The Singapore property market is increasingly becoming a ‘managed’ property market, in the sense that the government exerts control over prices and rents, in not allowing them to fall or rise too drastically.
Generally, the government in their many press releases and public statements have continually stated they want the property market to be stable, with price increases in line with that of wages.
For property investors, it is important to note the history of cooling measures to know how much of a heavy, or light, hand that the government has on the market.
A seemingly heavy hand in a downtrending market would suggest that the government may lift some cooling measures, while a light touch in a surging market would suggest one keep a lookout for potential introduction of increasing of cooling measures.
In the vein of keeping track of the property market, here is a compilation of the history and timeline of various property cooling measures introduced since 2011.
This list of cooling measures will serve as a good summary for those who are both new and experienced in the market.
Tracking back in time and looking at the history of cooling measures, it can be clearly seen that the government has been very involved in the property market since 2011.
Cooling measures form an integral and important part of the Singapore property market. Investors say it’s punitive and unnecessary while the banks and government claims it enhances stability of the market.
In whatever case, the cooling measures are here to stay. They were progressively ramped up since 2011 but has since very slightly been reduced in the last year.
There are websites that consolidate the cooling measures but this will be different. This post will lay out the text from the government’s ministries and stat boards such as MAS, MOF, MND, URA and HDB when they imposed their cooling measures.
The compilation of announcements and history of cooling measures below
- 13 Jan 2011 Measures to maintain a stable and sustainable property market
- 7 Dec 2011 Additional Buyer’s Stamp Duty for a stable and sustainable property market
- 11 Jan 2013 Additional Measures to Ensure a Stable and Sustainable Property Market
- 28 June 2013 MAS Introduces Debt Servicing Framework for Property Loans
- 10 Feb 2014 MAS Broadens Exemption from TDSR Threshold for Refinancing of Owner-Occupied Residential Properties Purchased before the Implementation of TDSR Rules
- 10 March 2017 Joint Press Release on Measures Relating to Residential Property
- 10 March 2017 Overview of the Additional Conveyance Duties (ACD) Provision
- 6 July 2018 Raising Additional Buyer’s Stamp Duty Rates and Tightening Loan-to-Value Limits to Promote a Stable and Sustainable Property Market (!new and latest)
13 Jan 2011 Measures to maintain a stable and sustainable property market
The Government announced today the following measures to maintain a stable and sustainable property market:
- Increase the holding period for imposition of Seller’s Stamp Duty (SSD) from the current three years 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;
- 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 individuals1; and
- 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 loans2 at the time of the new housing purchase.
The measures will take effect on 14 January 2011.
The Government’s objective is to ensure a stable and sustainable property market where prices move in line with economic fundamentals. Previous Government measures have to some extent moderated the market, but sentiments remain buoyant. Low interest rates plus excessive liquidity in the financial system, both in Singapore and globally, could cause prices to rise beyond sustainable levels based on economic fundamentals. Moreover, when interest rates eventually rise, it could strain purchasers who have overextended themselves financially. Therefore, the Government has decided to introduce additional targeted measures to cool the property market and encourage greater financial prudence among property purchasers.
Extending the Holding Period for Imposition of Seller’s Stamp Duty (SSD) on Residential Properties from 3 Years to 4 Years & Raising the SSD Rates
Currently, for residential properties bought on or after 30 August 2010, SSD3 is imposed on the sale of such properties within three years of purchase. This followed the introduction of SSD for residential properties bought on or after 20 February 2010.
The SSD rates will be increased sharply from 14 January 2011, so as to provide a strong disincentive for investors looking to make short term gains. The holding period for imposition of SSD will also be extended from the current three years to four years. The impact of the SSD is especially significant as it is payable regardless whether the property is eventually sold at a gain or loss.
Specifically, for residential properties bought4 on or after 14 January 2011, the SSD rates to be levied on the full consideration will be increased5 to as follows:
- SSD at 16% (higher than up to 3% currently), if the property is sold in the first year of purchase, i.e. the property is held for 1 year or less from its purchase date.
- SSD at 12% (higher than up to 2% currently), if the property is sold in the second year of purchase, i.e. the property is held for more than 1 year and up to 2 years.
- SSD at 8% (higher than up to 1% currently), if the property is sold in the third year of purchase, i.e. the property is held for more than 2 years and up to 3 years.
- SSD at 4% (no SSD currently), if the property is sold in the fourth year of purchase, i.e. the property is held for more than 3 years and up to 4 years.
Please see Annex for examples of how the SSD will be computed.
The extended SSD will not affect HDB lessees as the required Minimum Occupation Period for HDB flats is 5 years.
IRAS will be releasing an updated e-tax guide on the circumstances under which SSD will apply and the procedures for paying SSD6. The e-tax guide will be available at www.iras.gov.sg. Taxpayers with enquiries may call IRAS at 6351 3697 or 6351 3698.
Lower the Loan-To-Value (LTV) Limit to 50% on housing loans granted by financial institutions regulated by MAS for residential property purchasers who are not individuals
With effect from 14 January 20117, an LTV limit of 50% will apply to all residential 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.
Lower the LTV limit on housing loans granted by financial institutions regulated by MAS from the current 70% to 60% for residential property purchasers who are individuals with one or more outstanding housing loans at the time of the new housing purchase
The LTV limit is lowered from 70% to 60% with effect from 14 January 20118 for borrowers who are individuals and have one or more outstanding housing loans (whether from HDB or a financial institution regulated by MAS) at the time of applying for a housing loan for the new property purchase.
However, borrowers who can show evidence that they have sold their existing properties will not be subject to the lower LTV limit when they buy a new property. Where the existing property is a private property, he can show a signed Sale & Purchase (S&P) agreement with the IRAS certificate showing that stamp duty has been paid on it. Where the existing property is a HDB flat, he can show HDB’s approval letter to sell the flat, that HDB will issue within 2 weeks of the First Appointment. These borrowers will still be able to borrow at an 80% LTV from financial institutions.
