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.