TG13PD PROPERTY DEVELOPMENT

Transcription

1 TG13PD PROPERTY DEVELOPMENT Lecturer : Randy Chan Trent Global College of Technology and Management LEGISLATION RELATING TO ESTATE AGENCY PRACTICE RESIDENTIAL PROPERTY ACT Since 1973, the Singapore Government has imposed restrictions on foreign ownership of private residential property in Singapore. Such ownership is governed by the Residential Property Act (the Act). The Act seeks to strike a balance between giving Singaporeans a stake in the country by being able to buy and own residential properties at affordable prices, while attracting foreign talent by allowing permanent residents, foreign companies and limited liability partnerships that make an economic contribution to Singapore to purchase such properties for their occupation. 1

2 5.0 LEGISLATION RELATING TO ESTATE AGENCY PRACTICE 5.1 RESIDENTIAL PROPERTY ACT Under the Act, a foreign person means any person who is NOT any of the following: Singapore citizen; Singapore company; Singapore limited liability partnership; or Singapore society 5.0 LEGISLATION RELATING TO ESTATE AGENCY PRACTICE RESIDENTIAL PROPERTY ACT If foreign persons are interested in purchasing a restricted residential property, they are required to make applications together with the relevant supporting documents to: Land Dealings (Approval) Unit Singapore Land Authority 55 Newton Road #12-01 Revenue House Singapore

3 5.0 LEGISLATION RELATING TO ESTATE AGENCY PRACTICE Approval in principal (AIP) Can be applied for even when specific property is not found Valid for 6 months, if granted, non-renewable and new application must be made Question What are ownership criteria for Foreign Person? -Must use for own stay; -PR of Singapore; -Applicant of huge economic benefit to Singapore; -Applicant s academic, professional and technical qualification; -Applicant s expertise and working experience needed by Singapore and; -Investments in the type of industry or service sector needed in Singapore 6 3

4 LEGISLATION RELATING TO ESTATE AGENCY PRACTICE KEY CONDITIONS IMPOSED IF AIP APPLICATION IS APPROVED Foreign person cannot sell estate and interest within 3 years after date of purchase of property (or after date of issue of TOP or within 3 years after date of issue of Certificate of Statutory Completion, whichever is earlier) Land area of property <= sqm / 15,000sqf Property will be used solely by foreign person for own occupation and that of his family members as dwelling and not for rental or any other purposes LEGISLATION RELATING TO ESTATE AGENCY PRACTICE FOREIGN DEVELOPERS Must also apply for approval under Residential Property Act Who granted approval must develop and sell the residential units in a timely manner Stipulated Completion Period is currently 5 years Required to sell off all units within 2 years from TOP If fail to meet, their Banker s Guarantee, pegged at 10% of the land price, may be forfeited Extension charge may be levied for any extension of time beyond Project Completion Period 4

5 LEGISLATION RELATING TO ESTATE AGENCY PRACTICE RESIDENTIAL PROPERTY ACT WHAT IS RESTRICTED RESIDENTIAL PROPERTY UNDER THE RESIDENTIAL PROPERTY ACT: A foreign person cannot acquire or purchase restricted residential property unless he obtains the prior approval of the Minister for Law. Such property includes: vacant residential land; landed property [i.e detached house, semi-detached house, terrace house (including linked house or townhouse)]; and landed property in strata developments which are not approved condominium developments (e.g. cluster houses, townhouses) under the Planning Act. LEGISLATION RELATING TO ESTATE AGENCY PRACTICE RESIDENTIAL PROPERTY ACT ADDITIONAL RESTRICTED PROPERTIES Shophouses which is not strata subdivided and is erected on land which had been zoned residential ALL the apartments within a building (residential) or ALL the units in an approved condominium development with prior approval from the Minister of Law 5

6 URA s Master Plan Question Can foreigners buy strata-titled bungalows, semi-detached or terrace housing (within a condominium)? Answer: Yes Example: Ridgewood Condo Duchess Crest Sommerville Park Thomson View 12 6