Borrowers without any outstanding housing loans continue to have a LTV cap of 80%.
These rules apply to housing loans granted by financial institutions for private residential properties, Executive Condominiums, HUDC flats and HDB flats (including DBSS flats).
Loans granted by HDB for HDB flats (including DBSS flats) will still have a LTV cap of 90%. HDB loans are offered to eligible Singapore citizens buying their first homes or right-sizing their flats to meet their housing needs. HDB loan applicants are required to utilise all the balance in their CPF Ordinary Account before HDB loans will be granted. Furthermore, those taking a second concessionary HDB loan must use the CPF refund and 50% of the cash proceeds from the sale of their previous flat before they are granted an HDB loan. This is to ensure that eligible buyers, especially first-time buyers, purchase public housing in a financially prudent manner.
Adequate Supply in the Pipeline
There is an ample supply of private residential units and buyers need not rush to buy now. The Government will continue to ensure an adequate supply of housing to meet demand.
The annual average take-up9 of private residential units between 2007 and 2010 is about 12,700 units. Thus far, the sites awarded under the Government Land Sales (GLS) Programme in 2010 will already yield about 13,300 units. In the GLS Programme for the first half of 2011, we will make available sites that can yield about 14,300 private housing units, of which about 8,100 units will be from sites on the Confirmed List.
As at 3Q2010, there were about 64,400 uncompleted units of private housing from projects in the pipeline10. Of these, about 33,800 units were still unsold. This is equivalent to about 3 years of supply based on the average annual take-up over the last 4 years. The 33,800 unsold units in the pipeline comprised 3,300 units that had been launched for sale by developers and 11,400 units which had the pre-requisite conditions for sale11 and could be launched for sale immediately. The remaining 19,100 units with planning approvals did not have the pre-requisite conditions for sale but these could be obtained quickly from the Government12. The Government will also make available more supply in future GLS programmes. Buyers should bear in mind this supply in the pipeline when deciding whether to buy now.
The Government will continue to monitor the property market closely and take further steps to promote a stable and sustainable property market if necessary.
|1||“Purchasers who are not individuals” refer to purchasers who are not natural persons. These include but are not limited to corporations, trusts and collective investment schemes.|
|2||Financial institutions are required to conduct checks with HDB and with one or more credit bureaus on whether the purchaser has an outstanding housing loan at the time of applying for a housing loan for the property purchase. For joint purchasers, if either purchaser has an outstanding housing loan, the joint purchasers will be considered as having an outstanding housing loan.|
|3||The SSD will apply to the transfer or disposal of interest (including sale and gifts) of residential lands and residential units (whether completed or uncompleted).|
|4||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.|
|5||Currently, the SSD rates are levied at the same rate as buyer’s stamp duty, i.e. 1% for the first $180,000, 2% for the next $180,000 and 3% on the balance. The SSD rates are tiered according to the duration of the holding period, i.e. the seller pays the full SSD rate if the residential property is sold in the first year of purchase; 2/3 the full SSD rate if the sale is in the second year; 1/3 the full SSD rate if in the third year.|
|6||SSD is to be paid within 14 days of the execution of the Agreement (i.e. exercise of Option or signing of Agreement). If the Agreement is executed overseas, upon receipt of the Agreement in Singapore, the SSD must be paid within 30 days.|
|7||The 50% LTV limit will apply to transactions where the date on which the option to purchase (OTP) was granted falls on or after 14 January 2011; or if there is no OTP, where the date of the Sale & Purchase agreement falls on or after 14 January 2011.|
|8||The 60% LTV limit will apply to transactions where the date on which the option to purchase (OTP) was granted falls on or after 14 January 2011; or if there is no OTP, where the date of the Sale & Purchase agreement falls on or after 14 January 2011.|
|9||Take-up refers to the number of private residential units, including Executive Condominium (EC) units, sold by developers.|
|10||These refer to new development and redevelopment projects with planning approvals, i.e. either a Provisional Permission (PP) or Written Permission (WP).|
|11||These refer to private residential developments with Housing Developer Licence and Building Plan Approval. Under the Housing Developer (Control and Licensing) Act, a sale licence must be obtained for a project with more than 4 units, if the developer intends to sell uncompleted residential units in the development. However, the sale of the residential units can only commence with the approval of the building plans of the development.|
|12||These refer to uncompleted private residential developments without pre-requisites for sale but with WP or PP granted. The sale licences could be obtained within 5 working days and building plan approvals could be obtained within 7 working days from the date of application for cases where clearances from various technical agencies are obtained and relevant documents are in order during formal submissions.|
Issued By Ministry of National Development, Ministry of Finance, Monetary Authority of Singapore
7 Dec 2011 Additional Buyer’s Stamp Duty for a stable and sustainable property market
The Government announced today an Additional Buyer’s Stamp Duty (ABSD) to be imposed on certain categories of residential property purchases. The ABSD will be imposed over and above the current Buyer’s Stamp Duty, and will apply to the purchase price or market value of the property (whichever is higher) for the following purchases:
- Foreigners and non-individuals1 (corporate entities) buying any residential property will pay an ABSD of 10%;
- Permanent Residents (PRs) owning one2 and buying the second and subsequent residential property will pay an ABSD of 3%; and
- Singapore Citizens (Singaporeans) owning two2 and buying the third and subsequent residential property will pay an ABSD of 3%.
The ABSD will take effect on 8 Dec 20113. Remission of ABSD will be given for options granted on or before 7 Dec 2011 and exercised within 3 weeks (i.e. on or before 28 Dec 2011) or the option validity period, whichever is the earlier.
The Government’s objective is to promote a sustainable residential property market where prices move in line with economic fundamentals. Prices of private residential properties have continued to rise, albeit more slowly in the last two quarters. Prices are now 13% above the peak in 2Q1996 and 16% above the more recent peak in 2Q2008.
