The Ministry of National Development (MND) has recently announced changes to the Additional Buyer’s Stamp Duty (ABSD) regime for licensed housing developers, which will take effect on March 6. With these revisions, the ABSD remission timeline for developers undertaking complex projects will be extended from six to 12 months. This move 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 yield at least 700 units upon completion, with at least 1.5 times the number of homes of the existing development. Other projects that will be eligible for the extension include those with complex technical or instructional requirements, such as projects 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 granted an extension.
Projects that fall under any of the four 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 a 5% ABSD upfront, which is non-remittable, and a 35% ABSD, which is remittable when the developer completes and sells all the units in the project within a five-year timeframe.
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These revisions follow changes announced in February last year, which offered a lower clawback rate for residential developments with at least 90% of units sold. “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,” says PropNex Realty CEO Ismail Gafoor.
Lee Sze Teck, senior director of data analytics at Huttons Asia, believes that the ABSD revisions will give a much-needed boost to the en bloc market, particularly for larger en bloc projects. However, Christine Sun, chief researcher and strategist at OrangeTee Group, cautions that developers may still face challenges despite the deadline extension as there are other considerations, such as the willingness of buyers and sellers to negotiate prices.
Tay Liam Hiap, managing director of capital markets and investment sales at ERA, sees this as an excellent opportunity for older projects, like Braddell View and Pine Grove, to explore en bloc opportunities. These projects have extensive land areas and could potentially yield around 2,000 new homes, which may take longer 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 the policy change may not revive the en bloc market, and developers will continue to be cautious due to the high cost of redevelopment, an ample supply of private housing, and potential policy risks.