PropNex proposes lifting of cooling measures, Latest Business News - The New Paper

PropNex proposes lifting of cooling measures

This article is more than 12 months old

Amid increased scrutiny after a recent report highlighted an unusual spike in the number of options-to-purchase (OTPs) being reissued in December, an investigation by PropNex found this came about as a majority of upgraders found it difficult to stump up cash for the higher additional buyer's stamp duty (ABSD).

After last July's cooling measures, Singaporeans upgrading to a private property worth, say $1 million, will have to raise an additional $170,000, if they have not sold the flat.

That comprises $120,000 for the 12 per cent ABSD payable for the second property, plus $50,000 as loan-to-value (LTV) limits were tightened by 5 percentage points for all housing loans granted by financial institutions.

Although they can qualify for ABSD refund if they sell their flat within six months from the issue date of the new project's temporary occupation permit, the initial cash outlay is still quite hefty for most.

As a result, many buyers are asking developers to delay exercising their sale and purchase agreements - leading to a rise in the re-issuance of OTPs for units, or an apparent rise in the number of implied "returned units" from new launches after the measures.

PropNex has proposed three key recommendations to the Ministry of National Development (MND) and Ministry of Finance: Lift ABSD for HDB upgraders, revert LTV limits to 80 per cent for first-time private property buyers and lower ABSD rate for the purchase of a second property.

A spokesman told The Straits Times MND is studying the recommendations.

PropNex has proposed HDB upgraders buying their first private home, whether resale or a new launch, should get remission from ABSD, subject to their undertaking to sell their HDB flat within six months of exercising OTP or upon completion of the new launched project, or suffer penalties.

It cited declining new mortgage loan applications, a growing supply of new private homes, a lack of new executive condominiums for upgraders and more HDB flats reaching the minimum occupation period. - THE STRAITS TIMES