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.
1. If you want to buy a second property while still servicing an existing mortgage
a) You must pay 40% of the valuation, with at least 10% using cash, the rest from CPF
b) You can only take a maximum loan of 60% of valuation.
Previously, the upfront payment was minimum 30%, including at least 10% 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.
2. If you are a seller of private residential property within 4 years of purchase,
a) the Seller’s Stamp Duty (SSD) is raised to as high as 16% as indicated below
|Year of Purchase||Seller’s Stamp Duty|
Previously, the SSD was only for 3 years and the stamp duty was 3%, 2% and 1% respectively.
Implication: This measure will present a strong instant disincentive for speculative investors looking to make short term gains. The impact of the SSD is especially significant as it is payable regardless whether the property is eventually sold at a gain or loss. This measure will most adversely affect those looking to make a quick buck on “flipping” a property.
3. If you are not individuals (i.e. corporations, trusts and collective investment schemes etc),
a) The Loan-To-Value (LTV) limit is lowered to 50% on housing loans granted by financial institutions regulated by MAS for property purchases.
Previously, you must pay 20% upfront and borrow 80% if it is the first housing purchase. If you have an outstanding housing loan, you must pay at least 30% upfront and borrow 70% of the purchase price.
Implication: This will prevent individual from registering a company to make the property purchase in order to get the higher loan amount.
You may refer to the official announcement at http://www.mnd.gov.sg/newsroom/newsreleases/2011/news13012011.htm