SINGAPORE – Up to around 500 private housing developments in Singapore could benefit from a six-month extension to the original timeline for the completion and sale of the projects’ housing units, a Ministry of Finance spokesman told The Straits Times on Thursday (May 7).
The extra time given to developers to meet conditions for additional buyer’s stamp duty (ABSD) remission is among a slew of temporary relief measures rolled out earlier this week. These are meant to help developers and home buyers amid the circuit breaker period, which has disrupted construction timelines and property sales.
The Government has extended the project completion period (PCP) for eligible residential, commercial and industrial developments by six months with immediate effect. If a project was originally required to be completed on Feb 1, it must now be completed by Aug 1.
Around 100 residential, commercial and industrial development projects will qualify for this extension, a Ministry of National Development (MND) spokesman said in response to ST’s queries on Thursday.
Blue-chip property counters UOL Group, City Developments and CapitaLand, as well as mid-caps Yanlord Land and Wing Tai, gained as investors took heart that these measures could help stabilise the property market.
Credit Suisse analyst Louis Chua noted that while a majority of former collective sale developments have completion deadlines in 2022-23, the extension allows developers “added flexibility in managing average selling prices”.
With many construction workers still subject to stringent measures amid the Covid-19 pandemic and home sales dropping, the extension means that new launches can be spaced out in the second half of this year.
The measures should also benefit individuals who now have one year instead of six months to sell their first residential property to qualify for ABSD remission for their second property. This could help HDB upgraders by relieving some pressure to sell their flats in this challenging environment, Mr Chua said.
But many analysts say more measures may be needed if the pandemic is protracted, to cushion against a steeper fall in prices in the face of an “unprecedented recession” and the risk of higher unemployment here.
DBS Group Research sees the property price index likely dropping between 5 per cent and 10 per cent this year and sales volume falling by 25 per cent to 30 per cent to 7,000-7,500 units. “In our view, the next step is a review on the ABSD rates if market volumes remain tepid in the medium term,” DBS analysts said.
While the measures are a welcome first step, Mr Lee Liat Yeang, senior partner with Dentons Rodyk & Davidson’s corporate real estate, noted that they “did not deal with developers’ obligations to deliver completed units to home buyers” by agreed deadlines.
“While most developers should have buffered for more time in their sale and purchase agreement with buyers, they may still face problems delivering units by agreed deadlines if the pandemic drags on for more than six months. This could affect housing projects due to be completed beyond this year until 2023,” he added.
Should the delivery of residential units be delayed, MND said: “We encourage developers to come to a mutually agreed arrangement (with buyers). For example, developers could offer to extend the defects liability period if purchasers agree to defer the delivery of units to a later date without claiming damages. The deferment period should not be unreasonable.”
But Mr Lee added: “In practice, it would be very difficult for developers to renegotiate the commitments.”
If the buyers say no, developers could be exposed to damages for late delivery, he said.
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