Given the burden imposed on buyers by the seller’s stamp duty (SSD) and the total debt servicing ratio (TDSR) framework, the additional buyer’s stamp duty (ABSD) should be tweaked for Singaporeans who wish to buy more than one property, said Wing Tai Chairman Cheng Wai Keung in media reports.
“Why should they be dealing with three policies – SSD, ABSD and TDSR? Especially with the TDSR in place to limit debt exposure and SSD to prevent short-term trading, I believe that it is redundant to continue imposing ABSD on Singaporeans who have the financial ability and wish to invest locally in real estate,” he said.
As the cooling measures have already reduced the demand for residential properties, government should open up more options for Singaporean investors so that they could invest their excess funds on the local property market, which is deemed less risky than foreign real estate.
“This can be a win-win situation for both the industry and the domestic investor market,” Cheng noted.
Singaporean first-time buyers are exempt from the ABSD. However, they have to pay a seven percent duty for their second property, and 10 percent for subsequent property purchases.
However, the ABSD for foreigners should be retained due to existing danger posed by hot money coming from other countries.
“ABSD is still necessary to deal with foreign hot money. Recall the original intent of the ABSD: it is to deal with excessive liquidity flooding in from developed countries’ monetary policies. Looking at the global economy now, the conditions that necessitated the introduction of the ABSD by the Monetary Authority of Singapore have not abated,” he said.
Cheng added, “Notwithstanding Quantitative Easing tapering moves in the US, interest rates are still expected to stay low, and countries like Japan and Europe are still expanding their liquidity policy. Hence, for now, it is prudent for government not to remove the ABSD, to effectively manage the influx of foreign hot money and to stabilise our economy.”
Muneerah Bee, Senior Journalist at PropertyGuru, edited this story. To contact her about this or other stories email muneerah@propertyguru.com.sg
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