Singapore Imposed New Seller’s Stamp Duty & Lowered Housing Loan Limit

With immediate effect, the Singapore Government has introduced two new measures to cool down the property market.

Introducing Seller’s Stamp Duty (SSD) for Properties Sold Within a Year

Seller of a residential property located in Singapore must pay Seller’s Stamp Duty (SSD) if the property was acquired (or purchased) on or after 20 Feb 2010 but before 30 Aug 2010 and disposed of (or sold) within one year from the acquisition date. Properties acquired before 20 Feb 2010 will not be subject to SSD when disposed of.

SSD will be payable on residential properties which are bought or acquired on or after 30 Aug 2010 but before 14 Jan 2011 and sold or disposed of within 3 years of acquisition.

For residential properties bought on or after 14 January 2011, (SSD rates to be levied on the full sale price will be increased to as follows:

(a) SSD at 16% (higher than up to 3% currently), if the property is sold in the first year of purchase, i.e. the property is held for 1 year or less from its purchase date.

(b) SSD at 12% (higher than up to 2% currently), if the property is sold in the second year of purchase, i.e. the property is held for more than 1 year and up to 2 years.

(c) SSD at 8% (higher than up to 1% currently), if the property is sold in the third year of purchase, i.e. the property is held for more than 2 years and up to 3 years.

(d) SSD at 4% (no SSD currently), if the property is sold in the fourth year of purchase, i.e. the property is held for more than 3 years and up to 4 years.

HDB flats are excluded from the SSD as they do already have a minimum occupancy period of at least one year.

The objective is to discourage possible speculation in the market and is not meant for purchase of properties for owner-occupation or longer-term investment.

Calculation of the SSD will be of the same manner as the stamp duty when the purchaser bought the property.

The seller will have to pay the stamp duty fees immediately after the buyer exercises the option or sales & purchase agreement within 14 days.

Lowering Loan-To-Value (LTV) Limit to 80% for Housing Loans

The LTV limit will be lowered from 90% to 80% for all housing loans provided by financial institutions (FIs) regulated by MAS. This is applicable to all housing loans granted by FIs to private residential properties, ECs, HUDCs and HDBs.

Loan from HDB will still be capped at 90% to assist first time home buyers and second upgraders. Since HDB has already many criteria to prevent speculations, the LTV cap will only be limited to FIs.

Most FIs have already been practicing 80% LTV since the last measures from the Government to cool down the market.

This move will ensure that the FIs have a better credit standing and practice prudence when granting loans to property purchasers.