A Guide to the Latest Property Cooling Measures

The seventh round of cooling measures for the property market, implemented on January 12, are considered the most comprehensive yet. 

Most significantly, financial conditions have been tightened and foreign buyers will face more restrictions. Overall, these changes are expected to impact Executive Condominiums (ECs) most, along with the public housing sector. 

Details of the new measures are below.

All residential properties

1) A hike in the Additional Buyer’s Stamp Duty (ABSD).

Before January 12 After January 12
Foreigners 10% ABSD on the purchase of any property. 15% ABSD on the purchase of any property.
PRs 3% ABSD on the purchase of the second property onwards. First property will not be subjected to any ABSD. 5% ABSD on the purchase of the first property, and 10% ABSD on all subsequent properties purchased.
Singaporeans 3% ABSD on the purchase of the third property onwards. First and second properties will not be subjected to any ABSD. 7% ABSD on the purchase of the second property, and 10% ABSD on all subsequent properties purchased.

2) Tighter Loan-to-Value (LTV) limits for those who already have outstanding loans. LTV, simply put, is the percentage of the house’s value that can be borrowed from a bank by a home buyer.A LTV limit of, for example, 60%, means that 60% of the property’s price can be borrowed.

LTV Before January 12 After January 12
First housing loan 80% of house value or 60% if the loan tenure is more than 30 years or would extend past age 65. No changes
Second housing loan 60% of house value or 40% if the loan tenure is more than 30 years or would extend past age 65. 50% of house value or 30% if the loan tenure is more than 30 years or would extend past age 65.
Third housing loan 60% of house value or 40% if the loan tenure is more than 30 years or would extend past age 65. 40% of house value or 20% if the loan tenure is more than 30 years or would extend past age 65.

3) Hike in the minimum cash down payment for those who are purchasing a second or subsequent property from 10% to 25% of the property’s value.

Executive Condominiums (ECs)

1) A limit on the maximum strata floor space for new ECs. This means that penthouses, such as the 4349 sq ft presidential penthouse in [email protected], which exceed the new 1722 sq ft limit will no longer be allowed. Due to its large area, the said penthouse came with a $2.05 million price tag. This measure aims to put a stop to such situations, and ensure that ECs continue to serve as an affordable housing option for the “sandwich class”. 

2) Private enclosed spaces (PES) and private roof terraces (RTs) in non-landed homes such as private condominiums and ECs will be included under the 10% bonus gross floor area (GFA). These areas would then be charged a different premium accordingly. This new rule is a significant change from the previous rule. Then, PES and RTs were not included under the GFA, so developers didn’t have to pay development charges on them. 

The new rule is a reaction to the increasing number of EC units that have hit the million-dollar mark. Most of these apartments commanded a high price due to their sizes, but were actually good deals because of their low per-square-foot (psf) prices. 

Developers were able to charge attractive psf prices for these units by taking advantage of the PES and RTs, which they didn’t have to pay for, and adding these areas to the penthouses. In short, developers could create jumbo-sized units that sold for a large profit without additional development costs.

Now that the PES and RTs are no longer free development space for the developers, it is hoped that there would be better utilisation of space.

3) EC sites from the Government Land Sales programme will only be allowed to be launched units for sale 15 months from the attainment of the site, or after the completion of the foundation works, depending on which is sooner. This is to ensure that developers adhere to their initial plans, and not sway to feed market demands. 

4) Dual-key apartment units in ECs can now only be sold to families that are multigenerational. This is to prevent investors from buying these larger units for rental income. 

Public Housing Sector

1) Lower Mortgage Servicing Ratio (MSR). The MSR is the percentage of the buyer’s income that can be used to pay for the housing loan. In lowering the MSR, the government hopes to encourage Singaporeans to practise prudence, and not over-commit to loans.

Under the new rules, the MSR from financial institutions is capped at 30% and that from the Housing and Development Board (HDB) capped at 35%, reduced from 40%.

2) PRs who own HDB flats will no longer be allowed to sublet their entire flat. According to the Ministry of Finance, Ministry of National Development, Monetary Authority of Singapore and Ministry of Trade & Industry in a joint statement, this measure is intended to ensure that PRs remain the owner occupiers of the HDB homes.

3) PRs who purchase a private property would be required to sell their existing HDB, if they own any, within 6 months.

4) Further restrictions on the usage of CPF funds and HDB loans for the purchase of HDB flats will be put in place on July 1 this year. These changes apply only to the purchase of flats with less than 60 years on the lease.

Lease left on HDB flat Use of CPF funds HDB housing loan
More than, or equal to 60 years No changes No changes
30 to 59 years

Allowed, unless the remaining lease is not able to cover the buyer to the age of at least 80.

E.g: A buyer who is 30 is not allowed to use CPF funds to purchase a flat that has 30 years left on its lease because he will only be 60 when the lease ends.

Allowed, unless the remaining lease is not able to cover the buyer to the age of at least 80.
20 to 29 years Not allowed. Allowed, unless the remaining lease is not able to cover the buyer to the age of at least 80.
Less than 20 years Not allowed. Not allowed.

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