7 LEGISLATION RELATING TO ESTATE AGENCY PRACTICE RESIDENTIAL PROPERTY ACT WHAT IS NON-RESTRICTED RESIDENTIAL PROPERTY UNDER THE RESIDENTIAL PROPERTY ACT: A foreign person is not restricted from acquiring: any apartment within a building; any unit in an approved condominium development under the Planning Act; and Note: A foreign person is not allowed to acquire all the apartments within a building or all the units in an approved condominium development without the prior approval of the Minister for Law. a leasehold estate in restricted residential property for a term not exceeding 7 years, including any further term which may be granted by way of an option for renewal. 5.2 BASICS OF PROPERTY-RELATED TAXATIONS Background on Stamp Duty Stamp duty is a tax that is levied on documents. Historically, this included the majority of legal documents such as: cheques; receipts; military commissions; marriage licences; land transactions; etc. A physical stamp (a tax stamp) had to be attached to or impressed upon the document to denote that stamp duty had been paid before the document was legally effective. More modern versions of the tax no longer require a physical stamp. 7

8 5.2 BASICS OF PROPERTY-RELATED TAXATIONS Why should Stamp Duty be paid? A stamp duty paid instrument/document is considered a proper and legal instrument/document and as such gets evidentiary value and is admitted as evidence in courts. The instruments / documents not properly stamped are not admitted in evidence by the court. What sort of instruments/documents need to be stamped? From 1998, stamp duty in Singapore only applies to documents relating to :- immovable property, stocks and shares. 5.2 BASICS OF PROPERTY-RELATED TAXATIONS When you buy a residential property, what type of duties are you required to pay? 1. Buyer s stamp duty 2. Additional Buyer Stamp Duty (if applicable) 3. Property Tax 8

9 5.2.1 Stamp Duty on Sale & Purchase of Property You are required to pay stamp duty for documents executed for a sale and purchase of property. Stamp duty will be computed on the purchase price or market value of the property (whichever is the higher amount). The first instrument executed relating to a sale and purchase is liable to ad valorem duty (i.e. full duty). Subsequent document(s), relating to the same sale transaction, is liable to nominal duty. You will need to pay Stamp Duties if you have: Purchased a HDB Flat Purchased a completed property issued with Temporary Occupation Permit Purchased a Property under construction Purchased a property by way of sub-sale Stamp Duty on Sale & Purchase of Property Acquired properties in an Enbloc purchase or Block purchase. Purchased a property and leased the property to the sellers. Sold an existing property/land and bought back units developed by the purchaser. ( sale and buy-back) 9

10 If you have: (a) Purchased a HDB Flat You are required to pay stamp duty if you have executed document(s) for a sale and purchase of a HDB flat. STAMP DUTY WILL BE COMPUTED ON THE PURCHASE PRICE OR MARKET VALUE OF THE PROPERTY, WHICHEVER IS THE HIGHER AMOUNT. Document(s), executed for a sale and purchase of a HDB flat, have to be stamped within 14 days from the date of execution of document in Singapore. If you have purchased a resale HDB flat, the Acceptance to the Option to Purchase has to be stamped within 14 days FROM THE DATE OF HDB'S IN- PRINCIPLE APPROVAL. 19 Purchased a Completed Property issued with Temporary Occupation Permit (TOP) or Land (b) You are required to pay stamp duty on the ACCEPTANCE Letter to the Option to Purchase or Sale and Purchase Agreement that you have EXECUTED (signed). Stamp duty will be computed on the purchase price or market value of the property, whichever is the higher amount. All documents have to be STAMPED WITHIN 14 DAYS after the date of execution in Singapore

