Developers Given Extension Absd Remission Timelines Large En Bloc Sites And Complex Projects
The Ministry of National Development (MND) has announced changes to the Additional Buyer’s Stamp Duty (ABSD) regime for licensed housing developers, which will take effect on March 6.
One of the main changes is the extension of the ABSD remission timeline for developers undertaking complex projects from six to 12 months. This move aims to encourage developers to take on urban transformation developments, optimise 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 with at least 700 units upon completion, where the redevelopment has at least 1.5 times the number of homes of the existing development. It will also apply to projects with complex technical or instructional requirements, such as those integrated with major public transport facilities.
Additionally, the extension will also apply to 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.
Projects that fall under any of these four categories will receive a six-month extension, while projects that meet the criteria of more than one category will receive 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 an upfront 5% ABSD, which is non-remittable, and another 35% ABSD, which is remittable when the developer completes and sells all the units within the five-year timeframe.
These latest revisions follow changes announced in February last year, which offered a lower clawback rate for residential developments with at least 90% of units sold.
PropNex Realty CEO Ismail Gafoor says, “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.”
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, in particular, bigger en bloc projects.”
However, while the proposed policy change is likely to be welcomed, Christine Sun, chief researcher and strategist at OrangeTee Group, highlights that developers may still face challenges despite the extension. She notes, “For example, the success rate of en bloc sales will depend on the willingness of buyers and sellers to negotiate prices.”
Tay Liam Hiap, managing director of capital markets and investment sales at ERA, believes that this could be “an opportune time” for older projects such as Braddell View and Pine Grove, which have expansive land areas, to explore en bloc opportunities. These projects may yield some 2,000 new homes, which may take more time to sell. Tay adds, “In such cases, the extension of six to 12 months may not be sufficient for developers to sell out their projects.”
However, Gafoor notes that the policy change may not “spark a revival in the en bloc market”. He expects developers to continue to be cautious due to the high cost of redevelopment, ample upcoming private housing supply, and potential policy risks.
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