The Ministry of National Development (MND) has announced changes to the Additional Buyer’s Stamp Duty (ABSD) regime for licensed housing developers, which will come into effect on March 6. The revisions also include an extension of the ABSD remission timeline for developers undertaking complex projects from six to 12 months. This move is aimed at encouraging developers to undertake urban transformation developments, optimize land use through intensification or integration, rejuvenate older estates, or adopt new construction technologies.
The extension will apply to several types of projects, including en bloc redevelopments that will yield at least 700 units upon completion, with at least 1.5 times the number of homes of the existing development. Other projects include those with complex technical or instructional requirements, such as those 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 eligible for the extension.
Projects that fall into any of these categories will receive a six-month extension, while those that meet the criteria of 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 another 35% ABSD, which is remittable when the developer completes and sells all the units within the five-year timeframe.
These revisions come after changes were 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 says that “such extensions will give developers more flexibility and may help to mitigate development risks to some extent, as they have a bit more time to sell units, particularly for mega projects.”
Huttons Asia senior director of data analytics Lee Sze Teck adds that the ABSD revisions will “give a much-needed boost to the en bloc market, in particular, bigger en bloc projects.” While the proposed policy change will likely be welcomed, OrangeTee Group chief researcher and strategist Christine Sun notes that “developers may still face challenges despite the deadline extension as there are other considerations.” She explains that the success rate of en bloc sales will depend on the willingness of buyers and sellers to negotiate prices.
ERA managing director of capital markets and investment sales Tay Liam Hiap believes that it could be “an opportune time” for older projects like Braddell View and Pine Grove to explore en bloc opportunities. These projects may yield around 2,000 new homes, which could take more time to sell. “In such cases, the extension of six to 12 months may not be sufficient for developers to sell out their projects,” adds Tay.
However, Gafoor believes that this policy change may not “spark a revival in the en bloc market,” and expects developers to continue to be cautious due to the high cost of redevelopment, ample oncoming private housing supply, and potential policy risk.