On Thursday (6 Feb), the Ministry of Law (MinLaw) and the Singapore Land Authority (SLA) announced that exemption will be allowed for publicly-listed housing developers which has a “substantial connection to Singapore” from the Qualifying Certificate (QC) regime.
This exemption has been much awaited by publicly-listed developers which have long griped about the need to be subjected to strict penalties and timelines similar to the treatment received by foreign firms, although they deem themselves as local firms.
The Residential Property Act (RPA) defines a Singapore company as a company that is incorporated in the country as well as their shareholders and directors as being Singapore citizens or Singapore companies.
Based on the RPA’s definition, public-listed housing developers which are Singaporean, even if there is one foreign shareholder, will be taken as not being a Singaporean company.
The QC regime is not imposed on a housing developer which is a Singapore firm. Under the QC regime, developers are required to complete their developments in five years and dispose of all units in two years after completion. This is done so that land hoarding can be avoided and residential land can be built and sold by housing developers.
According to the authorities, this change in rule will “better align the QC regime and the objectives of the RPA”.
Based on a few criteria, publicly-listed housing developers can apply for exemption from the QC regime. These criteria include the incorporation in Singapore, primary listing is on the Singapore Exchange and the principal place of business is Singapore, the chairperson and the majority of the company’s board are Singapore citizens, a significantly Singaporean substantial shareholding interest in the company and track record in Singapore.
Later in 2020, the changes will take immediate effect and enforced by the legislation. Applications can be submitted to the Controller of Residential Property.
According to authorities, no changes will be made by the government to the current property market cooling measures which were designed to ensure private residential price increases are accurately reflected by economic fundamentals.
Under the present property rule, property developers have five years to build new projects once they have acquired the land to do so. Within the five years, they must also sell all units if they want to qualify for the upfront remission of Additional Buyer’s Stamp Duty (ABSD) on the buying price of the land. However, developers will need to pay a hefty sum including interest to pay for the ABSD if they exceed the five-year mark.
Specifically, the Additional Buyer’s Stamp Duty (ABSD) regime is still continuously binding on all housing developers. One of the conditions of ABSD regime requires that developers develop their acquired residential site as well as selling all the new project units within five years after the purchase date. Through this, depending on the buying price of the land, housing developers can qualify for an upfront remission of ABSD.
A developer that fails to do so will face payment penalty of 25 per cent ABSD with interest or similarly a 30 per cent including an additional ABSD of 5 per cent that is non-remittable. Prior to July 2018, this figure was capped at 15 per cent.