Even with the current economic uncertainties, the demand for private residential property remains firm. Given the uncertainty in stock markets and with interest rates remaining low, private property in Singapore continues to attract investors, local and foreign. Excessive investment demand will however make the property cycle more volatile, and thus increase the risks to our economy and banking system.
The Government has therefore decided to impose the ABSD to moderate investment demand for private residential property and promote a more stable and sustainable market. A higher ABSD rate for foreign buyers in particular is necessary, in view of the large pool of external liquidity and strong buying interest from abroad, and the relatively small size of the Singapore market. Foreign purchases account for 19% of all private residential property purchases in 2H2011, up from 7% in 1H2009.
The ABSD will apply in addition to the existing Buyer’s Stamp Duty on property purchases, which are applied at following rates: 1% on first $180,000 of purchase consideration or market value of the property (whichever is higher), 2% on the next $180,000 and 3% for the remainder.
For purchases made jointly by two or more parties (e.g. a Singaporean with a PR, or a PR with a foreigner), the higher applicable ABSD rate will be imposed. For example, if a citizen purchases a property with a foreigner, the ABSD of 10% will apply. In the case of a joint purchase by Singaporeans, who each already owns properties, the ABSD of 3% will apply as long as one of the purchasers already owns two properties.
Singaporean first time buyers and upgraders, and buyers of HDB flats4 will not be affected by the new measure. Certain reliefs will be provided so that the measure will not impact home occupation demand by residents. For example, relief will be provided for Singaporean-foreigner/PR married couples buying their homes. Reliefs will also be provided for qualifying developers and for purchases falling within the scope of Singapore’s international trade agreements. More details will be provided on the IRAS website.
Adequate Supply of Private Housing to Meet Demand
The Government will also continue to ensure an adequate supply of private housing to meet medium term demand. There are 41,000 unsold private housing units in the pipeline. The Government will inject sites that can potentially yield a total of 14,100 units in the 1H2012 Government Land Sales (GLS) Programme, similar to the supply in previous GLS programmes. Of these, about 7,000 units will be from sites on the Confirmed List. These numbers take into account the ample pipeline supply and the dampening effect of the ABSD.
To give more Singaporean households the chance to own or upgrade to private housing, the Government raised the monthly income ceiling for the purchase of new Executive Condominiums (ECs) from $10,000 to $12,000 in Aug 2011. We will expand the EC supply in 2012 and are prepared to release sites that can potentially yield 5,000 EC units for the entire year. Sites for 3,500 EC units will be made available in 1H2012, including 3,000 EC units on the Confirmed List. The Confirmed List quantum is comparable to the 3,000 EC units from 5 sites sold for the whole of 2011. More details will be provided in the press release for the 1H2012 GLS Programme on MND’s website.
The Government will continue to monitor the property market and adjust our property policies in step with changes in the market and the economy. Mr Tharman Shanmugaratnam, Deputy Prime Minister and Minister for Finance, said, “We have always had open markets and must keep them that way. However, the reality is that investment flows into our property market are now larger than before, and unlikely to recede as long as interest rates remain low. The additional buyer’s stamp duty should help cool investment demand, and avoid the prospect of a major, destabilising correction further down the road.”
Khaw Boon Wan, Minister for National Development, said, “We are ramping up the supply of new EC units through the Government Land Sales Programme. This will help higher-income Singaporeans own private condominium units in an affordable way, as the sale of new EC units is restricted to Singaporean households only.”
Annex 1 – Existing and Additional BSD Rates
- This includes corporate, trusts and collective investment schemes amongst other.
- A person is regarded as owning a property for the purpose of ABSD as long as he owns part of that property. Overseas properties will be excluded from the count of properties owned.
- The measure will apply to a property purchase if the option for purchase is exercised or the agreement for transfer is executed, whichever is earlier, on or after 8 Dec 2011. Where no option for purchase is granted and only an agreement for transfer is executed, then the measure will apply to the agreement for transfer if it is executed on or after 8 Dec 2011.
- The purchase of HDB properties will not be affected by this measure. Only Singaporeans and Permanent Residents are eligible to be HDB flat lessees (i.e. own a flat). Existing residential property owners who buy an HDB flat or a new unit under the Design, Build and Sell Scheme (DBSS) or the Executive Condominium (EC) Housing Scheme will not be subject to the ABSD, since the existing flat/property will have to be disposed of as part of the conditions for the purchase of the HDB/DBSS flat or EC unit.
Issued By Ministry of National Development
11 Jan 2013 Additional Measures to Ensure a Stable and Sustainable Property Market
1 The Government announced today a comprehensive package of measures to cool the residential property market. It also introduced a Seller’s Stamp Duty on industrial properties for the first time, to discourage speculative activity in the industrial market.
Cooling Measures for the Residential Property Market
2 The Government has implemented several rounds of measures to cool demand and expand supply, so as to moderate the increase in housing prices. While these measures have dampened speculative buying, the demand for residential property remains firm and prices have continued to rise.
3 The continued buoyancy of the property market reflects the very low interest rate environment and continued income growth in Singapore. These factors supported a record level of housing transactions last year, particularly from investment demand. Housing prices have also shown signs of reaccelerating in recent months, in both the private residential and HDB resale flat markets. Price increases, if not checked, will run further ahead of economic fundamentals and raise the risk of a major, destabilising correction later on.
4 The Government has therefore decided to implement a further set of measures to cool the private and public housing markets. These measures are calibrated to be tighter on property ownership for investment, as well as on foreign buyers. To discourage over-borrowing, financing conditions for housing have also been tightened. In addition, structural measures have been implemented to strengthen the policy intent of public housing and Executive Condominiums (ECs).
