This will help solve the re-issuing of OTPs and help HDB upgraders buy a new private home.
PropNex CEO Ismail Gafoor urged the government to hold off the imposition of the Additional Buyer’s Stamp Duty (ABSD) on HDB homeowners buying private property during the six-month disposal period, which he says will not only help upgraders buy a new private home, but will also solve the repeated re-issuing of Option to Purchase (OTP), reported The Business Times (BT)
The BT report said Ismail was taking a leaf from a similar dispensation offered to HDB upgraders purchasing executive condominium (EC) units, which are a public-private housing hybrid. Ismail noted that EC buyers are given six months to sell their HDB flats after collecting the keys to their new home – much like HDB homeowners acquiring Build-to-Order or resale flats.
However, according to ABSD rules, Singaporean private property buyers are required to fork out the 12% ABSD for the purchase of their second home if they have not disposed of their existing home within six months of the completion
The 12% ABSD applies to Singaporeans purchasing their second home. They are eligible to an ABSD remission only if they have disposed of their first property within six months of completion of their second home (in the event it was uncompleted at the time of acquisition).
As such, buyers in need of more time to dispose of their existing properties have been asking for a re-issue of OTPs. BT reported last month that the Urban Redevelopment Authority (URA) is aware of such practice and has tightened its monitoring of private developers.
The problem with the practice of re-issuing OTPs upon expiry is that it distorts the primary private sales market once the buyer – who may have stretched out the OTP period to 18 months – suddenly backs out of the deal, particularly when property prices fall. Notably, the option has a validity period of up to five weeks.
With this, Ismail suggested making these group of private property buyers give an undertaking to HDB that they will sell their HDB flat within six months.
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Victor Kang, Digital Content Specialist at PropertyGuru, edited this story. To contact him about this or other stories, email victorkang@propertyguru.com.sg