Singapore doubles ABSD to 60% for foreign property buyers in effort to “prioritise housing for owner-occupation”

SINGAPORE— To “promote a sustainable property market” and “prioritise housing for owner-occupation”, Singapore government announced the implementation of increased Additional Buyer’s Stamp Duty (ABSD) rates effective from 27 April.

Foreigners buying any residential property in Singapore will see an ABSD raise from 30% to 60%.

While entities or trusts purchasing any residential property, except for housing developers, will see a raise from 35% to 65%.

For Singapore Citizens (SCs) purchasing their 2nd residential property, will see a raise from 17% to 20%.

SCs purchasing their 3rd and subsequent residential property, and Singapore Permanent Residents (SPRs) purchasing their 2nd residential property will see a raise from 25% to 30%.

On Wednesday (26 Apr), the Ministry of Finance, Ministry of National Development and Monetary Authority of Singapore issued a joint statement announcing the raise.

This was the steepest increase among the cooling measures implemented.

The revised ABSD rates will apply to all residential properties acquired on or after 27 April 2023.

ABSD rates for SCs and SPRs purchasing their first residential property will remain at 0% and 5%, respectively, which constitutes about 90% of residential property transactions based on 2022 data.

For acquisitions made jointly by two or more parties of different profiles, the highest applicable ABSD rate will apply.

Married couples with at least one SC spouse, who jointly purchase a second residential property, can continue to apply for a refund of ABSD, subject to conditions.

Based on 2022 data, the above ABSD rate increases will affect about 10% of residential property transactions.

Transitional provision

There will be a transitional provision, where the ABSD rates on or before 26 April 2023 will apply for cases that meet all the specified conditions.

• The Option to Purchase (OTP) was granted by sellers to potential buyers on or before 26 April 2023
• This OTP is exercised on or before 17 May 2023, or within the OTP validity period, whichever is earlier
• This OTP has not been varied on or after 27 April 2023.

Correspondingly, the Additional Conveyance Duties for Buyers (ACDB), which applies to qualifying acquisitions of equity interest in property holding entities (PHEs) will be raised from up to 46% to up to 71%.

Government claims previous measures had a “moderating effect on property prices”

The housing prices have risen significantly in recent years, and the government had to implement several cooling measures in December 2021 and September 2022, to moderate demand in the property market.

The joint statement said government’s previous measures had a “moderating effect on property prices”.

However, in the first quarter of 2023, property prices showed renewed signs of acceleration amid resilient demand, particularly from locals purchasing homes for owner-occupation and renewed interest from local and foreign investors in the residential property market.

“If left unchecked, prices could run ahead of economic fundamentals, with the risk of a sustained increase in prices relative to incomes.”

“To promote a sustainable property market and prioritise housing for owner-occupation, the Government will raise the ABSD rates further to pre-emptively manage investment demand, ” the statement said.

Government promised to beef up housing supply

The joint statement said the revisions to the ABSD rates to help moderate investment demand will complement government’s efforts to ramp up supply, to alleviate the tight housing market for both owner-occupation and rental.

The government has increased the supply of private housing on the Confirmed List to 4,100 units for the 1H2023 Government Land Sales (GLS) programme, from 3,500 units for 2H2022.

In 2022, a total of 6,300 units were injected under the Confirmed List.

Launch up to 23,000 public housing flats in 2023

For public housing, the government has launched more than 23,000 flats in 2022 and will launch up to 23,000 flats in 2023, with up to 100,000 new flats expected to be launched between 2021 to 2025.

“We will continue to maintain a steady pipeline, to cater to growing housing demand. ”

While COVID-19 had led to severe delays across private and public housing projects, the statement said government have made good progress to get back on track.

“With almost 40,000 public and private residential property completions in 2023, and near 100,000 units expected to be completed from 2023 to 2025, there will be significant housing supply coming onstream over the next few years.”

” The measures above have been calibrated to moderate housing demand while prioritising owner-occupation, and provide sufficient housing supply.”

The statement reiterated that the Government will continue to adjust policies as necessary to ensure that they remain relevant, and promote a sustainable property market.

Table 1: Adjustments to ABSD Rates for Residential Property

¹ The ABSD residential property count includes properties that are owned wholly, partially, or jointly with others.
² The ABSD (Trust) rate was for the period from 9 May 2022 to 26 April 2023.
³ ABSD (Trust) is payable by a trustee of any trust when acting in that capacity, but excludes the following: (a) trustee for a collective investment scheme when acting in that capacity; (b) trustee-manager for a business trust when acting in that capacity; (c) trustee for a housing developer when acting in that capacity. (a)/(b) and (c) are already subject to ABSD (Entity) and ABSD (Housing Developer) respectively, when they acquire residential property.
⁴ Housing developers refer to entities in the business of housing development (i.e. construction and sale of housing units) with respect to the subject property acquired. These include trustees for housing developers.
⁵ Housing developers may apply for remission of this ABSD, subject to conditions.
⁶ This 5% will not be remitted and is to be paid upfront upon purchase of residential property.