11 (c) Purchased a Property Under Construction Properties under construction are referred to properties, which have not been issued with the Temporary Occupation Permit (TOP) or Certificate of Statutory Completion (CSC). You are required to pay stamp duty on the Acceptance Letter to the Option to Purchase or Sale and Purchase Agreement that you have executed (signed) for a purchase of a property under construction. All documents have to be stamped within 14 days after the date of execution of the agreement. 21 (d) Purchased a Property by Way of a Sub-sale If you have purchased a property from the original purchaser (i.e. not the developer), you are required to PAY STAMP DUTY ON THE ACCEPTANCE LETTER TO THE OPTION TO PURCHASE or Sale and Purchase Agreement that you have executed (signed). You are required to stamp the Acceptance Letter to the Option to Purchase or Sale and Purchase Agreement within 14 days after the date of execution. Example: You have purchased a property from the developer and subsequently sub-sold the property to another purchaser. In this case, stamp duty is imposed on document(s) executed between the developer and yourself and document(s) executed between yourself and the sub-purchaser. Even though the sale is for the same property, the parties to the contract and purchase price are different and they are considered as two separate sale transactions. Hence, stamp duty is imposed on each sale transaction

12 (v) Acquired Properties in an Enbloc Purchase or 'Block' Purchase An enbloc purchase or block purchase is regarded as A SINGLE SALE TRANSACTION, notwithstanding that multiple documents may have been executed. Stamp duty is therefore computed on the collective sale price or block purchase price (i.e. TOTAL CONSIDERATION). If multiple documents are entered into amongst the individual owners and purchaser, one document has to be stamped, at ad valorem duty, based on the total consideration. The remaining documents are to be stamped at a NOMINAL DUTY OF $10 EACH. ( Budget 2011) You are required to the stamp all documents within 14 days after the date of execution. Example: If there are 53 documents executed for an enbloc sale and purchase, one document has to be stamped based on the total consideration. The remaining 52 documents are to be stamped at a nominal duty of $10 each. Budget 2011 Nominal duties can be in terms of duplicate ($2) and supplemental agreements or novations ($10) 24 12

13 (f) Purchased a Property and Leased the Property to the Seller (i.e. sale and lease-back) If you have purchased a property and leased the property back to the seller, two sets of stamp duty will be charged. According to Section 6 of the Stamp Duties Act (Cap 312), an instrument relating to several matters is required to be stamped individually. In this instance, one set of lease duty and another set of conveyance duty will be charged. 25 (g) Sold an Existing property / land and bought back units developed by the purchaser (i.e. sale and buy-back) If you have sold an existing property / land and bought back units developed by the purchaser, two sets of stamp duty will be charged. According to Section 6 to the Stamp Duties Act (Cap 312), an instrument relating to several matters is required to be separately stamped for each matter. In this instance, two sets of conveyance duty will be charged

14 5.2.1 Stamp Duty on Sale & Purchase of Property Stamp Duty on Sale & Purchase of Property 14

15 Quick Formula IF THE PROPERTY S PRICE THAT IS $360,000 AND ABOVE, Buyer Stamp Duty = (PRICE * 3% ) - $ PERSON LIABLE TO PAY STAMP DUTY The persons liable to pay stamp duty will be in accordance to the terms of the document. If the terms of the document are silent on this, under the Stamp Duties Act (Cap 312), the transferee has to pay stamp duty and the transferor has to pay the duty on duplicate

16 MORTGAGE A Mortgage is a document where the interest in immovable property or shares is transferred from the borrower to the lender as security for the repayment of a loan obtained under such an agreement. You are required to pay stamp duty on a mortgage where immovable property and/or shares are used as securities for a loan. If the document is signed under hand (signed but not under seal) where shares are used as a security, it is exempt from stamp duty. 31 STAMP DUTY RATE FOR MORTGAGE You are required to pay stamp duty on a mortgage where immovable property and/or shares are used as securities for a loan. The rate is as follows: 32 16

