Private spaces may incur development charges

PHOTO: Private spaces may incur development charges
“An artist's impression of Forestville executive condominium in Woodlands, one of EC developments under the spotlight for selling 'free spaces' like roof terrances.

SINGAPORE - Developers may be saddled with additional development charges if private roof terraces and enclosed spaces are included under the gross floor area (GFA), said Lee Lay Keng, associate director of research at DTZ.

"One possible measure could be that private enclosed areas like the patio for ground floor units, or roof terraces for penthouses could be chargeable for developers," said Ms Lee, who was part of a discussion panel at the DTZ Property Seminar 2013 on Tuesday.

Ms Lee was responding to a question about possible measures that the government might roll out in the coming year.

Currently, developers of all non-landed private developments and executive condominiums (ECs) do not have to pay development charges for outdoor spaces that are open to the sky as they are not considered part of the GFA.

Despite public indignation over such super-sized EC units, "developers selling off free space to make additional profit for themselves is not improper under current URA (Urban Redevelopment Authority) rules", National Development Minister Khaw Boon Wan said in a blog post on Monday. He has since directed URA to review and fix guidelines on the issue.

Additional measures targeting the resale flat market may also be in the works, said Ms Lee.

"The rise in prices in the mass market over the last two years was (partly) driven by HDB resale prices, with a lot of demand coming from the HDB upgrader segment," said Ms Lee.

To tackle this, the government can consider making it a requirement for upgraders to sell their flats before purchasing a private home, said Ms Lee. This will be similar to current practices in which private property owners who want to buy a HDB flat have to dispose of their private homes within six months.

Alternatively, more restrictions can be placed on owners who want to retain their HDB flats in pursuit of rental yield after upgrading to a private property.

A host of measures targeting the non-residential sector, too, could be introduced.

"Over the last year, a lot of investment was driven from the residential sector to the non-residential sector because of the stamp duties (imposed on the former). If prices were to run away, one possible measure is to have similar seller stamp duties, because we see a lot of sellers flipping commercial units quite quickly, some selling their unit within weeks," said Ms Lee.

Specific to the industrial sector, the government will likely step up enforcement against non-qualifying users of industrial spaces, said Ms Lee.

"There's also a large supply (of industrial sites which) comes from the private sector. Sites from the industrial Government Land Sales Programme have certain restrictions including minimum unit size, and certain sites cannot be strata-titled within 10 years to ensure there's sufficient sites for end-users. This (set of rules) could be applied to private sites as well," she said.