The Ministry of National Development (MND) has recently announced revisions to the Additional Buyer’s Stamp Duty (ABSD) regime for licensed housing developers, with effect starting from March 6.
Under the new changes, the ABSD remission timeline for developers undertaking complex projects will be extended from six to 12 months. This is aimed at encouraging developers to take on urban transformation developments, optimize land use through intensification or integration, rejuvenate older estates, or adopt new construction technologies.
The extension will apply to projects such as en bloc redevelopments that will yield at least 700 units upon completion, and have 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 projects integrated with major public transport facilities.
Furthermore, 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 extended timeline.
Projects falling under any of the four categories will receive a six-month extension, while those meeting the criteria of more than one category will get 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 5% ABSD upfront, which is non-remittable, and another 35% ABSD, which is remittable when the developer completes and sells all the units in the project 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.
According to PropNex Realty CEO Ismail Gafoor, the extension of the ABSD deadline will provide developers with more flexibility and help mitigate development risks, as they will have more time to sell units, especially for mega projects.
Senior director of data analytics at Huttons Asia, Lee Sze Teck, believes that the ABSD revisions will give a much-needed boost to the en bloc market, particularly for bigger projects. However, Christine Sun, chief researcher and strategist at OrangeTee Group, points out that developers may still face challenges despite the deadline extension, as other factors such as buyer and seller willingness to negotiate prices will also play a role.
On the other hand, managing director of capital markets and investment sales at ERA, Tay Liam Hiap, says that the extended timeline could be valuable for older projects, such as Braddell View and Pine Grove, which have a large land area and may take longer to sell. However, PropNex Realty’s Gafoor believes that the policy change may not lead to a revival in the en bloc market, as developers may still be cautious due to high redevelopment costs, upcoming private housing supply, and potential policy risks.