5 Deputy Prime Minister and Minister for Finance Mr Tharman Shanmugaratnam said: “The reality we face is that interest rates are extraordinarily low, globally and in Singapore, and continue to add fuel to our property market. We have to take this further round of measures now, to check recent market trends and avoid a more serious correction in prices further down the road.”
6 Minister for National Development Mr Khaw Boon Wan said: “A large supply of public and private housing – up to 200,000 units in total – will be completed in the coming years. Coupled with the new measures, we will be better placed to ensure that housing remains affordable to Singaporeans.”
Measures Applicable to all Residential Property
7 The following measures will take effect on 12 January 2013:
a) Additional Buyer’s Stamp Duty (ABSD) rates will be:
i) Raised between five and seven percentage points across the board.
ii) Imposed on Permanent Residents (PRs) purchasing their first residential property and on Singaporeans purchasing their second residential property.
b) Loan-to-Value limits on housing loans granted by financial institutions will be tightened for individuals who already have at least one outstanding loan, as well as to non-individuals such as companies.
c) Besides tighter Loan-to-Value limits, the minimum cash down payment for individuals applying for a second or subsequent housing loan will also be raised from 10% to 25%.
8 The measures listed above will not impact most Singaporeans buying their first home. Some concessions will also be extended to selected groups of buyers, such as married couples with at least one Singaporean spouse who are purchasing their second property and will sell their first residential property.
9 The new ABSD and loan rules are significant, but they are temporary. They are being imposed to cool the market now, and will be reviewed in the future depending on market conditions.
10 The details of the ABSD measure are set out in Annex I and the housing loan measures, in Annex II.
Measures Specific to Public Housing
11 The Government is also introducing measures to further moderate the demand for HDB flats, instil greater financial prudence among buyers, and require owner occupation by PR buyers. The following measures will take effect on 12 January 2013:
a) Tighter eligibility for loans to buy HDB flats:
i) MAS will cap the Mortgage Servicing Ratio (MSR) for housing loans granted by financial institutions at 30% of a borrower’s gross monthly income.
ii) For loans granted by HDB, the cap on the MSR will be lowered from 40% to 35%.
b) PRs who own a HDB flat will be disallowed from subletting their whole flat.
c) PRs who own a HDB flat must sell their flat within six months of purchasing a private residential property in Singapore.
Details of these measures are in Annex III.
12 An additional measure will take effect on 1 July 2013 to tighten the terms for granting HDB loans and the use of CPF funds for the purchase of HDB flats with remaining leases of less than 60 years (details of this measure are in Annex IV).
Measures for Executive Condominium Developments
13 The Government will introduce measures specific to new EC developments to ensure that ECs continue to serve as an affordable housing option for middle-income Singaporean families.
14 The following measures will take effect on 12 January 2013:
a) The maximum strata floor area of new EC units will be capped at 160 square metres.
b) Sales of new dual-key EC units will be restricted to multi-generational families only.
c) Developers of future EC sale sites from the Government Land Sales programme will only be allowed to launch units for sale 15 months from the date of award of the sites or after the physical completion of foundation works, whichever is earlier.
d) Private enclosed spaces and private roof terraces will be treated as gross floor area (GFA). The GFA of such spaces in non-landed residential developments, including ECs, will be counted as part of the ‘bonus’ GFA of a residential development and subject to payment of charges. This is in line with the treatment of balconies under URA’s current guidelines. Details of this measure are at www.ura.gov.sg/circulars/text/dc13-01.htm.
Cooling Measure for the Industrial Property Market: Seller’s Stamp Duty
15 Prices of industrial properties have doubled over the last three years, outpacing the increase in rentals. In addition, there has been increasing speculation in industrial properties: in 2011 and the first eleven months of 2012, about 15% and 18% respectively of all transactions of multiple-user factory space were resale transactions carried out within three years of purchase. This is significantly higher than the average of about 10% from 2006 to 2010.
16 The Government is introducing Seller’s Stamp Duty (SSD) on industrial property to discourage short-term speculative activity which could distort the underlying prices of industrial properties and raise costs for businesses.
17 With effect from 12 January 2013, the following SSD rates will be imposed on industrial properties and land bought and sold within three years of the date of purchase:
a) SSD at 15% if the property is sold in the first year of purchase, i.e. the property is held for one year or less from the date of purchase.
b) SSD at 10% if the property is sold in the second year of purchase, i.e. the property is held for more than one year and up to two years from the date of purchase.
c) SSD at 5% if the property is sold in the third year of purchase, i.e. the property is held for more than two years and up to three years from the date of purchase.
18 The Inland Revenue Authority of Singapore (IRAS) will be releasing an E-tax guide on the circumstances under which SSD is applicable and the procedures for paying SSD. The E-tax guide will be available at www.iras.gov.sg.
Issued by the Ministry of Finance, Ministry of National Development, Monetary Authority of Singapore and Ministry of Trade & Industry
28 June 2013 MAS Introduces Debt Servicing Framework for Property Loans
Singapore, 28 June 2013 … The Monetary Authority of Singapore (MAS) will introduce a Total Debt Servicing Ratio (TDSR) framework for all property loans granted by financial institutions (FIs) to individuals1. This will require FIs to take into consideration borrowers’ other outstanding debt obligations when granting property loans. They will help strengthen credit underwriting practices by FIs and encourage financial prudence among borrowers.
2 MAS will also refine rules related to the application of the existing Loan-to-Value (LTV) limits on housing loans. These refinements seek to ensure the effectiveness of the LTV limits that were put in place to cool investment demand in the housing market. In particular, they aim to prevent circumvention of the tighter LTV limits on second and subsequent housing loans.
Introduction of TDSR framework
3 MAS conducted a thematic inspection of banks’ residential property loan portfolios in 2012. While banks generally had in place sound policies to assess the credit worthiness of borrowers, the inspection and subsequent surveys revealed uneven practices with respect to the application of debt servicing ratios and highlighted areas for improvement in credit underwriting practices.
