

If you register your pur­chase of prop­erty from 14 Janu­ary 2011 onwards, the fol­low­ing rules apply to you. If you have pur­chased the prop­erty before this date, they are not applic­able. How­ever, do also take note of those meas­ures that were intro­duced on 30 August 2010 if you bought your prop­erty on or after this date.

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Owner-Occupier’s Progressive Tax Rate

With effect from 1 Jan 2011, the cur­rent sys­tem of flat 4% prop­ert tax rate for all own­er-occu­pied res­id­en­tial prop­er­ties will be changed to pro­gress­ive prop­erty tax rate on the Annu­al Val­ues (AV).

Annu­al Value> Tax Rate>
First $6,000> 0%>
Next $59,000> 4%>
Amount exceed­ing $65,000> 6%>

This implies that all HDB flat own­ers will pay lower taxes since the first $6,000 of the Annu­al Value is tax-free. Own­ers of prop­er­ties with AVs of more that $77,000 will see a small increase in tax pay­able.

The Council for Estate Agencies (CEA) launched!

The Coun­cil for Estate Agen­cies (CEA) is a new stat­utory board estab­lished under the Estate Agents Act 2010. It com­mences its oper­a­tions on 22 Octo­ber 2010. CEA’s role is to raise pro­fes­sion­al­ism in the real estate agency industry and pro­tect con­sumer interest.

New reg­u­lat­ory frame­work is also set up to to enhance licens­ing con­di­tions for estate agents, regis­tra­tion of sales­per­sons, reg­u­la­tion on the con­duct of estate agency work, mech­an­isms for dis­cip­line and dis­pute res­ol­u­tion, and pub­lic edu­ca­tion. The imme­di­ate focus for CEA is to pre­pare the estate agents and sales­per­sons to meet the high­er stand­ards of the enhanced licens­ing and new regis­tra­tion frame­work.

To ensure high stand­ards, there will be a code of con­duct, eth­ics and prac­tice which the Coun­cil will issue for estate agents and sales­per­sons to fol­low.  The CEA will invest­ig­ate com­plaints and take firm action against errant estate agents and sales­per­sons.

From 2011 onwards, CEA can sub­ject errant estate agents and sales­per­sons to dis­cip­lin­ary action, with poten­tial pen­al­ties such as warn­ings, fines, sus­pen­sion or revoc­a­tion.  Court pro­sec­u­tion may also be under­taken for ser­i­ous cases.

In addi­tion, CEA will also be devel­op­ing a pub­lic edu­ca­tion cam­paign to edu­cate con­sumers on their respons­ib­il­it­ies, rights and expect­a­tions in a prop­erty trans­ac­tion.

This is really good news to most of us since this industry has been unreg­u­lated for too long. CEA now can be our single point of con­tact for any com­plaints against the unscru­pu­lous tac­tics used by errant agents.

You may find more inform­a­tion on CEA at www.cea.gov.sg

Source : The Straits Times, 22 Octo­ber 2010

Property Cooling Measures from 30 August 2010

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.