The Ministry of National Development (MND) has announced changes to the Additional Buyer’s Stamp Duty (ABSD) regime for licensed housing developers, which will go into effect on March 6. The revisions include an extension of the ABSD remission timeline for developers undertaking complex projects from six to 12 months. This move is aimed at incentivizing developers to take on urban transformation projects, optimize land use through intensification or integration, revitalize older estates, or adopt new construction technologies.
Projects eligible for the extended remission period include en bloc redevelopments that will yield at least 700 units upon completion, with at least 1.5 times the number of units of the existing development. Other projects that qualify include those with complex technical or instructional requirements, such as developments integrated with major public transport facilities. Additionally, 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 will also be granted the extension.
Developers who fall under any of these categories will receive a six-month extension, while those who qualify for 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.
Currently, licensed housing developers purchasing residential redevelopment sites are subjected to an upfront 5% ABSD, which is non-remittable, and a 35% ABSD, which is remittable only when the developer completes and sells all units in the project within a five-year timeframe.
The latest revisions follow changes announced in February last year, which offered a lower clawback rate for residential developments with at least 90% of units sold.
PropNex Realty CEO Ismail Gafoor believes that these extensions will give developers more flexibility and help mitigate development risks to some extent, as they will have more time to sell units, particularly for large projects. Meanwhile, Lee Sze Teck, senior director of data analytics at Huttons Asia, believes that the ABSD revisions will give a much-needed boost to the en bloc market, particularly for bigger projects.
However, Christine Sun, chief researcher and strategist at OrangeTee Group, cautions that developers may still face challenges despite the deadline extension, as other factors like buyers’ and sellers’ willingness to negotiate prices also affect the success rate of en bloc sales.
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, which have large land areas, to explore en bloc opportunities. Tay adds that these projects could potentially yield around 2,000 new units, which may take longer to sell. However, he believes that even with the extended timeline, six to 12 months may not be enough for developers to sell out their projects.
Furthermore, Gafoor believes that the policy change may not necessarily spark a revival in the en bloc market, as developers are likely to remain cautious due to high redevelopment costs, an influx of new private housing supply, and potential policy risks.