4 The TDSR framework will provide FIs a robust basis for assessing the debt servicing ability of borrowers applying for property loans, taking into consideration their other outstanding debt obligations. FIs will be required to compute the TDSR, or the percentage of total monthly debt obligations to gross monthly income, on a consistent basis.2
5 The coverage of the TDSR framework will be more comprehensive than FIs’ current practice. The TDSR will apply to loans for the purchase of all types of property, loans secured on property,3 and the re-financing of all such loans.4
6 The methodology for computing the TDSR will be standardised. FIs will be required to:
- take into account the monthly repayment for the property loan that the borrower is applying for plus the monthly repayments on all other outstanding property and non-property debt obligations of the borrower;
- apply a specified medium-term interest rate or the prevailing market interest rate, whichever is higher, to the property loan that the borrower is applying for when calculating the TDSR;5
- apply a haircut of at least 30% to all variable income (e.g. bonuses) and rental income; and
- apply haircuts6 to and amortise the value of any eligible financial assets taken into consideration in assessing the borrower’s debt servicing ability, in order to convert them into ‘income streams’ in computing the TDSR.
7 FIs will be required to verify and obtain relevant documentation on a borrower’s debt obligations and income used in the computation of the TDSR.
8 MAS expects any property loan extended by the FI to not exceed a TDSR threshold of 60% and will regard any property loan in excess of a 60% TDSR to be imprudent.7 The threshold is set at 60% for a start to allow both the FIs and borrowers to familiarise themselves with the TDSR framework and its computation methodology. MAS will monitor and review the 60% threshold over time, with a view to further encouraging financial prudence.
Refinement of rules related to application of LTV limits
9 MAS will refine certain rules related to the application of the existing LTV limits on housing loans granted by FIs. In particular, MAS will require:
- borrowers named on a property loan to be the mortgagors of the residential property for which the loan is taken;
- “guarantors” who are standing guarantee for borrowers otherwise assessed by the FI at the point of application for the housing loan not to meet the TDSR threshold for a property loan to be brought in as co-borrowers; and
- in the case of joint borrowers, that FIs use the income-weighted average age of borrowers8 when applying the rules on loan tenure.9
Measures for the long term
10 The new rules will take effect from 29 June 2013.
11 The TDSR framework and refinements to the rules relating to the application of LTV limits are structural in nature, and will be in place for the long term. They aim to encourage prudent borrowing by households and strengthen credit underwriting standards by FIs.
12 They do not involve changes to the LTV limits on housing loans themselves, which were last tightened in January 2013 as part of the government’s package of measures to promote stable and sustainable conditions in the housing market.10The current LTV limits are not permanent, and will be reviewed depending on the state of the property market.
13 Please refer to the FAQs on MAS’ website for further details.
1 This includes sole proprietorships and vehicles set up by an individual solely to purchase property.
2 In the case of a joint application for a property loan, the TDSR shall be computed based on the aggregate total monthly debt obligations and aggregate gross monthly incomes of the joint borrowers.
3 Where a loan is secured by a pool of collateral including property, the TDSR rules will apply if the market value of the property is 50% or more of the value of the total pool of collateral.
4 Existing borrowers who are seeking to refinance their housing loans will be exempted, provided they meet the specific conditions set out in MAS’ Guidelines on the Application of TDSR for Property Loans under MAS Notices 645, 1115, 831 and 128.
5 3.5% for housing loans and 4.5% for non-residential property loans.
6 Eligible liquid assets which are pledged for at least 4 years with the FI from which the borrower is taking the property loan will not be subject to any haircut.
7 Property loans in excess of the TDSR threshold of 60% should be granted only on an exceptional basis. The board of directors of the FI (or senior management in the case of an FI incorporated outside of Singapore) will have to approve policies and procedures relating to such exceptions. In addition, cases exceeding the threshold will need to be approved by the FI’s credit committee.
8 The income-weighted average age will be based on the borrowers’ gross monthly income.
9 Lower LTV limits apply to a loan granted for the purchase of a residential property, where the loan period extends beyond the retirement age of 65 years or the tenure exceeds 30 years.
10 In January 2013, MAS lowered the LTV limits for housing loans to individuals with one outstanding housing loan from 60% to 50%, and to individuals with two or more outstanding housing loans from 60% to 40%. Loans with longer tenure faced even tighter LTV limits. The LTV limit for housing loans to non-individuals was also reduced to 20%.
10 Feb 2014 MAS Broadens Exemption from TDSR Threshold for Refinancing of Owner-Occupied Residential Properties Purchased before the Implementation of TDSR Rules
Singapore, 10 February 2014… The Monetary Authority of Singapore (MAS) has received feedback from borrowers who face challenges refinancing loans for owner-occupied properties which were bought before the introduction of the Total Debt Servicing Ratio (TDSR) rules. MAS has decided to broaden the existing exemption from the TDSR threshold of 60 per cent for such loans to ease the debt servicing burden of these borrowers.
Refinancing of owner-occupied property loans
2 Under the revised rules, a borrower who bought a residential property before the TDSR rules were introduced – i.e. the Option to Purchase (OTP) of the residential property was granted before 29 June 2013 – will be exempted from the TDSR threshold as long as he occupies the residential property that is being refinanced.1 This is a concession compared to the current rules, which also require that he does not own any other property, or have any other outstanding property loan.
3 The Mortgage Servicing Ratio (MSR) will also not apply to the refinancing of loans for HDB flats and Executive Condominiums (ECs) that are owner-occupied and were purchased before their respective MSR implementation dates.2
4 A similar concession will apply with regard to loan tenures, for residential properties purchased before the respective implementation dates for the loan tenure limits.3 In such cases, borrowers whose loan tenures for their owner-occupied residential properties exceed the current regulatory limits4 will be allowed to maintain the remaining tenures of their loans at the point of refinancing.
