Raising additional buyers stamp duty rates and tightening loan to value limits to cool the property market
27 January 2022
On 15 December 2021, the Ministry of Finance (“MOF”), Ministry of National Development (“MND”) and Monetary Authority of Singapore (“MAS”) jointly announced a set of measures effective from 16 December 2021 to cool the private and public housing markets and to promote a stable and sustainable property market and continued housing affordability. These measures include raising the Additional Buyer’s Stamp Duty (“ABSD”) rates and tightening the Total Debt Servicing Ratio (“TDSR”). The loan to value (“LTV”) limit for loans from the Housing and Development Board (“HDB”) has also been tightened. The Government will also increase public and private housing supply to cater to demand.
Measures applicable to all residential property
Raising ABSD rates
There is no change to the ABSD rates for Singapore Citizens (“SCs”) and Singapore Permanent Residents (“SPRs”) purchasing their first residential property. These ABSD rates remain at 0% and 5% respectively.
The increase in ABSD rates from 16 December 2021 are as follows:
- Raise to 17% for SCs purchasing their second residential property;
- Raise to 25% for SCs purchasing their third and subsequent residential property, and SPRs purchasing their second residential property;
- Raise to 30% for SPRs purchasing their third and subsequent residential property and foreigners purchasing any residential property;
- Raise to 35% for entities purchasing any residential property; and
- Raise to 35% for developers purchasing any residential property. This 35% may be remitted under the Stamp Duties (Non-Licensed Housing Developers) (Remission of ABSD) Rules 2015 and the Stamp Duties (Housing Developers) (Remission of ABSD) Rules 2013, subject to conditions. In addition to this 35% ABSD rate, the non-remittable component remains unchanged at 5%.
These adjustments to the ABSD rates are set out in the table below.
|
Categories of purchasers |
Property |
Rates from |
Rates on or after |
|
Singapore Citizens |
First residential property |
0% |
0% |
|
Second residential property |
12% |
17% |
|
|
Third and subsequent residential property |
15% |
25% |
|
|
Permanent Residents |
First residential property |
5% |
5% |
|
Second residential property |
15% |
25% |
|
|
Third and subsequent residential property |
15% |
30% |
|
|
Foreigners |
Any residential property |
20% |
30% |
|
Entities |
Any residential property |
25% |
35% |
Source: Joint press release from MOF, MND and MAS
Where a residential property is purchased jointly by two or more parties of different profiles, the highest applicable ABSD rate will apply.
Married couples with at least one SC spouse, who jointly purchase a second residential property, can continue to apply for a refund of ABSD, subject to conditions including selling their first residential property within six months after (a) the date of purchase of the second residential property if this is a completed 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 second property is not completed at the time of purchase.
The ABSD currently does not affect those buying an HDB flat or EC unit from property developers with an upfront remission, if any of the joint acquirers/purchasers is a SC. There will be no change to this.
The revised ABSD rates apply to transactions where the Option to Purchase (“OTP”) is granted on or after 16 December 2021. There is a transitional provision where ABSD rates before 16 December 2021 will apply for cases that meet all of the following conditions: (a) the OTP was granted by sellers to potential buyers on or before 15 December 2021, (b) this OTP was exercised on or before 5 January 2022, or within the OTP validity period, whichever is earlier, and (c) this OTP has not been varied on or after 16 December 2021.
The Additional Conveyance Duties for buyers of equity interest property-holding entities will be raised from up to 34% to up to 44% (increase by 10 percentage points).
Tightening of TDSR
The TDSR refers to the portion of a borrower’s gross monthly income that goes towards repaying the monthly debt obligations, including the loan being applied for. The TDSR threshold has been tightened from 60% to 55%. The revised TDSR threshold applies to loans for the purchase of properties where the OTP is granted on or after 16 December 2021, and for mortgage equity withdrawal loan applications made on or after 16 December 2021. Borrowers with existing property loans granted before 16 December 2021 will not be affected by the revised TDSR threshold when refinancing their loans.
Measure specific to public housing
Tightening Loan-to-Value (LTV) limits
The LTV limit determines the maximum amount an individual can borrow for a housing loan. LTV refers to the loan amount as a percentage of the property’s value. The LTV limit for HDB housing loans has been tightened 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%. The LTV limit of 85% applies to new flat applications for sales exercises launched after 16 December 2021, and complete resale applications which are received by HDB from 16 December 2021 onwards.
Reference materials
The following materials are available on the MAS website www.mas.gov.sg:
Following the announcement of the property cooling measures, MAS updated the Guidelines on the Application of Total Debt Servicing Ratio for Property Loans under MAS Notices 645, 1115, 831 and 128 (with effect from 16 December 2021).