SINGAPORE – At least 40 new private home sales, mostly in the prime districts, were inked on the evening of Feb 14, as some buyers rushed to bring forward their purchases before buyer’s stamp duties (BSD) are raised the next day, according to ERA Realty Network.
Sources from several property brokerages told The Straits Times that some condo buyers, following the Budget speech by Finance Minister Lawrence Wong on Tuesday, were chasing sellers for options to purchase (OTPs) to be granted that very day to avoid higher BSD.
An OTP is a legal agreement for the sale of a residential property.
ERA Realty, citing sales from residential projects marketed by it and other agencies, said that 39 units were sold on Feb 14, of which 25 were located in the prime district. There were seven each in the suburbs and city fringe areas.
“More buyers were interested in prime properties as some projects are newly completed or about to be finished. They can move in or rent out the units shortly after completing the purchase,” said Mr Nicholas Mak, head of research and consultancy at ERA Realty.
Huttons estimated that about 60 condo units were sold in the hours after the announcement on Feb 14. “This is around four times more than the number of units sold on Feb 13,” senior director of research Lee Sze Teck said.
“Those buying in the prime district are paying much higher prices and would therefore stand to save more on stamp duties if they can get their OTP granted by Feb 14 (among other conditions),” he said.
PropNex chief executive Ismail Gafoor said the Budget announcement gave some serious buyers the impetus to lock in the sales, and that sales were done in several prime district and city fringe projects on the night of Feb 14.
BSDs for higher-value residential and non-residential properties were raised with effect from Feb 15.
For residential properties, the portion of the value of the property in excess of $1.5 million and up to $3 million will be taxed at 5 per cent, while that in excess of $3 million will be taxed at 6 per cent. This is up from the current rate of 4 per cent.
For non-residential properties, the portion of the value of the property in excess of $1 million and up to $1.5 million will be taxed at 4 per cent, while that in excess of $1.5 million will be taxed at 5 per cent. This is up from the current rate of 3 per cent.
But the Ministry of Finance (MOF) said that there will be a transitional provision, where the old BSD rates on or before Feb 14 will apply for cases that meet certain conditions.
The OTP has to be granted by sellers to potential buyers on or before Feb 14, and must not be varied on or after Feb 15. In addition, the OTP has to be exercised on or before March 7, 2023, or within the OTP validity period, whichever is earlier, MOF said.
Mr Mak noted that the Feb 14 sales were “a bit out of the ordinary”, but “not as dramatic as that on July 5, 2018, when the Government surprised the market with cooling measures”.
He added: “Back then, there was a mad rush by buyers to try to beat new higher additional buyer’s stamp duty (ABSD) on July 6, 2018.
“Hundreds of people showed up at some showflats, forming queues that went out into the carpark. For them, delaying their purchase could cost anywhere from tens of thousands of dollars to hundreds of thousands of dollars in additional stamp duties.”
Ms Wong Siew Ying, head of research and content at PropNex Realty, said the increase in BSD payment should still be manageable for those buying homes priced at more than $1.5 million and more than $3 million.
“For a $2 million property, the additional BSD payable is $5,000, while for a $3 million property, it would be $15,000, which isn’t excessive,” she said.
“Source:[At least 40 buyers rush to secure condo purchases before new buyer’s stamp duties kick in] © Singapore Press Holdings Limited. Permission required for reproduction”
