Developers who buy residential en bloc sale sites are getting more time to meet the government's deadlines to finish developing their sites.
This is to take into account the time taken to get a collective sale order from the Strata Titles Board (STB) or the High Court.
The changes are in response to feedback from the industry which had asked for a fairer treatment of the rules, and are expected to give some breather to residential en bloc sales.
It takes several months for the collective sale order to be granted and this currently eats into the five-year deadline set for developers. The changes mean the deadline will start from the date of the en bloc sale order - instead of much earlier under current rules.
The changes involve two regulations under the ambits of the ministries of law and finance.
The first concerns foreign developers who buy residential en bloc sale sites for which they are given a five-year project completion period (PCP). The PCP currently starts from the date of the issue of a Qualifying Certificate (QC), which foreign developers must obtain from the authorities to buy private residential land in Singapore.
Under the change announced by the Singapore Land Authority (a statutory board under MinLaw), for QCs issued on or after July 1, 2012, the PCP for residential en bloc sites will now start from the date of the collective sale order.
The refinement "is to enable the developer to have the full PCP to complete the project", the SLA said yesterday in a circular to the Real Estate Developers' Association of Singapore (Redas), law firms and law organisations.
The Ministry of Finance (MOF) said that it would adopt the same approach as MinLaw with regard to the additional buyer's stamp duty (ABSD).
To avoid paying the 10 per cent ABSD for the purchase of residential land, developers have to undertake to complete developing the project and selling all the residential units in it within five years of the date of contract or agreement to purchase the site. In the case of collective sales, this would be the date when the site is awarded by the en bloc sales committee.
Under the change, for residential sites bought through collective sales from July 1, 2012, "the start date of the five-year period for the completion and sale of all residential units to qualify for ABSD remission will start from the date of the collective sale order", MOF said yesterday.
The 10 per cent ABSD is payable by all developers - even those who do not have foreign shareholders or directors - and applies to all residential site purchases, including Government Land Sale plots bought on or after Dec 8, 2011.
Developers and en bloc sale agents have requested the authorities to make the changes.
Jones Lang LaSalle's head of investments and residential, Karamjit Singh, welcomed the change. "This may not be a major game changer for collective sales but it is a much-needed tweak of the ABSD and QC regulations bearing in mind that the completion period of an en bloc sale can range from as short as three months (if there is unanimous approval from the owners and hence STB or court approval is not required) to as long as nine months."
It takes three months to complete an en bloc sale after the STB or court order.
"So the changes will help to calibrate the QC and ABSD clocks to start ticking three months before completion of the sale as opposed to from the QC issue date or signing of the agreement respectively," he added. "The changes will have greatest impact on the larger residential en bloc sale sites as any time saving would be more crucial given the scale of the project."
Under the Residential Property Act, housing developers whose shareholders and directors are not all Singapore citizens have to get a QC from SLA's Land Dealings (Approval) Unit (LDAU) to buy private residential property for development. This rule is aimed at controlling foreign ownership of land here. One of the conditions of the QC is the five-year PCP.
A point to note about the tweaking of the start date of the PCP under a QC to buy residential en bloc sale sites is that it is aimed at fairness and equity of an existing policy. The current rules will continue to ensure that foreign companies which develop residential properties in Singapore dispose of the developed units and not hold on to them for investment.
Separately, SLA in its circular yesterday also made an announcement pertaining to developers who had responded to the government's call in 2008 and deferred redevelopment of en bloc sale sites they had bought and instead rented out the units in the existing development to alleviate a shortage of rental homes at the time. LDAU will grant a one-time extension of the PCP (upon application and without charge) based on how long these developers rented out their units.