Experts Share Their Property Wishlists for Budget 2020

All eyes will be on Finance Minister Heng Swee Keat as he prepares to unveil Budget 2020 on 18 Feb.

This year, in particular, Singapore’s economy is expected to take a drastic hit primarily because of the coronavirus outbreak and subdued global economy.

Prime Minister Lee Hsien Loong has previously said that this year’s budget will be "suitable to economy needs", while Minister for National Development Lawrence Wong has said the budget will have a strong package that will help to reduce economic fallout.

But what about the property sector?

While the government has recently announced that publicly-listed developers can apply to be exempted from the Qualifying Certificate (QC) scheme, developers are still concerned over the Additional Buyers Stamp Duty (ABSD) penalty, which is seen as more onerous.

With that, we spoke to several experts to share their opinions and wishes for Budget 2020, here’s what they had to say:

"We hope the government can consider to tax developers on unsold units after 5 years instead of the full ABSD and allow developers to pay extension cost for every year extended but subject to a max extension of two years after which the full ABSD is payable.

For individuals subjected to ABSD, we hope the government can allow HDB upgraders full exemption from ABSD if they are buying a private property for their own stay, or upfront remission of ABSD with the proviso that they sell their HDB flat within six months of Temporary Occupation Permit (TOP) for the private property.

Lastly, while there is still some time left before the older HDB flats reach their 70 years lease, we hope that the government can release details of what people can expect from Voluntary Early Redevelopment Scheme (VERS)."

"With the current global outlook, including the spread of coronavirus, I think the government will consider calibrating a couple of policies for this year’s budget:

1. Extending the 5-year timeframe for developers to dispose of all their units before ABSD kicks in
2. A Singaporean-centric approach of removing stamp duty for the purchase of second home, so that the ABSD is only applicable from the third home onwards
3. Further calibration of the ABSD for Singapore Permanent Residents (SPRs) and foreigners by bringing down the current ABSD rates.”

"Currently, property developers have to pay a 25% ABSD on their land cost (in addition to a non-remissible 5%) unless they manage to sell all the units in their projects within 5 years.

This policy is likely to have the unintended effect of pushing all developers to exhaust their inventory at around the same time, and could possibly create a repeat of the 2017-2018 ‘land grab’ situation in four to five years’ time.

I am hoping that the government will recalibrate the ABSD requirement for developers by taking into consideration the size of the development and possibly extending it from 5 to 7 years for those developments that consist of more than 500 units. It would be timely for the government to carry out such a policy review given the looming COVID-19 affecting the real estate market."

"The property cooling measures had a more adverse impact on the private resale market. Demand for resale homes slipped significantly since the implementation of the cooling measures while the price gap between resale and new condominiums had continued to widen in recent months.

Given the macroeconomic uncertainties and rising supply of new homes, some owners are facing difficulty selling their units.

Currently, property sellers are required to pay a property tax if they were to sell the unit within a three-year holding period.

Perhaps the authorities could review the Seller’s Stamp Duty (SSD) to provide homeowners more flexibility to ease their cash flow. Other safeguards like the Total Debt Servicing Ratio (TDSR) and ABSD are already in place to instil financial prudence in a property purchase."

“It is widely expected that the government will announce a ‘strong’ economic package as part of its national budget to mitigate the economic fallout from the COVID-19 outbreak.

Given this virus outbreak is likely to have a much wider and deeper impact than SARS, we wish for a more substantial relief package than the one offered for SARS. In particular, we hope for the following for hospitality and retail property sectors which have been most affected.

Measures rolled out in 2003 that could be further enhanced:

1. Additional property tax rebates for commercial property: there was an additional rebate of $2,000 plus 10% of the balance property tax payable in 2003. This should include commercial buildings made up mainly by shops, restaurants and hotels. Landlords should pass these savings to their tenants.

2. Higher property tax rebates for hotels. As they are badly affected, gazetted tourist hotels were given a higher additional rebate of $2,000 plus 30% of the balance property tax payable in 2003."

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