Some residential developers are disappointed that the additional buyer’s stamp duty (ABSD) remission deadline to sell all units in a project was not further extended, although they have been given an additional six months to complete construction.
Additional temporary relief measures were announced on Thursday night for developers whose construction timelines have been disrupted by the pandemic.
While almost all projects have restarted, there may be disruptions when workers are placed under quarantine if they come into close contact with a Covid-19 case.
The further extension of six additional months for project completion will help to “mitigate downstream risks which could potentially destabilise the property market”, said Ms Christine Li, Cushman & Wakefield’s head of business development services for Singapore and South-east Asia.
The additional relief measures include a further six-month extension of the project completion period (PCP) for residential, commercial and industrial development projects. The PCP has also been extended by up to six months for residential projects under the qualifying certificate regime for foreign developers.
Another step is a further six-month extension for the completion of residential projects in relation to the remission of the ABSD. That means developers now have six years to complete a project instead of the usual five years.
But there was no further extension of the remission condition timeline to offload all the units in a project. This was initially five years, but was extended by a further six months in May.
Some developers could face challenges meeting such sales deadlines, given the disruptions caused by the pandemic.
This could be especially acute in 2022 and 2023, when the bulk of the units will reach the five-year-plus mark, Ms Li said.
“It will be especially challenging for high-end projects where a significant portion of the buyers are non-Singaporeans,” she added.
“Due to travel curbs, it may be very difficult to reach out to these buyers in the short to medium term… which (may) affect developers’ ability to clear all units by the stipulated deadlines.
“The Government might want to consider a more progressive approach… (such as to) levy the penalty based on the proportion of unsold units.”
The further six-month extension under the ABSD remission rules will give developers more time to complete their projects, but do not change the date of delivery of vacant possession stipulated in the sale and purchase agreement between the developer and the buyer, a Ministry of National Development (MND) spokesman said.
“The Government is aware of the concerns regarding the liquidated damages under the terms of the sale and purchase agreement which developers may incur as a result of delays due to the pandemic.
“We are studying the concerns regarding the liquidated damages, and will implement additional relief measures as necessary, to ensure that neither party bears an undue share of the burden caused by the pandemic,” MND said.
Thursday’s additional relief measures are unlikely to change most developers’ commitment to build and complete the projects as soon as possible, because their commitment to buyers in their sale and purchase agreements remain the same, said Mr Lee Liat Yeang, senior partner at Dentons Rodyk & Davidson’s corporate real estate practice.
“I suspect developers will be disappointed that no additional time is given for sales beyond the extra six months given in May. This could be reflective of the apparent strong sales figures in recent months,” he added.
New private home sales typically slow during the Hungry Ghost month, but in August, they surged for a fourth straight month after the circuit breaker period. The buoyant recovery has led to upward revisions by analysts, with some forecasting this year’s transactions may exceed the 9,912 last year.
But Mr Lee noted that this sales trend could change in the coming months, following new rules prohibiting developers from reissuing the option to purchase (OTP) multiple times to the same buyer for the same unit.
Ms Tricia Song, head of research at Colliers International, believes the extension of the relief measures is “equitable, (and) targeted at relieving the pressures of meeting deadlines specific to project completion dates”.
“Show-flats have reopened and pre-sales since June have almost caught up with 2019’s pace of pre-sales. The delays have been mainly in the commencement and construction of projects,” she said.
“While the clampdown of reissuance of OTPs could cool the market by encouraging marginal buyers to exercise more financial discipline, we believe there is genuine demand. Good projects priced sensitively should have no problem selling within the timeline.
“Not extending the deadline to sell should encourage developers to continue to price their projects attractively, instead of holding back.”
There was also no further extension for married Singaporean couples, who now have one year instead of six months to sell their first home to qualify for remission of ABSD for their second property.
“Buoyant HDB (Housing Board) resales and the higher HDB resale price index in the third quarter testified to the resilience of the market. Upgraders should have no excuse for their inability to sell due to the pandemic or circuit breaker,” Ms Song said.
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