• Redas says first-time upgraders should get extra 6 months to pay the Additional Buyer’s Stamp Duty
• Call comes after URA restricts extensions of time for options to buy
• Redas says stamp duty deferral will help buyers facing cash crunch

SINGAPORE — The head of the Real Estate Developers' Association of Singapore (Redas) is urging the authorities to allow first-time private property buyers who are upgrading from Housing and Development Board (HDB) flats to defer their Additional Buyer’s Stamp Duty (ABSD) payment until six months after the completion of their new home.

The stamp duty has to be paid by homeowners who buy their second and more properties two weeks after exercising their option to purchase the property. For Singaporeans, it is 12 per cent of the property price.

Redas president Chia Ngiang Hong made the “urgent” appeal on Tuesday (Sept 29) for the deferral saying that this would ease the cash crunch faced by those moving from HDB flats to private properties for the first time.

A similar dispensation is offered to HDB upgraders buying units in executive condominiums, which are public-private housing hybrids built by private developers.

Mr Chia’s comments came a day after the Urban Redevelopment Authority (URA) announced that private property sellers will no longer be able to extend the period of time for a prospective buyer’s option to purchase (OTP) without URA approval.

“One of our urgent suggestions is for the Government to consider allowing first-time upgraders (from) HDB to private properties to defer the ABSD payment to six months after the completion of the newly purchased unit,” he said.

An OTP is usually a three-week period when a buyer books his right to purchase a property from a developer in return for a cash payment.

Buyers have to pay the stamp duty two weeks after the OTP exercise date, but some would rather pay developers a small fee — S$300 or so — under these developer-run schemes to extend their OTP validity. This gives them more time to raise the cash.

The new rules, effective immediately, mean that such moves will no longer be possible, as any extension must be approved by the URA’s Controller of Housing, and only if both buyers and sellers agree.

Mr Chia added that with a six-month deferment, upgraders will not face the pressure of paying stamp duty within two weeks of their purchase.

“It will ease the cash flow of the genuine first-time upgraders and hence reduce the need to ask for an extension of the OTP,” he said.

Mr Chia was speaking at a virtual mid-autumn celebration hosted by the association where National Development Minister Desmond Lee was the guest-of-honour.

While Mr Lee did not directly respond to Mr Chia’s suggestion, he had been asked earlier this month whether the Government would review the ABSD and consider loosening some requirements. Mr Lee had responded that it is important for Singaporeans to be cautious about financial investments.

“A home is a big-ticket item and it's for the well-being of Singaporeans that some of the measures are there,” he had said.

Mr Lee said in his speech on Tuesday that the Government will continue to work closely with the construction sector to help it “ramp up and recover as quickly as possible”.

Some initiatives in place include a six-month extension to developers on the project completion period as well as ABSD remission timelines.

“We will continue to monitor closely the impact of the pandemic on the sector, and will adjust our policies as necessary,” he said.

Mr Lee also spoke about the importance of building resilience in the system to weather future “black swan events”.

“We could, for example, look at how we approach the procurement and management of construction supplies, driving digitalisation and adopting more advanced building technologies,” he said.

“This pandemic has strengthened our collective resolve to quicken the transformation of our entire construction and built environment sector, so that we become more integrated and resilient.”