New Cooling Measures Yet Again – Seller Stamp Duty and Loan to Value Adjusted

With the introduction of Seller’s Stamp Duty and lowering of Loan-to-Value ratio last year and being enhanced before, the Singapore Government steps in further to adjust the already heavy measures to cool down the property market by introducing the following:-

  • Increasing the holding period for imposition of Seller’s Stamp Duty(SSD) from three to four years
  • 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. You can see an example of the computation here.
  • 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 individuals
  • 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 loans at the time of the new housing purchase

The measures will take effect tomorrow on the 14th of January 2011.

What it means for property investors

There will be no effect on properties bought before 14th of January 2011. Do note that the Seller’s Stamp Duty is raised much sharply to 16% for 1st year, 12% for 2nd year, 8% for 3rd year and 4% for 4th year as compared to the previous tier of 3%, 2% and 1% for 3 years holding period.

  • Properties that were bought before 20th February 2010 will not be affected by SSD.
  • Properties that were bought between 20th February 2010 to 29th August 2010 will be affected by a 1-year holding period of 3% SSD.
  • Properties that were bought between 30th August till 13th of January 2011 will be affected by 3-years holding period of SSD tiered 3% for the 1st year, 2% for the 2nd and 1% for the 3rd.
  • Properties that were bought on 14th January 2011 onwards will be affected by this latest SSD rule of 16% on the 1st year of sale , 12% on the 2nd year, 8% on the 3rd year and 4% on the 4th.

This is heavy penalty if you were to sell your properties before the 4-year holding period.

You will also have lower loan-to-value ratio, which means the bank can only loan you up to 60% of the property valuation. 40% of the proceeds will have to come from cash and CPF OA funds which is pretty drastic.

What it means for home buyers

If you are buying for your own stay and this is your first home, these rules should not affect you unless you have an outstanding mortgage loan since the loan-to-value has been reduced drastically down from 70% to 60% for your 2nd property purchase. And should you be buying your first private property, these rules will be working towards your favor as they should be keeping speculators or cash poor investors out.

These are very serious measures indeed and property purchasers are advice to be prudent on their purchase should they be thinking in the speculation angle.

11 thoughts on “New Cooling Measures Yet Again – Seller Stamp Duty and Loan to Value Adjusted

    1. Hi Joey,

      This is the clarification for property purchasers who are not individuals,

      This includes corporations, trusts and collective investment schemes, among others. The 50% LTV limit for housing loans will also apply to joint property purchases by an individual and a purchaser who is not an individual.

  1. Hi Benson,

    Wat if i have pay 5% downpayment on 30Dec 2010 to the developer, but still not yet sign SNP till now? We are falls under which catetory?

    1. Hi Andrea,

      You could be falling under the new 4-years seller’s stamp duty rule.

      The date of purchase for computation of the holding period for SSD shall be the date when a buyer (i.e. Buyer A) exercises the option to purchase the property, or signs the sale and purchase agreement, whichever is earlier. The date of sale of the property shall be the date when the subsequent buyer (i.e. Buyer B) exercises the option to purchase the property from Buyer A, or signs the sale and purchase agreement, whichever is earlier.

      These clause comes directly from IRAS as well on Seller’s Stamp Duty,

      Sale or Purchase

      The material date of acquisition or disposal is the date on which the contract is made rather than the date of transfer or date of possession of the property. Where there is an Option to Purchase, the material date shall be the date when the Option is exercised.

      In the case of a direct sale of an uncompleted property by the developer where the Sale & Purchase Agreement constitutes the first contract between the developer and the Original Purchaser, the date of acquisition shall be the date of the Sale & Purchase Agreement between the developer and the Original Purchaser. Should the Original Purchaser subsequently sell the property to the Sub-Purchaser, the subsequent date of acquisition or disposal shall be the date when the Option to Purchase is exercised by the Sub-Purchaser.

  2. I am a PR and have a house in my home country.i am interested to buy a house (HDB)..what i need to do..how much down payment..(i can pay cash as downpayment 100k)??can u advise what is best option availble for me.I heard i must sell my house in home country.
    Secondly can i buy this house on wife name ..shi si also PR but house wife..not working.
    Appreciate your sugestion.
    thanks

    1. Hi there,

      In order for you to buy a HDB in Singapore, you definitely have to dispose your home country’s property (unless with special permission), and in order for you to buy the apartment, it must be bought under both husband and wife’s name as a family nucleus is necessary.

  3. hello, 14th of January 2011 does it affect those who already signed the option to purchase prior to Jan 2011 but completion of sales is after 14 Jan 2011

  4. Question, IRAS says stamp duty is paid based on the purchase price or market value which ever is higher. Whats the definition of market value?

    1. Hi Pehon,

      This is one way to prevent abuse in case the seller under sells his/her property. IRAS has the right to engage a valuer and still charge you base on their valuation should they suspect that there’s an abuse.

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