Refinancing of investment property loans
5 The TDSR threshold of 60 per cent will continue to apply to the refinancing of all investment property loans. This is to encourage borrowers to right-size their loans and thereby reduce their vulnerability to adverse economic conditions or changes in interest rates. However, MAS recognises that some borrowers may face challenges in right-sizing their debt obligations in the short term; the starting level of debt may be too high and there may be significant costs involved if they had to sell their properties to reduce their leverage.
6 Therefore, MAS will allow a transition period until 30 June 2017, during which a borrower may refinance his investment property loans above the 60 per cent threshold, provided he meets the following conditions:
(a) the OTP of the property was granted before 29 June 2013;
(b) the borrower commits to a debt reduction plan with the financial institution (FI) at the point of refinancing; and
(c) the borrower fulfils the FI’s credit assessment.
7 The changes are intended to help borrowers ease their immediate debt servicing burdens, while encouraging those who have taken on high leverage on their investment properties to right-size their loans as early as possible.
8 Borrowers should be aware that the current low interest rate environment will not persist indefinitely. When interest rates rise, borrowers will face higher mortgage repayments. Borrowers engaging in refinancing should therefore exercise prudence and review their debt commitments.
9 The revised rules will take immediate effect.
10 March 2017 Joint Press Release on Measures Relating to Residential Property
Singapore, 10 March 2017… The Government has continued to review conditions in the residential property market. It has determined that the current set of property market measures remain necessary to promote a sustainable residential property market and financial prudence among households. However, we will make calibrated adjustments to the Seller’s Stamp Duty (SSD) and Total Debt Servicing Ratio (TDSR) framework, with effect from 11 March 2017.
Additional Buyer’s Stamp Duties (ABSD) and Loan to Value (LTV) Limits
2. Transaction volumes in the private residential property market remain healthy. There is firm demand for private housing, in part because of current low interest rates and continued income growth. While the growth in outstanding housing loans has moderated, it is prudent for households to further build up their financial buffers to protect against future interest rate increases or any losses in income. The Government is therefore retaining the current ABSD rates and LTV limits.
Seller’s Stamp Duties (SSD)
3. The SSD is currently payable by those who sell a residential property within 4 years of purchase, at rates of between 4% and 16% of the property’s value1. The number of property sales within the 4-year window has fallen significantly over the years since this measure was introduced. The Government will therefore revise the SSD as follows:
a) Impose SSD on holding periods of up to 3 years, down from the current 4 years; and
b) Lower the SSD rate by four percentage points for each tier. The new SSD rates will range from 4% (for properties sold in the third year) to 12% (for those sold within the first year).
4. The new SSD rates will apply to all residential property purchased on and after 11 March 2017. Details of the revised SSD rates are in the Annex.
Total Debt Servicing Ratio (TDSR)
5. The TDSR framework aims to encourage prudent borrowing by households and strengthen credit underwriting standards by financial institutions. Under this framework, property loans extended by a financial institution should not exceed a TDSR threshold of 60%.
6. However, some borrowers have given feedback that the TDSR framework has limited their flexibility to monetise their properties in their retirement years, i.e. to borrow against the value of their properties to obtain additional cash. MAS will therefore relax the rules to meet such needs. We will no longer apply the TDSR framework to mortgage equity withdrawal loans with LTV ratios of 50% and below.
Stamp Duties on Transfer of Equity Interest in Entities whose Primary Tangible Assets Are Residential Properties in Singapore
7. The 2nd Minister for Finance will be introducing legislative changes in Parliament today aimed at treating transactions in residential properties on the same basis irrespective of whether the properties are transacted directly or through a transfer of equity interest in an entity holding residential properties. The intent is not to impact the ordinary buying and selling of shares in such entities by retail investors, where the entities are listed on the Singapore Stock Exchange. However, significant owners of residential property-holding entities or PHEs2 will be subject to the usual stamp duties when they transfer equity interest in such entities, similar to what would happen if they were to buy or sell the properties directly.
8. The Stamp Duties (Amendment) Bill will be tabled in Parliament today to give effect to this policy intent. Further details of this measure are in the Bill.
1 Refers to the property’s selling price or market value.
2 An entity is defined as a Property Holding Entity (PHE) under two possible circumstances.
a) The first category of entities holds residential properties directly. To establish if such an entity is a PHE, a significant asset test will be applied. An entity can be a PHE if 50% or more of its total tangible assets is residential properties in Singapore. We will call this a Type 1 PHE.
b) There is also a second category of entities that have indirect holdings of residential property through Type 1 PHEs in which it has at least 50% equity interest. For such an entity, it will be considered as a PHE if it meets two criteria:
i. First, it beneficially owns at least 50% equity interest in a Type 1 PHE, and
ii. Second, it meets the significant asset test as mentioned above – in other words, the total value of the residential property it owns indirectly through Type 1 PHEs in which it owns at least 50% equity interest as well as the value of the property which it may own directly comprises 50% or more of its total tangible assets. Its total tangible assets comprise the total tangible assets it owns directly, as well as through entities (whether PHEs or not) in which it owns at least 50% equity interest.
10 March 2017 Overview of the Additional Conveyance Duties (ACD) Provision
1. What is a Qualifying Acquisition/ Disposal?
A qualifying acquisition happens when equity interest in a PHE (i.e. the target entity) is acquired and the buyer (with any associates):
- is already a significant owner of the PHE before the acquisition; or
- becomes a significant owner of the PHE after the acquisition.
Each qualifying acquisition is subject to ACDB. It does not apply to equity interest acquired before 11 Mar 2017.
A qualifying disposal happens when the seller (together with any associates) is a significant owner of the PHE and the equity interest of the PHE disposed of:
- was acquired on or after 11 Mar 2017; and
- disposed of within 3 years of acquisition (holding period) on a first-in-first out basis.
