Singapore raises Additional Buyer Stamp Duty to 60% for Foreign Buyers
Latest Hike in ABSD to Cool Heated Property Market
Singapore has announced new measures to regulate the property market, particularly concerning foreign buyers and Singaporeans purchasing additional properties. From April 27, foreigners purchasing residential properties will face a higher Additional Buyer's Stamp Duty (ABSD) rate, increasing from 30% to 60% of the purchase price. This is the most significant increase among all the ABSD rate adjustments introduced by the government.
Singaporeans buying their second residential property will now be subject to a 20% ABSD, up from 17%. For individuals purchasing their third or subsequent properties, as well as permanent residents acquiring their second homes, the ABSD rate has been raised from 25% to 30%.
First-time buyers, both Singaporeans and permanent residents, will not experience any change in the ABSD rates, which remain at 0% for Singaporeans and 5% for permanent residents. First-time buyers constituted approximately 90% of residential property transactions in 2022.
It is worth noting that there are no modifications to the ABSD policy for buyers of Housing and Development Board (HDB) flats or executive condominium units from property developers, as long as one of the joint buyers is a Singaporean. Developers receive an ABSD remission on the land purchase price under specific conditions. Executive condos are subsidized by the government and built and sold by private developers.
Transitional provisions will apply for properties bought on or before April 26, 2023, under certain conditions specified by the government. This includes the granting of an option to purchase agreement by sellers to potential buyers on or before April 26, 2023, with the agreement being exercised on or before May 17, 2023, or within the validity period of the document, whichever is earlier. The agreement should not have been modified on or after April 27, 2023.
The government's objective in increasing the ABSD rates, the third cooling measure since December 2021, is to promote a sustainable property market. Despite previous measures to moderate the property market in 2021 and 2022, the first quarter of this year witnessed a renewed acceleration in property prices, driven by robust demand.
To prevent prices from outpacing economic fundamentals and incomes, the government aims to temper investment demand in the property sector. These efforts will be complemented by increasing the supply of housing for both ownership and rental purposes to alleviate the tight housing market.
Based on official estimates, private home prices rose by 3.2% in the first quarter of this year, compared to a 0.4% increase in the previous quarter. Strong demand from residents buying homes for personal use, along with increased interest from domestic and foreign investors, contributed to this growth.
Source: MAS, TodayOnline
