Ever wondered what were some of the major residential property cooling measures that impacted the local property market the most in the past few years? Let’s have a look at some of these market-wide measures that were implemented by the Singapore government.
10 March 2014
HDB Cooling Measures
The HDB sales process changed dramatically for both sellers and buyers on March 2014.
Instead of obtaining a valuation before deciding on a price to sell, valuation requests are now only accepted after a price is agreed upon by both parties and an OTP is exchanged.
The option period will also increase from the previous 14 days to a longer period of 21 days using the updated version of the HDB OTP.
Valuation requests can only be made by the buyer and must be done within one day from the date of the OTP. Each valuation report is exclusive to the OTP and can not be transferred or reused after the option period lapses. A new valuation report has to be made if there are any changes made to the OTP or price.
The valuation report will take approximately 5-10 working days to process from the date of request.
9 December 2013
Three new measures were introduced to the EC property sector in December 2013.
The first change decreases the cancellation fees of EC purchases from the original 20% to 5%.
The second change was the introduction of a resale levy for 2nd-timers who are applying directly from the EC developer and had already enjoyed a Government subsidy through the BTO process.
The third measure states that purchasers who buy executive condos direct from the developer and who are taking a loan from financial institutions will have a Mortgage-Servicing-Ratio (MSR) for EC cap of 30%.
27 August 2013
There were three major property cooling measures in Singapore implemented by the Government in August 2013.
The first ruling states that Singapore Permanent Resident households are only allowed to purchase a resale HDB flat three years from the date after they achieve their permanent residency status.
The second ruling states that the maximum term for housing loans for HDB is 25 years. This is reduced from the previous ruling of 30 years. The Mortgage Servicing Ratio (MSR) limit has also been scaled down to 30% of the borrower’s gross monthly income, from the previous 35%.
The new maximum term for housing loans has been modified as well. The new tenure financial institutions can grant for new housing loans and re-financing facilities for buyers of HDB flats (this includes DBSS flats) is now 30 years, which is reduced from 35 years from previous rulings.
Loans that have been granted with a tenure of more than 25 years and up to 30 years are subject to tighter Loan-To-Value limits.
29 June 2013
There were two new Singapore property rules that were put in place by the Government in June 2013. The first of which was a ruling which concerned the Total Debt Servicing Ratio (TDSR).
It states that in the event of granting property loans, it is mandatory for financial institutions to take into consideration the current debt obligations of their borrowers.
They need to ensure that the total monthly amount their borrowers have to repay on their debt obligations is equal or less than 60% of their gross monthly income.
Singapore Property Loan Rules Change
The second ruling states that the Monetary Authority of Singapore (MAS) required debtors, whose names have been declared on their property loans, to be the ones to mortgage their residential property for the property loan which they have been granted.
“Guarantors” who act as standing guarantees for borrowers otherwise assessed by financial institutions during a housing loan application are not to meet the TDSR threshold for the loan that is to be brought in as co-borrowers; and in the event of joint-borrowing, financial institutions are required to rely on the income-weighted average age of the borrowers when they apply the terms & conditions of the length of the loan.
12 January 2013
Four new measures were implemented in January 2013.
The first ruling concerned the Additional Buyer’s Stamp Duty (ABSD) on residential property.
It states that Singapore residents are now required a fee of 7/10% (previously 0/3%) of the purchase price on their second or third property; Permanent Residents now need to pay a fee of 5/10% of the purchase price on their first or second property; foreigners and non-individuals are required to pay 15%.
The Loan-To-Value (LTV) for loans granted to Singapore citizens or PRs on their second or third property has also been modified. It is now reduced from 60% to 50/40%; likewise, the newly established Loan-To-Value for non-individuals is 20%, down from 40%.
The new cap for the Mortgage Servicing Ratio (MSR) on housing loans for HDBs is 35% of gross monthly income, reduced from the previous cap of 40%. The new MSR cap on loans granted by financial institutions is 30%.
Last but not least, Permanent Residents (PRs) are now not able to avail their entire HDB flat for rental purposes.
6 October 2012
In October 2012, the Government introduced three new measures.
The new cap on the period of mortgages is now 35 years. Loans which have a tenure of more than 30 years or those that last longer than the borrower’s retiring age of 65 years, their Loan-To-Value is now reduced to 60% on their first mortgage; for their second and successive mortgages, the Loan-To-Value is 40%. The Loan-To-Value has also been reduced to 40% for non-individuals.
8 December 2011
In December 2011, two new policies were implemented. This was when the Additional Buyer’s Stamp Duty (ABSD) was first implemented.
The ruling required foreigners and non-individuals to pay a fee of 10% on the purchase of their property; Permanent Residents (PRs) to pay 3% on their second or successive properties; and Singapore citizens were required a fee of 3% when purchasing their third or successive properties.
The Additional Buyer’s Stamp Duty ruling also affected developers.
Their ABSD fee would be forgone if they purchase residential units exceeding 4 units and must also include plans to establish these units for residential purposes and selling. Additionally, they must provide evidence of these plans in the next 5 years.
14 January 2011
In January 2011, four Singapore property cooling measures were introduced. Firstly, the holding period for imposing the Seller’s Stamp Duty (SSD) has been modified. The period is now increased to 4 years, from the previous length of 3 years.
The SSD rates has also been increased to 16%, 12%, 8% and 4% of consideration.
Secondly, the Loan-To-Value for buyers buying second property in Singapore has been reduced from 70% to 60%. A new cap on the Loan-To-Value for non-individuals purchasing residential units has also been introduced, the cap is set at 50%.
30 August 2010
In August 2010, three Singapore cooling measures were introduced by the Government.
The first measure was concerning the holding period for imposing the Seller’s Stamp Duty (SSD). The holding period has been increased to from 1 year to 3 years. As stated earlier, this measure was modified later on in January 2011, where the holding period was further increased to 4 years.
The new ruling also required the minimum cash payments of property purchasers with one or more outstanding housing loans to be increased from 5% to 10%. The Loan-To-Value was also reduced from 80% to 70% for buyers of their second property.
20 February 2010
In February 2010, the Seller’s Stamp Duty (SSD) was first implemented and it applied to all residential property and land which were sold within a year of the sale transaction.
The Loan-To-Value was also reduced from 90% to 80%, this ruling applied to all housing loans with the exception of loans on HDBs.
14 September 2009
In September 2009, the scheme which absorbs interest for installments made up to TOP and for interest-only housing loans were removed for all private properties. This event sparked off a change in the rules for buying condo in Singapore.