2. What is a Property-Holding Entity (PHE)?
A PHE is a property-holding entity whose primary tangible assets (owned directly/indirectly) are Singapore residential properties. A PHE can be a Type 1 PHE, a Type 2 PHE or both.
Type 1 PHE means the target entity whose market value of the residential properties makes up at least 50% of the value of its total tangible assets (TTA).
Type 2 PHE means the target entity:
- Which has 50% or more beneficial interest (directly or indirectly) in one or more entities (henceforth referred to as “related entities”) which is a Type 1 PHE; and
- the sum of the market value of the residential properties beneficially owned by the target entity and its related entities is at least 50% of the TTA of the target entity and its related entities.
Click here for the Definition of Residential Property
3. Who is a Significant Owner of a PHE?
A significant owner of a PHE refers to a person or entity who beneficially owns at least 50% equity interest or voting power in a PHE either on its own or with its associates.
4. Who are Associates?
In determining whether the 50% ownership threshold for significant ownership is met, the equity interest of the buyer’s and seller’s associates will be taken into account. In certain scenarios, the associates’ equity interests will also be included in the tax computation.
Example of associates:
Where the buyer/seller is an individual, his/her associates include:
- family members such as grandparent, parent, child, grandchild, sibling and spouse,
- partners in a partnership, limited partnership or limited liability partnership, or
- the entities which the buyer/seller beneficially owns 75% or more voting capital and more than 50% voting power in.
Where the buyer/seller is an entity, its associates include:
- subsidiaries which it beneficially owns 75% or more voting capital and more than 50% voting power in,
- individuals who or holding entities which beneficially owns 75% or more voting capital and more than 50% voting power in it
- other entities in the group that is an associated entity to a common holding entity or individual which meets condition ii.
- partners in a partnership, limited partnership or limited liability partnership
5. What are the Additional Conveyance Duties?
In addition to existing stamp duty on shares, the Additional Conveyance Duties (ACD) that will apply on qualifying transfer of equity interests in PHEs are:
- Additional Conveyance Duties for Buyers (ACDB):
- Existing Buyer’s Stamp Duty at 1% to 3%
- Additional Buyer’s Stamp Duty at 15% (flat rate)
- Additional Conveyance Duties for Sellers (ACDS):
- Seller’s Stamp Duty at 12% (flat rate)
ACD will be levied on the prevailing market value of the Type 1 PHE’s underlying residential property at the time of the qualifying equity transfer, pro-rated by the percentage of the beneficial equity interest transferred in the Type 1 PHE.
For more information on examples and computation, please refer to IRAS e-Tax Guide on Stamp Duty: Additional Conveyance Duties (ACD) On Residential Property-Holding Entities.
Dutiable Documents relating to Property-Holding Entities
Dutiable documents relating to transfer of equity interest in Property-Holding Entities (PHEs) include the following:
- Contract or agreement for sale and purchase;
- Assignment or transfer;
- Settlement; and
- Declaration of trust
No stamp duties including ACD will apply if the transfer of equity interest in a PHE is pursuant to a will or by way of assent.
Where there is no document executed for the transfer of scripless shares, Stamp Duty is not payable.
Making a Submission to IRAS
For acquisition of equity interest in a company, share duty remains payable in addition to the ACD. You are required to stamp the instrument and pay the share duty via our e-Stamping website (https://estamping.iras.gov.sg).
In addition, you will have to make a submission to IRAS within the stipulated stamping timeframe on the qualifying acquisition/disposal and provide the supporting documents below:
- A copy of the contract/agreement or transfer instrument
- Entire group structure (pre-acquisition and post-acquisition) which shows:
- The chain of relationship including the percentage of equity interest between:
- The ultimate holding entities, the intermediate holding entities and the immediate holding entities of target entity
- The target entity and all its related entities
- Indication on the group structure the target entity or the related entities (whichever applicable) which own residential properties in Singapore
- The chain of relationship including the percentage of equity interest between:
- Documents (e.g. ACRA business profiles) which support the percentage of equity interest between each entity in S/N 2(a).
- Listing of the residential properties in S/N 2(b). The listing should include:
- The entities’ names and the address/land details of the residential properties owned by each of them
- The value of the residential properties
- Valuation reports of the residential properties that indicate the prevailing market value
- Latest audited accounts of the target entity and all related entities
- Register of the target entity which reflects the number of shares/units owned, date of acquisition/disposal by each shareholder/unitholder
- Articles of association of the target entity or other documentary evidences to support the voting power of each equity interest of the target entity
- Declaration of associates (individuals and/or entities) and their beneficial equity interest in PHEs (Please use the template in Annex 6)
- Declaration by the buyer/seller that relevant checks have been made and the information provided is true.
The Commissioner of Stamp Duties may request for further information.
It is the responsibility of the party liable to provide the required information to IRAS.
If you are a buyer, you should approach the seller for information in S/N 2, 4, 5, 6 and 7, and verify with each of your associate on the percentage of equity interests it owns in the target entity. The seller and associate are legally obliged to furnish the requested information to you.
If you are the seller, you should approach your associate to verify the percentage of equity interests it owns in the target entity. Similarly, the associate is legally obliged to furnish the requested information to you.
When to Stamp
You are required to stamp a document before you sign it. However, if you have signed a document and stamped it within the following time frame, no penalty will be charged:
- Within 14 days after signing the document if it is signed in Singapore or
- Within 30 days after receiving the document in Singapore if the document is signed overseas
Where to Stamp
You can stamp your documents easily through any of the following:
- e-Stamping website
- Service Bureaus
- e-Terminals at IRAS Surf Centre
Non-Payment or Late Payment of Stamp Duty
If you do not meet the deadline, you may have to pay a penalty.
A penalty of up to 4 times may be imposed on documents that are unstamped, stamped late or insufficiently stamped.
It is an offence to use a document for which Stamp Duty payment has not been made.
Please refer to Late Payment of Stamp Duty for more details.
