Publicly-listed companies with ‘substantial connections to Singapore’ can now be exempted from the QC regime.
Singapore-listed property developers welcomed the government’s move to exempt publicly-listed housing developers from the Qualifying Certificate (QC) regime, if they have ‘substantial connections to Singapore’, according to a statement by the Ministry of Law on Thursday (6 Feb).
“We welcome the move by Ministry of Law as it now recognises publicly-listed housing developers with a substantial connection to Singapore to be treated as Singapore companies when they acquire residential land for development,” said Liam Wee Sin, Group Chief Executive of UOL Group.
“It is also timely especially due to the outbreak of the Novel Coronavirus (2019-nCoV), where Singapore developers and the real estate industry are facing unprecedented and rapidly evolving challenges.”
Under the Residential Property Act (RPA), any residential property developer not considered a Singapore company has to apply for a QC when acquiring residential land for development, other than from the government.
A Singapore company is one that is incorporated in Singapore, the directors and shareholders of which are all Singapore citizens or Singapore companies. Hence, publicly-listed developers with one foreign shareholder are not considered a Singapore company.
With the rules however, a publicly-listed company can apply for a QC exemption, and will be accessed on the following criteria, according to the Ministry of Law:
1.) Incorporation in Singapore;
2.) Primary listing is on the Singapore Exchange and the principal place of business is Singapore;
3.) The chairperson and the majority of the company’s board are Singapore citizens;
4.) A significantly Singaporean substantial shareholding interest in the company, and;
5.) Track record in Singapore
The QC regime requires foreign developers to complete the housing project within five years and sell all units within two years of completion.
Developers who fail to sell the project within the stipulated period would be subject to extension charges of 8% for the first year of extension, 16% for the second year and 24% for the third and subsequent years. When computing for the charge, the number of unsold units would be taken into account.
“This change has been long-awaited as the QC policy places listed developers who are locally controlled companies like CDL in a disadvantaged position, as we are subjected to double penalties of QC and Additional Buyer’s Stamp Duty (ABSD),” said a City Developments Limited (CDL) spokesperson.
In fact, the onerous ABSD penalty and the associated tight timeline of five years “remain a hefty consideration for developers”, said the spokesperson.
In a joint statement, the Ministry of Law and Singapore Land Authority (SLA) revealed that the government is not making any changes “to the existing property market cooling measures, which were put in place to keep private residential property price increases in line with economic fundamentals”.
“In particular, all housing developers continue to be subject to the prevailing ABSD regime,” read the statement.
Removing the double whammy effect on some developers, CBRE noted that the QC exemption is a “clear indicator that the government is constantly monitoring and fine-tuning its policies”.
It added that the policy further strengthens the government’s support for local developers, considering the difficulty of qualifying listed developers as a 100% Singapore company.
Victor Kang, Digital Content Specialist at PropertyGuru, edited this story. To contact him about this or other stories, email firstname.lastname@example.org