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.

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