MND Lowers Development Charge (DC) by 4% to 15%

Singapore government board Ministry of National Development (MND) has dropped its development charge for the following sites with this current revision:-

  1. Reduction of 15% of DC for non-landed residential use
  2. Reduction of 10% of DC for hotel and hospital use
  3. Reduction of 4% of DC for commercial use
  4. No changes to landed residential and industrial use.

The actual revision and press release can be found in URA’s Press Release on 27th February 2009.

MND reviews its DC rates after consulting with the Chief Valuer, taking into account of the current market values.

What is Development Charge? The Actual Principle of DC

Land value can be enhanced with the Government approve its change of rezoning or adjustment of its plot ratio to a higher value. Development charge actually allows the government to tax on the profit gained from the enhancement of the land upon approval of the proposed plan.

The gained portion then can be used by the government to offset on infrastructure improvements such as road or rail works. The balance of the gain is retained by the owner to encourage him to undertake the development work.

How is the Development Charge derived?

(Fellow agents, refer to your CEHA notes again, lol). The amount of Development Charge payable is calculated by the additional gross floor area multiplied by its development charged rate, in accordance with its sector as assessed by URA. The revised DC rates can be found here and the list of group here.

Development charge rates are reviewed half-yearly, usually in March and September.The review is undertaken by MND in consultation with the Chief Valuer.

Rational for this Government Move?

To spur job creation and job retention. The move made from the government is really conservative as compared to its DC rates adjustment of the former drop of 70% to 50% charges in the declining property market in 1985’s recession. The rate has been revised back from 50% to 70% in July 2007 at the peak of the property market.

Written by Benson Koh
Benson is a professional real estate realtor with over 11 years of experience specializing in all forms of real estate consultancy and brokeraging of different segments from regal homes to commercial spaces. Also a boutique developer, he manages both SRI5000 Developments which concentrates on landed homes as part of his land bank segment and Singapore Realtors Inc (SRI), a real estate agency which has over 7 years of group experience. You can reach him here via various channels. [ Facebook | Linkedin | Twitter | RSS Feed ]