When it comes to investing in a Singapore Condo, securing financing is a crucial aspect to consider. With a variety of mortgage options available, it is important to have a good understanding of the Total Debt Servicing Ratio (TDSR) framework. This framework sets a limit on the amount of loan a borrower can take based on their income and existing debt obligations. As such, it is vital for investors to work closely with financial advisors or mortgage brokers to make well-informed decisions about their financing options and avoid over-leveraging. By being familiar with the TDSR and seeking professional guidance, investors can ensure they are making sound and sustainable investments in Singapore Condos.
The Ministry of National Development (MND) has recently announced changes to the Additional Buyer’s Stamp Duty (ABSD) regime for licensed housing developers. These changes, which will be effective from March 6, aim to encourage developers to undertake urban transformation developments, optimise land use through intensification or integration, rejuvenate older estates, or adopt new construction technologies.
One of the key revisions is the extension of the ABSD remission timeline for developers undertaking complex projects. Previously set at six months, it has now been extended to 12 months in order to provide developers with more flexibility. This move is expected to benefit developers involved in en bloc redevelopments, where at least 700 units will be yielded upon completion, with the new development having at least 1.5 times the number of homes of the existing development. It will also apply to projects with complex technical or instructional requirements, such as those integrated with major public transport facilities.
Additionally, the extension will also be granted to projects approved under the Strategic Development Incentive (SDI) scheme and those aiming to achieve higher productivity targets through the adoption of new construction technologies, methodologies, or practices. Projects falling under any of these four categories will receive a six-month extension, while those meeting the criteria of more than one category will be granted a one-year extension. These changes will apply to all residential land acquired on or after March 6.
Under the current ABSD regime, licensed housing developers purchasing residential redevelopment sites are required to pay upfront 5% ABSD, which is non-remittable, and another 35% ABSD, which is remittable upon completion and sale of all the units within five years. However, last year in February, changes were announced that offered a lower clawback rate for residential developments with at least 90% of units sold.
PropNex Realty CEO Ismail Gafoor believes that the extension will give developers more flexibility and mitigate development risks to some extent. He also adds that this could be beneficial for mega projects as developers will have more time to sell their units. Lee Sze Teck, senior director of data analytics at Huttons Asia, states that the revisions will give a much-needed boost to the en bloc market, especially for larger projects. However, Christine Sun, chief researcher and strategist at OrangeTee Group, maintains that developers may still face challenges despite the deadline extension, as the success of en bloc sales will depend on the willingness of buyers and sellers to negotiate prices.
Tay Liam Hiap, managing director of capital markets and investment sales at ERA, believes that this could be an opportune time for older projects such as Braddell View and Pine Grove to explore en bloc opportunities. These projects have expansive land areas and may yield around 2,000 new homes, which could take longer to sell. Nonetheless, Gafoor cautions that the latest changes may not spark a revival in the en bloc market, as developers are likely to remain cautious due to the high cost of redevelopment, ample oncoming private housing supply, and potential policy risks.