The latest government measures will have a major impact on developers acquiring residential land, particularly those involved in collective sales sites.
Under the new regulations, property developers who want to avoid paying the 10 percent additional buyer’s stamp duty (ABSD) will have to develop all residential sites acquired from 8 December onwards and sell all the units in the projects within five years.
“This can be very onerous, especially when the property market is slow,” said Ong Teck Hui, Executive Director of Credo Real Estate.
Ong Sim Ho, Head of Tax Practice at Drew & Napier, noted, “For developers, it has become more difficult and costly to land bank.”
Some market watchers believe that with the five-year window to complete and fully sell projects, property developers will have to consider their land acquisition decisions more carefully.
“They must be confident of developing the project and disposing of all residential units in it within five years — taking into account the possibility of any turn in market conditions and in the case of en bloc sales, the risk of a possible delay in court approval,” said Lee Liat Yeang, Partner in Rodyk & Davidson.
Karamjit Singh, Managing Director of Credo noted that the latest rules will greatly affect major collective sales.
“For the small and medium-sized en bloc sale sites, most developers would already aim to buy the site, develop it and sell new units within five years, even before the new rules kicked in – whereas for the bigger sites it can be very difficult to be certain that you can clear all your units within five years.”
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