Measures to cool the real estate market

1 The government today announced a package of measures to cool the private residential and HDB resale markets. Effective December 16, 2021, Buyer’s Additional Stamp Duty (ABSD) rates will be raised and the Total Debt Service Ratio (TDSR) threshold will be tightened. The government will also tighten the LTV limit for HDB loans from 90% to 85%. In addition, the government will increase the supply of public and private housing to meet demand.

2 The government has been monitoring the real estate market closely for several quarters. The private residential and HDB resale markets have been buoyant, despite the economic impact of COVID-19. Prices for private homes have increased by around 9% since 1Q2020. HDB resale prices are also recovering sharply after a six-year decline. The HDB resale price index decreased 9.9% over 5 years between 2014 and 2018 and remained stable in 2019. Income ratios remain below their historical averages, there is a clear upward momentum. In a low interest rate environment, transaction volumes in the private housing market and the HDB resale market were also high despite the COVID-19 situation.

3 If left unchecked, prices could exceed economic fundamentals and increase the risk of a destabilizing correction thereafter. Borrowers would also be vulnerable to a possible rise in interest rates in the years to come.

4 The government has therefore decided to implement a set of measures to cool the private and public housing markets, in order to promote the maintenance of housing affordability. Private residential measures are calibrated to dampen general demand, especially from those who buy real estate for investment rather than owner occupancy. Measures to tighten financing conditions for both public and private housing will encourage greater financial prudence. The government will also increase the supply of private and public housing.

Measures applicable to all residential properties

Buyer’s Additional Stamp Duty (ABSD) rate increase

5 The current ABSD rates for Singapore Citizens (SC) and Singapore Permanent Residents (SPR) purchasing their first residential property will remain at 0% and 5% respectively.

6 The Government will increase the ABSD rates as follows:

a. Increase the ABSD rate to 17% for SCs buying their 2nd residential property;

b. Increase the ABSD rate to 25% for SCs buying their 3rd and subsequent residential properties, and SPRs buying their 2nd residential properties;

vs. Increase the ABSD rate to 30% for SPRs purchasing their third and subsequent residential property and foreigners purchasing residential property;

D. Increase the ABSD rate to 35% for entities purchasing residential property; and

e. Increase the ABSD rate to 35% for developers who purchase residential property. This 35% can be remitted under the stamp duty rules (unlicensed housing developers) (discount for ABSD) and stamp duty rules (housing developers) (remission of ABSD), subject to conditions . In addition to this ABSD rate of 35%, the non-refundable portion remains unchanged at 5%.

7 Table 1 summarizes the adjustments to the ABSD rates.

Table 1: ABSD Rate Adjustments for Residential Properties

Additional buyer stamp duty rates from July 6, 2018 to December 15, 2021 Prices from July 6, 2018 to December 15, 2021 Prices from December 16, 2021

Singapore citizens

First residential property

0%

0%
(No change)

Second residential property

12%

17%
(Amended)

Third residential property and following

15%

25%
(Amended)

Permanent residents

First residential property

5%

5%
(No change)

Second residential property

15%

25%
(Amended)

Third residential property and following

15%

30%
(Amended)

Foreigners

Any residential property

20%

30%
(Amended)

Entities

Any residential property

25% As entities, Housing Developers will also be subject to the ABSD rate for entities. Real estate developers can request a rebate of this ABSD, subject to conditions.

(Plus an additional 5% for real estate developers Real estate developers refer to entities active in the field of real estate development (i.e. ABSD for all entities. This 5% will not be paid and must be paid in advance when purchasing the property. ‘a residential property.)

35% As entities, Housing Developers will also be subject to the ABSD rate for entities. Real estate developers can request the surrender of this ABSD, subject to the conditions
(Amended)

(Plus an additional 5% for real estate developers) Real estate developers refer to entities active in the field of real estate development (i.e. construction and sale of housing units) with respect to the acquired subject property. (non-refundable) This 5% ABSD for real estate developers is in addition to ABSD for all entities. This 5% will not be paid and must be prepaid when purchasing a residential property.)

8 For purchases made jointly by two or more parties with different profiles, the highest applicable ABSD rate will apply.

9 Married couples with at least one SC spouse, who jointly purchase a second home, may continue to claim reimbursement from ABSD, subject to conditions. These conditions include the sale of their first residential property within 6 months of (a) the date of purchase of the second residential property if it is a completed property, or (b) the date of issuance of the permit. of Temporary Occupancy (TOP) or Certificate of Status of Completion (CSC) of the second residential property, whichever comes first, if the second property is not completed at the time of purchase.

10 ABSD does not currently affect those who buy an HDB apartment or EC unit from real estate developers with an initial discount, if one of the joint buyers / buyers is a SC. There will be no change to this.

11 The revised ABSD rates will apply in cases where the call option (OTP) is granted as of December 16, 2021. There will be a transitional provision that ABSD rates before December 16, 2021 will apply in cases which meet all of the following conditions:

a. The OTP is granted by sellers to potential buyers no later than December 15, 2021;

b. This OTP is exercised no later than January 5, 2022, or during the validity period of the OTP, whichever comes first; and

vs. This OTP has not been modified as of December 16, 2021.

12. Correspondingly, additional transport rights for buyers of entities with equity participation. See the IRAS website for more details on prescribed real estate. will be increased from 34% to 44% (increase of 10 points).

Tightening of the total debt service ratio (TDSR) threshold

13 The TDSR threshold TDSR applies to residential and non-residential real estate loans granted by financial institutions to individuals, sole proprietorships and vehicles without actual substantial commercial activity, set up for the purchase of properties owned by individuals. will be tightened by 5% points from 60% to 55%. The revised TDSR threshold will apply to loans for the purchase of real estate for which the OTP is granted on or after December 16, 2021, and mortgage loan applications with principal withdrawal made on or after December 16, 2021. Borrowers with existing home loans made before December 16, 2021 will not be affected by the revised TDSR threshold when refinancing their loans. The TDSR is currently removed for borrowers who refinance their owner-occupied home loans. For borrowers refinancing their existing investment home loans, MAS has provided a temporary TDSR waiver for borrowers affected by COVID-19. Otherwise, the previous TDSR of 60% will apply.

Specific measure for social housing

Tightening of the loan-to-value (LTV) limit

14 The LTV limit for HDB home loans will be tightened by 5% points from 90% to 85%. The revised LTV limit does not apply to loans granted by financial institutions, for which the LTV limit remains at 75%.

15 The LTV limit of 85% will apply to new flat-rate sales exercise requests launched after December 16, 2021 and to complete resale requests. which are received by HDB from December 16, 2021.

Increase in housing supply

16 The government will also increase the supply of public and private housing to meet housing demand. Details will be provided tomorrow.

17 The measures taken in this cooling package will help promote a stable and sustainable real estate market. The Government remains vigilant in the face of the risk of a lasting rise in prices in relation to the evolution of incomes.

Published by: Ministry of Finance, Ministry of National Development and Monetary Authority of Singapore