Singapore's residential
private property market cooling measures with effect from August
30, 2010 and do not apply to HDB buyers.
1. The Seller now must
pay stamp duty for if he sells within the 3 years (instead
of 1 year) after purchase
2. If the Buyer of the property has an outstanding
loan, he pays 10% cash down payment (instead of 5%)
3. The Buyer gets only 70% of the LTV (instead of 80%) if
he has an outstanding loan.
4. These measures take effect from August 30, 2010.
More regulations to remember if the HDB buyer sells and
then buys another HDB property! See 50%* below. |
Implications are as
follows:
It is not profitable to flip properties in 2011 because
1. The Seller now pays stamp duty if he sells within 3 years
(not 1 year holding period).
2. The Seller's Stamp Duty (SSD) is 16% for the first year and
decreasing to the 3rd year. Only after the 4th year is there no
SSD.
HDB buyers are not affected as the MOP (Minimum Occupation
Period is 5 years).
3. The flipper still has to pay Buyer's Stamp Duty as well and
so it may not be profitable to flip the property in the first
year of purchase.
4. Down payment by cash is now 10% of the valuation limit
(not 5%) for buyers who already has at least one mortgage loan.
Does not apply to HDB buyers with no mortgage loan. They apply
to buyers of Executive Condominium, HUDC flats, DDBS flats,
if the HDB owner has one loan.
5. LTV (loan to valuation) is now 70% (not 80%) for housing
loans for any borrower who has one or more outstanding housing
loans (from HDB or banks) at the time of applying for a housing
loan for the new property purchase. But 80% if no outstanding
housing loan.
6. 90% LTV for HDB loans for first-time flat buyers and
second-timers who are right-sizing their flats. They need
to utilise all of their CPF Ordinary Account balance before HDB
loans are granted.
7. Those who take a second concessionary HDB loan
(Singaporeans are allowed to take 2 concessionary HDB loans if
they are eligible based on income) must use the CPF refund and
50%* of the cash proceeds from the sale of their previous
flat before they are granted the loan. During my lecture on
April 8, 2011, there was great confusion even from the lecturer.
A LOUD DISCUSSION DURING A CEA-APPROVED LECTURE
ON APRIL 8, 2011
What is the 50% ruling? The lecturer said that the
first $25,000 of the sales proceeds can be kept by the HDB
seller for his first HDB sale. If the proceeds are $26,000, the
seller keeps only $13,000!
The mature students (almost all over 30s) protested and talked
amongst themselves. There was something not fair. It should be
$26,000 - $25,000 = $1,000. The HDB seller pockets $500 while
the "HDB" keeps $500! Another student said that the HDB does NOT
keep the 50% at all to itself. It goes to the payment for the
purchase of the 2nd new HDB flat from the HDB. If the lecturer
gets confused, you can pity the students who don't do HDB sales
but must memorise all new rules and regulations of the HDB!
Since there will be 3 HDB questions out of 8 during the
forthcoming CEA examination, the students have no choice but to
remember and know how to apply the 50% ruling and to memorise
every formula, new rule and regulation, "right-sizing", CPF
annuities, % for property tax payments, AV, 2-year restriction
period in enbloc sales and failed attempt % to approve repeat
attempts, etc in the essay question just to pass the exam! If he
can't remember how to apply the 50% ruling in a case scenario
examination question to advise some prospects, he fails the
exam! |
Apr
9, 2011
For Rent