Here is the full list of the 8 recent property cooling measures.

1. 14 Sep 2009 – Measures to Ensure a Stable and Sustainable Property Market

a. Removal of Interest absorbing scheme (IAS) and Interest only Housing loan (IOL).
b. Property-Related Budget 2009 Assistance Measures to developers to expire when due.

2. 19 Feb 2010 – Measures to Ensure a stable and sustainable property market

The measures will take effect on 20 February 2010.

a. Introducing a Seller’s Stamp Duty (SSD) on all residential properties and residential lands that are bought after today and sold within 1 year from the date of purchase. The Seller Stamp Duty SSD
wiil be applied at the standard ad valorem stamp duty rates for the conveyance, assignment or transfer of property: 1% for the first $180,000 of the consideration, 2% for the next $180,000, and 3% for the balance.

b. Lowering the Loan-to-Value (LTV) limit from 90% to 80% for all housing loans provided by financial institutions regulated by the Monetary Authority of Singapore (MAS)

3. 30 Aug 2010 – Joint Press Release on Measures to Maintain a Stable and Sustainable Property Market

The measures will take immediate effect on 30 August 2010.

a. Increase the holding period for imposition of Seller’s Stamp Duty (SSD) from the current one year to three years.

b. For property buyers who already have one or more outstanding housing loans1 at the time of the new housing purchase:
i. Increase the minimum cash payment from 5% to 10% of the valuation limit2; and
ii. Decrease the Loan-to-Value (LTV) limit for housing loans granted by financial institutions
regulated by MAS to these buyers from the current 80% to 70%.(for second or more properties)

c. Decrease the LTV limit for housing loans granted by financial institutions regulated by MAS from the current 80% to 70% for Property Purchasers with one or more outstanding Housing Loans

d. The LTV limit is lowered from 80% to 70% with effect from 30 Aug 2010

e. Loans granted by HDB for HDB flats (including DBSS flats) will still have an LTV cap of 90%. HDB loans are offered to eligible first-time flat buyers and second-timers who are right-sizing their flats to meet their housing needs. They are required to utilise all of their CPF Ordinary Account balance before HDB loans will be granted. Furthermore, those taking a second concessionary HDB loan must use the CPF refund and 50% of the cash proceeds from the sale of their previous flat before they are granted an HDB loan. This is in line with HDB’s home ownership policy of helping eligible buyers, especially first-time buyers, purchase public housing in a financially prudent manner.

4. 31 Jan 2011 – Measures to Maintain a Stable and Sustainable Property Market

a) Increase the holding period for imposition of Seller’s Stamp Duty (SSD) from the current three years to four years;

b) Raise the SSD rates to 16%, 12%, 8% and 4% of consideration for residential properties which are bought on or after 14 January 2011, and are sold in the first, second, third and fourth year of purchase respectively;

c) Lower the Loan-To-Value (LTV) limit to 50% on housing loans granted by financial institutions regulated by MAS for property purchasers who are not individuals1; and

d) Lower the LTV limit on housing loans granted by financial institutions regulated by MAS from 70% to 60% for property purchasers who are individuals with one or more outstanding housing loans2 at the time of the new housing purchase.

The measures will take effect on 14 January 2011.

5. 07 Dec 2011 – Additional Buyer’s Stamp Duty for a Stable and Sustainable Property Market

The ABSD will take effect on 8 Dec 2011.

Government imposes additional buyer stamp duty to curb demand in several sectors.

a. The Government announced today an Additional Buyer’s Stamp Duty (ABSD) to be imposed on certain categories of residential property purchases. The ABSD will be imposed over and above the current Buyer’s Stamp Duty, and will apply to the purchase price or market value of the property (whichever is higher) for the following purchases:

b. Foreigners and non-individuals (corporate entities) buying any residential property will pay an ABSD of 10%;

c. Permanent Residents (PRs) owning one and buying the second and subsequent residential property will pay an ABSD of 3%; and

d. Singapore Citizens (Singaporeans) owning two and buying the third and subsequent residential property will pay an ABSD of 3%.

Remission of ABSD will be given for options granted on or before 7 Dec 2011 and exercised within 3 weeks (i.e. on or before 28 Dec 2011) or the option validity period, whichever is the earlier. Note, the 5 nations which Free Trade Agreement with Singapore are treated in the same way as Singaporeans.

6. 05 Oct 2012 – MAS Restricts Loan Tenure for Residential Properties

The new rules will take effect from 6 October 2012.

a. The maximum tenure of all new residential property loans will be capped at 35 years. In addition, loans exceeding 30 years tenure will face significantly tighter loan-to-value (LTV) limits. This will apply to both private properties and HDB flats.

b. In addition, MAS will lower the LTV ratio for new residential property loans to borrowers who are individuals, if:

i. the tenure exceeds 30 years; or the loan period extends beyond the retirement age of 65
years. For these loans, the LTV limit will be:

40% for a borrower with one or more outstanding residential property loans; and
60% for a borrower with no outstanding residential property loan.

c. MAS will also lower the LTV ratio for residential property loans to non-individual borrowers (i.e. property holding companies or any company purchase) from 50% to 40%.

7. 11 Jan 2013 – Additional Measures To Ensure A Stable And Sustainable Property Market

Effective 12 Jan 2013.