6 July 2018 Raising Additional Buyer’s Stamp Duty Rates and Tightening Loan-to-Value Limits to Promote a Stable and Sustainable Property Market
Singapore, 5 July 2018… The Government announced today adjustments to the Additional Buyer’s Stamp Duty (ABSD) rates and Loan-to-Value (LTV) limits on residential property purchases, to cool the property market and keep price increases in line with economic fundamentals.
Status of the Private Housing Market
2. After declining gradually for close to 4 years, private residential prices began rising in 3Q2017. Prices have increased sharply by 9.1% over the past year. Demand for private residential property has also seen a strong recovery, as transaction volumes continue to rise.
3. The sharp increase in prices, if left unchecked, could run ahead of economic fundamentals and raise the risk of a destabilising correction later, especially with rising interest rates and the strong pipeline of housing supply.
4. The Government has therefore decided to raise ABSD rates and tighten LTV limits for residential property purchases.
Raising ABSD Rates
5. The current ABSD rates for Singapore Citizens (SC) and Singapore Permanent Residents (SPR) purchasing their first residential property will be retained at 0% and 5% respectively.
6. The Government will make the following changes to ABSD rates:
a. Raise ABSD by 5%-points for all other individuals; and
b. Raise ABSD by 10%-points for entities; and
c. Introduce an additional ABSD of 5% that is non-remittable under the Remission Rules1 (payable on the purchase price or market value, as applicable) for developers purchasing residential properties for housing development.
7. Table 1 summarises the adjustments to the ABSD rates.
Table 1: Adjustments to ABSD Rates for Residential Property
|Rates on or before 5 July 2018||Rates on or after 6 July 2018|
|SCs buying first residential property||0%||0%
|SCs buying second residential property||7%||12%
|SCs buying third and subsequent residential property||10%|| 15%
|SPRs buying first residential property||5%|| 5%
|SPRs buying second and subsequent residential property||10%|| 15%
|Foreigners buying any residential property||15%|| 20%
|Entities buying any residential property||15%|| 25%
| Plus additional 5% for developers^
# As entities, developers will also be subject to the ABSD rate of 25% for entities. Developers may apply for remission of this 25% ABSD, subject to conditions (including completing and selling all units within the prescribed periods of 3 years or 5 years for non-licensed and licensed developers respectively). Details are provided under the Stamp Duties (Non-licensed Housing Developers) (Remission of ABSD) Rules and the Stamp Duties (Housing Developers) (Remission of ABSD) Rules.
^ Developers refer to entities which engage in the business of construction and sale of housing units.
* This new 5% ABSD for developers is in addition to the 25% ABSD for all entities. This 5% ABSD will not be remitted, and is to be paid upfront upon purchase of residential property.
8. For purchases made jointly by two or more parties of different profiles, the highest applicable ABSD rate will apply. However, full ABSD remission will continue to be provided for joint purchases of the first residential property by married couples with at least one SC spouse.
9. Married couples with at least one SC spouse, who jointly purchase a second residential property, can continue to apply for a refund of ABSD, as long as they sell their first residential property within 6 months after (a) the date of purchase of the second residential property, or (b) the issue date of the Temporary Occupation Permit (TOP) or Certificate of Statutory Completion (CSC) of the second residential property, whichever is earlier (if the property was uncompleted at the time of purchase).
10. There will be a transitional provision for cases where an Option to Purchase (OTP) has been granted by sellers to potential buyers on or before 5 July 2018, and this OTP has not been varied on or after 6 July 2018. For such cases, the current ABSD rates, instead of the revised ABSD rates, will apply if the OTP is exercised within 3 weeks of this announcement (i.e. exercised on or before 26 July 2018) or the OTP validity period, whichever is earlier.
Tightening of LTV Limits
11. LTV limits will be tightened by 5%-points for all housing loans granted by financial institutions. These revised LTV limits do not apply to loans granted by HDB. Table 2 summarises the adjustments to the LTV limits:
Table 2: Revised LTV Limits on Housing Loans Granted by Financial Institutions
|1st Housing Loan||2nd Housing Loan||From 3rd Housing Loan|
|LTV Limit||Existing Rules
80%; or 60% if the loan tenure is more than 30 years* or extends past age 65
75%; or 55% if the loan tenure is more than 30 years* or extends past age 65
50%; or 30% if the loan tenure is more than 30 years* or extends past age 65
45%; or 25% if the loan tenure is more than 30 years* or extends past age 65
40%; or 20% if the loan tenure is more than 30 years* or extends past age 65
35%; or 15% if the loan tenure is more than 30 years* or extends past age 65
|Minimum Cash Down Payment||No change to existing rules|
|5%; or 10% if the loan tenure is more than 30 years* or extends past age 65||25%|
|LTV Limit||Existing Rule
* 25 years, where the property purchased is a HDB flat.
12. The tightened LTV limits will apply to loans for the purchase of residential properties where the OTP is granted on or after 6 July 2018.
13. In line with the tightening of LTV limits for housing loans, LTV limits for mortgage equity withdrawal loans (MWLs) will be tightened as follows:
a. 75% for a borrower with no outstanding housing loan for the purchase of another residential property; and
b. 45% for a borrower with an outstanding housing loan for the purchase of another residential property.
14. The tightened LTV limits will apply to MWL applications made on or after 6 July 20182.
15. The Government will continue to monitor the property market and adjust our policies as necessary, to maintain a stable and sustainable property market.
Issued by: Ministry of Finance, Ministry of National Development and Monetary Authority of Singapore
1 Stamp Duties (Non-licensed Housing Developers) (Remission of ABSD) Rules and Stamp Duties (Housing Developers) (Remission of ABSD) Rules
2 For refinancing of existing MWLs, the current LTV limits of 80%, or 60% (for borrowers with an outstanding housing loan for the purchase of another residential property), will continue to apply. Existing MWLs refer to those which were applied before 6 July 2018.