The Ministry of National Development (MND) has recently announced revisions to the Additional Buyer’s Stamp Duty (ABSD) regime for licensed housing developers. These changes will take effect on March 6th.
One of the main revisions is an extension of the ABSD remission timeline for developers undertaking complex projects. Previously, this timeline was six months, but it has now been extended to 12 months. This move aims to encourage developers to take on urban transformation developments, optimise land use through intensification or integration, rejuvenate older estates, or adopt new construction technologies.
The extended timeline will apply to projects such as en bloc redevelopments that will yield at least 700 units upon completion, and have at least 1.5 times the number of homes of the existing development. Other projects include those with complex technical or instructional requirements, such as projects integrated with major public transport facilities.
Additionally, projects approved under the Strategic Development Incentive (SDI) scheme and those aiming to achieve higher productivity targets through the adoption of new construction technologies, methodologies, or practices will also be eligible for the extended timeline.
Depending on the category, these projects will receive either a six-month or one-year extension. These changes will apply to all residential land acquired on or after March 6th.
Currently, licensed housing developers purchasing residential redevelopment sites are subjected to a 5% ABSD upfront, which is non-remittable, and another 35% ABSD, which is remittable when the developer completes and sells all the units in the project within a five-year timeframe.
The latest revisions come after changes were announced in February last year, which offered a lower clawback rate for residential developments with at least 90% of units sold.
PropNex Realty CEO, Ismail Gafoor, believes that such extensions will give developers more flexibility and may help mitigate development risks. This is especially true for mega projects, as they will have more time to sell units.
Huttons Asia’s Senior Director of Data Analytics, Lee Sze Teck, says that the ABSD revisions will provide a much-needed boost to the en bloc market, especially for larger en bloc projects.
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However, OrangeTee Group’s Chief Researcher and Strategist, Christine Sun, believes that developers may still face challenges despite the deadline extension. This is due to other factors, such as the willingness of buyers and sellers to negotiate prices.
ERA’s Managing Director of Capital Markets and Investment Sales, Tay Liam Hiap, believes that this could be an opportune time for older projects, like Braddell View and Pine Grove, to explore en bloc opportunities. These projects may yield about 2,000 new homes, which could take longer to sell. Thus, the six to 12-month extension may not be sufficient for developers to sell out their projects.
Overall, while the policy change may not spark a revival in the en bloc market, PropNex’s Ismail Gafoor expects developers to continue to be cautious due to the high cost of redevelopment, ample oncoming private housing supply, and potential policy risks.