Property firms rush to close deals

Property firms scrambled to close large residential property deals on Friday, after a sudden government announcement on the stamp duty rate, effective Saturday.

It was meant to bring the rate applying to the transfer of shares in property-owning companies in line with the rate applied to regular property deals.

The Straits Times understands at least three such deals were completed at the eleventh hour on Friday. First, a consortium led by Mr Ben Yeo, former managing director of engineering and property group Guthrie GTS, reportedly purchased 28 units at TwentyOne Anguilla Park for around $160 million.

Second, in a filing to the Singapore Exchange on Friday, Sing Holdings said it had sold its 100 per cent stake in Sing Holdings (Robin). The buyer, a Singapore entity not related to the firm, paid $72.7 million for 29 units at the Robin Residences condo.

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Third, over 80 units changed hands through a transfer of shares at The Line @ Tanjong Rhu for an undisclosed price.

Developers and buyers were scrambling to avoid the newly introduced additional conveyance duty (ACD).

For buyers, on top of the 0.2 per cent share duty tax, they must pay ACD comprising 1 per cent to 3 per cent on the value of underlying residential properties and a flat 15 per cent on the value of those assets.

Sellers who are significant owners disposing of their equity stake within three years of acquisition will have to pay a flat 12 per cent levy.

The Government was moving to align rates imposed on direct purchase of residential properties and the transfer of shares in property-owning companies.

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A direct purchase of residential property attracts buyer's stamp duty of 3 per cent and depending on the buyer's citizenship, up to 15 per cent additional buyer's stamp duty.

In contrast, acquiring the shares of a holding company that owns the property incurred a share duty tax of 0.2 per cent of the firm's net asset value, prior to the introduction of the ACD.

In response to a media query, a Finance Ministry spokesman said: "As the ACD came into effect on Saturday, it applies only to transactions on and after (that day). We do not comment on tax obligations of individual taxpayers for confidentiality reasons."

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Mr Ian Loh, executive director and head of investment and capital markets at Knight Frank, brokered the Sing Holdings deal. He said the parties had begun viewings last year, and had been discussing pricing over the last two months.

"The sudden announcement helped speed things up. Unless you have been in discussions, it is virtually impossible to seal a deal in less than a day," he said.

Several lawyers told The Straits Times they fielded more calls than they could handle, and were hammering out agreements in five to six hours - a process of negotiation that would usually take weeks.

Mr Kenneth Szeto, a partner at Colin Ng and Partners, said that after Saturday, "it is unlikely developers will still find it worthwhile to engage in the transfer of shares, as the total transaction cost is likely to exceed the potential qualifying certificate penalties".

This article was first published on Mar 14, 2017.
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