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PropNex calls for easing of curbs for HDB upgraders

PropNex calls for easing of curbs for HDB upgraders.

Amid increased scrutiny after a recent report highlighted an unusual spike in the number of options-to-purchase (OTPs) being reissued in December, an investigation by PropNex found that this came about as a majority of HDB upgraders found it difficult to stump up cash for the higher additional buyer's stamp duty (ABSD).

Following last July's cooling measures, Singaporeans upgrading to a private property worth, say, $1 million, will have to raise an additional $170,000, if they have not sold their flat. That comprises $120,000 for the 12 per cent ABSD payable for the second property, plus $50,000 as loan-to-value (LTV) limits were tightened by five percentage points for all housing loans granted by financial institutions.

Although they can qualify for ABSD refund if they sell their flat within six months from the issue date of the new project's temporary occupation permit, the initial cash outlay is still quite hefty for most.

As a result, many buyers are asking developers to delay exercising their sale and purchase agreements - leading to a rise in the reissuance of OTPs for units, or an apparent increase in the number of implied "returned units" from new launches after the cooling measures.

To address this issue, PropNex, Singapore's largest listed real estate agency, has proposed three key recommendations to the Ministry of National Development (MND) and the Ministry of Finance. These are to lift ABSD for HDB upgraders, revert the LTV limits to 80 per cent for first-time private property buyers, and lower the ABSD rate for the purchase of a second property.

An MND spokesman yesterday told The Straits Times the ministry is studying the recommendations.

"The Government monitors the property market closely, and intervenes where necessary to maintain a stable and sustainable property market," he said.

PropNex has proposed that HDB upgraders buying their first private home, whether resale or a new launch, should get remission from ABSD, subject to their undertaking to sell their HDB flat within six months of exercising OTP or upon completion of the new launched project, or suffer penalties.

It cited declining new mortgage loan applications, an increasing supply of new private homes, a lack of new executive condominiums (EC) for upgraders, and a rising number of HDB flats reaching the minimum occupation period.

Its proposal also comes amid increased scrutiny from the authorities following a report by Credit Suisse's equity research arm that some developers, facing a limited pool of buyers and competition from multiple new launches this year, found a way to lock in potential buyers who may not be ready to commit to their purchases.

To read more: https://www.straitstimes.com/business/property/propnex-calls-for-easing-of-curbs-for-hdb-upgraders

Adapted from The Straits Times 15 March 2019