This round of regulation is aimed as further increasing the price of levies through increasing additional buyer stamp duties.

a. Raising of Additional Buyer Stamp Duty (ABSD)
b. Impose Additional Buyer Stamp Duty (ABSD) on Permanent residents buying their 1st residential property and Singaporeans buying their 2nd residential property.
c. Loan-to-value limits on housing loans granted by Financial institutions to be tightened for individuals who have already 1 outstanding residential loan.
d. Loan-to-value limits on non-individuals (such as companies) to be tightened.
e. Increase of minimum cash down payment for individuals applying for a second or subsequent housing loan to be raised from 10% to 25%. (The rest can be via CPF ordinary account if it is sufficient and complies with CPF limits)
f. Concessions will be given to married couples with at least 1 Singaporean spouse who are purchasing their 2nd property and will sell their first residential property.

g. FOR HDB, MAS will cap the Mortgage Servicing Ratio (MSR) for housing loans granted by Financial institutions at 30% of a borrower’s gross monthly income.

h. For loans granted by HDB, the cap on the MSR will be lowered from 40% to 35%.

i. PRs who own a HDB flat will be disallowed from subletting their whole flat.

j. PRs who own a HDB flat must sell their flat within six months of purchasing a private residential property in Singapore.

Measures for Executive Condominium Developments

k. The Government will introduce measures specific to new EC developments to ensure that ECs continue to serve as an affordable housing option for middle-income Singaporean families.

i) The maximum strata floor area of new EC units will be capped at 160 square metres.

ii) Sales of new dual-key EC units will be restricted to multi-generational families only.

iii) Developers of future EC sale sites from the Government Land Sales programme will only
be allowed to launch units for sale 15 months from the date of award of the sites or
after the physical completion of foundation works, whichever is earlier.

l. Private enclosed spaces and private roof terraces will be treated as gross floor area (GFA). The GFA of such spaces in non-landed residential developments, including ECs, will be counted as part of the ‘bonus’ GFA of a residential development and subject to payment of charges. This is in line with the treatment of balconies under URA’s current guidelines. Details of this measure are at www.ura.gov.sg/circulars/text/dc13-01.htm.

m. Cooling measures for Industrial Property Market: Seller’s Stamp Duty

Prices of industrial properties have doubled over the last three years, outpacing the increase in rentals. In addition, there has been increasing speculation in industrial properties: in 2011 and the first eleven months of 2012, about 15% and 18% respectively of all transactions of multiple-user factory space were resale transactions carried out within three years of purchase. This is significantly higher than the average of about 10% from 2006 to 2010.

The Government is introducing Seller’s Stamp Duty (SSD) on industrial property to discourage short-term speculative activity which could distort the underlying prices of industrial properties and raise costs for businesses.

i. The following SSD rates will be imposed on industrial properties and land bought and sold within three years of the date of purchase (These SSDs will apply for industrial properties and land bought on or after 12 January 2013.)

8. 28 Jun 2013 – MAS Introduces Debt Servicing Framework for Property Loans

a. MAS introduces Total Debt Servicing ratio (TDSR) for credit approval so as to align all the bank’s lending criteria.

b. Total Debt servicing ratio is capped at 60% of the borrower’s income. While total debt refers to all the borrower’s debt. Incomes refer to fixed income which is treated as 100% and variable income to be treated as 70%. And collaterals/assets can be pledged are amortized over 48 months as “income”.

c. Loan tenure is also based on income weighted average age to determine loan tenure.

d. Where there are previous and existing property loans with joint borrowers, incomes of joint borrowers are required and the debt servicing is assessed accordingly.

e. For residential home loans, an interest rate of 3.5% is used, for Commercial and industrial properties, a 4.5% rate is used for TDSR computation.

f. (Not in MAS notice), but all credit cards, outstanding balances will be taken into account in the computation of TDSR.

g. HDB buyers need to clear the 30% Mortgage Servicing Ratio (MSR) which includes all incomes but also subjected to TDSR of 60%.

After I pointed out that an average couple may not be able get a loan for a HDB but can qualify for a higher quantum for Executive Condominium (EC) and Condominiums a new regulation is imposed.

09 Dec 2013 – MND – Refining the Executive Condo housing scheme– MSR cap of 30% to apply to EC. (Effective with OTP on 10th Dec 2013)

We welcome MND’s refining of the regulations. However what has happened is, MND slapped the Monthly servicing ratio (or Mortgage servicing ratio) of 30% on the Executive Condominium as well. What this means is, a couple buying the EC will have to meet both the criteria of: -

MSR less than or equal to 30% and;
Total Debt Servicing Ratio (TDSR) less than or equal to 60%.

On top of that, new Executive condominiums have an upper income cap of $12,000 a month.

What this means is, in order to meet the MSR <= 30%, the selling price has to be about or less than $880,000. Else a couple’s salary will not be sufficient. This effectively killed off the developer’s chances of marketing the property above $880,000.

Hence the future land use is bound to be more optimum with Singapore citizens and Permanent residents staying in ever smaller housing units. So there is only one way for the property to go, units will get smaller and smaller.

10 Feb 2014 – MAS broadens

This is a welcome news. This shows that MAS really value feedback. However, the policy is again fraught with ambiguity as many banks we spoke to are not sure how much “exemptions” they are allowed to do. For investment properties, they can waive TDSR to be coupled with a debt reduction plan. However there was no mention of what kind of debt reduction. This goes to show that MAS still has some room for improvement where it involves industry consultation, such as involving the stakeholders such as banks for implementation feedback.

Source: Paul Ho

PROPERTY LAUNCHES & INVESTMENTS

Property Launches & Investments

List of Property cooling measures by URA/MAS.