Property Cooling Measures Singapore | New Property Regulations in Singapore

Property | Singapore
by Priyadarshini 23 August 2023

Recently there have been changes in the property prices in Singapore. The cost of Private properties has increased. Also, the prices for Housing Board resale flats have also shot up. In light of the recent price fluctuations, Singaporean authorities have implemented a new set of cooling measures. In this blog, we tell you about Property Cooling Measures Singapore. 

Property Cooling Measures Singapore

The extra buyer’s stamp duty (ABSD) on residential property has increased. You ask, what is ABSD? It is a tax levied on Singapore citizens’ second and subsequent residential property acquisitions. As well as all residential property purchases by permanent residents and foreigners.

The total debt servicing ratio (TDSR) level, which limits the amount a person can spend on monthly debt repayments, will be tightened. This resulting in borrowers receiving smaller house loans.

One good news is that HDB loan restrictions will be reduced as well.ule 

When do the New Rules Become Active?

The measures went into effect on Thursday. They apply to all residential property transactions in which the option to purchase (OTP) was issued on or after December 16, 2016. Buyers with OTPs issued before December 16 will not be affected by the higher ABSD. They must, however, use their OTP on or before January 5. Or within the OTP validity period, whichever comes first. The terms of the OTP must not have been altered on or after December 16. Borrowers with mortgages granted prior to December 16 will not be affected by the new TDSR when refinancing their loans.

Rising Stamp Duty

The ABSD rate will rise from 12% to 17% for citizens purchasing their second residential property. And from 15% to 25% for those purchasing their third and subsequent homes. The ABSD rate for permanent residents purchasing their second residential property will increase from 15% to 25%. This will rise from 15% to 30% if they purchase their third and subsequent properties. The 5% rate for PRs purchasing their first home remains unchanged. Also, the ABSD rate for foreigners purchasing any residential property will be 30%, up from 20%. And the ABSD rate for companies, including home developers, will increase from 25% to 35%.

What Impact would Tighter Loan Limitations have on Private House Buyers?

Due to the new property cooling measures Singapore, the threshold for TDSR will be reduced from 60% to 55%. This means that new mortgages cannot lead total monthly loan repayments to surpass 55% of borrowers’ monthly income. For buyers who received an OTP on or before December 15, the prior 60% TDSR will apply whether or not they exercised their OTP at the time of applying for a home loan.

What Impact would Tighter Loan Limitations have on HDB Buyers?

HDB loans will be reduced from 90% to 85% of the buying price of a property as a rule of the property cooling measures Singapore. This will apply to anyone who purchases a new unit through HDB’s sales exercises beginning on December 16. It will also apply to resale apartment buyers, notably complete resale applications received by HDB after December 16. A complete application is one in which HDB received both the seller’s and buyer’s sections of the resale application. The borrowing ceiling for those taking out housing loans from financial institutions rather than HDB remains at 75%.

Will House Loan Refinancing be Affected?

Borrowers refinancing existing property loans made before December 16 will not be affected by the new TDSR level. The TDSR also does not apply to owner-occupied housing loan refinancing. Although the TDSR applies to existing investment property loans, borrowers affected by Covid-19 have been granted a temporary TDSR relief. Otherwise, the prior TDSR of 60% will apply.

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new property rules
property cooling measures Singapore
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