Redas calls for review of property tax policies

Redas calls for review of property tax policies
Redas’ recommendation for a property tax exemption on land under development could help to lower holding costs, especially for developers of large projects that take a long time to finish. This could bring some relief to builders during the current downturn.
PHOTO: The Straits Times

The Real Estate Developers' Association of Singapore (Redas) has called for a review of property tax policies, among other suggestions for the upcoming Budget.

Redas is also asking the Government to improve transparency in the property valuation process, as well as reduce business costs and regulatory fees, its president Augustine Tan said yesterday.

These proposals - coming amid concerns that geopolitical and economic uncertainties could hurt the economy - are aimed at helping firms contain costs and ensuring business sustainability.

"Negative sentiments can weigh heavily on the property market should there be a confluence of recessionary factors and destabilising events. This will, in turn, adversely affect Singapore's economy," Mr Tan said at the association's Chinese New Year luncheon.

Redas did not lobby for the lifting of property cooling measures in its wish list for the Feb 20 Budget, but instead focused on property tax issues.

Among them, a call for a reduction in property tax for vacant private land, tax exemption on land under development and buildings undergoing renovations, and tax concessions for vacant properties. Market watchers say the property tax exemption on land slated for, or under, development could help to reduce costs and risks for developers.

Chesterton Singapore managing director Donald Han said: "Some developers may be unable to launch their project right away due to uncompetitive price points. The tax exemption will help them to lower holding costs."

Dentons Rodyk & Davidson senior partner Lee Liat Yeang does not think that the Government will agree to the tax exemption at this point as "we are not in a severe downturn or economic crisis".

"That said, for some large projects - perhaps those over $1 billion in value, which will take a longer time to plan and develop - tax exemption for the development period will provide some form of reasonable relief for the developer," Mr Lee said.

Redas is also pushing for special training grants to enhance maintenance skills and technical expertise among engineers and technicians.

The association looks forward to contributing to key areas drawn up by the Committee on the Future Economy, including developing digital capabilities for the real estate industry and tapping opportunities in urban solutions.

Future prospects aside, Mr Tan said that challenges loom for the real estate sector, as all segments of the market continue to reel from the "persistent oversupply situation, rising vacancy rates and weak demand".

Although new private home sales have improved slightly last year, Mr Tan cautioned that it is still too early to conclude that a market recovery is in sight.

"With the weakened labour market, slower growth in employment and earnings, declining population growth, coupled with the prospect of rising interest rates, the current slowdown is expected to continue into 2017," he added.

In addition, developers continue to shoulder the financial burden for failing to sell all units at their residential projects within a stipulated timeframe.

Mr Tan said that about 730 units remain unsold in projects affected by qualifying certificate charges, while another 3,500 units in nearly 40 projects will be hit by the Additional Buyer's Stamp Duty remission clawback during this year and the next.

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This article was first published on Feb 11, 2017.
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