17 STAMP DUTY RATE FOR MORTGAGE An example on the computation of stamp duty on mortgage, for a loan amount of $253,448, is as follows: Additional Buyer s Stamp Duty from 12 Jan 2013 Who are affected? Foreigners, companies, partnerships and societies (15%) Singapore Permanent Residents (PR) who are purchasing their 1 st property (5%) and subsequent properties (10%) Singapore Citizens (SC) who are purchasing their 2 nd property (7%) and subsequent properties (10%) 34 17

18 5.2.1 Stamp Duty on Sale & Purchase of Property Properties to be included in the Count of Properties Owned a) Count from Date of Contract or Agreement The property is to be included in the count of properties owned by a person if there is already a Contract or Agreement to purchase the property even though the property has not been legally transferred to him yet. This would include the purchase of an uncompleted unit from the developer whereby the Sale & Purchase Agreement has been signed. Similarly, the property is to be excluded from the count of properties owned by a person if there is already a Contract or Agreement to sell his property. 18

19 5.3.1 Properties to be included in the Count of Properties Owned b) Include All Residential Properties (Wholly or Partly Residential) (i) Building units (including those under construction) (ii) Vacant land or entire building on land with Master Plan zonings as shown in Table Properties to be included in the Count of Properties Owned 19

20 5.3.1 Properties to be included in the Count of Properties Owned c) Full Count for Partial Ownership and Joint Ownership As long as a person owns any share of interest in a property, that property will be included in the count of properties owned by him. For example, if a person jointly owns a property with his wife, and owns 20% share of another property with his sibling, the number of properties owned by him is counted as two Properties to be included in the Count of Properties Owned d) Exclude Properties Gazzetted for Compulsory Acquisition All residential properties gazzetted for compulsory acquisition will be excluded from the count of properties. 20

21 5.3.1 Properties to be included in the Count of Properties Owned e) Purchase Made by One Buyer Whether ABSD is payable and which ABSD rate would apply would depend on the profile of the buyer whether the buyer is an individual or non-individual, his residency status and the count of residential properties owned by him Properties to be included in the Count of Properties Owned f) Purchase Made by Multiple Buyers with Different Profiles If the property is jointly bought (either joint tenancy or tenancy-in-common) by buyers with different profiles, the higher ABSD rate will apply, regardless of his share in the interest of the property. For example, if a foreigner, a Singapore PR and a SC jointly buy a property worth $3million, with each owning a one-third share, the ABSD rate of 15% applicable to the $3million, notwithstanding that the other two purchasers are nonforeigners and have paid $2million for their share of the property. Remission applies to purchases by married couples of certain profiles 21

22 5.3.2 Manner of Property Acquisition/Transfer The most common manner of property acquisition is by way of direct purchase. Properties may also be acquired or transferred in the following manner : - (a) Via Gift, Release, Settlement; (b) Via Declaration of Trust where the beneficial interest in the property passes to the beneficiary; (c) Via Letter of Authority (d) Via Exchange All the above manner of property acquisition will similarly be subject to ABSD depending on the profile of the transferee, beneficiary and the intended transferee. For example, if a property is bought by a SC who holds the property in trust for a beneficiary who is a FR, the ABSD rate at 15% applies based on the profile of the beneficiary Purchase of Multiple Properties in One Transaction Although many properties may be bought under a single contract, each property will be counted as a separate property. The buyer may choose any one of the multiple properties to include in the property count that is not subject to the ABSD or subject to lower ABSD rate. For example, if the SC who does not own any residential property decides to purchase two residential units in one contract, he may choose any one of the units that is not subject to ABSD. 22

23 5.3.4 Purchase of Additional Partial Interest in the Same Property Where the owner already owns a partial interest in a property, the ABSD rate applicable for the acquisition of additional interest in the same property will depend on the number of properties he already owns at the time of the acquisition. Hence if a SC only owns a partial interest in one property, his acquisition of additional share in the same property would not be subject to ABSD. If he already owns partial interests in both property A and B, his acquisition of additional share in property A or B or both would be subject to ABSD rate of 7% as he owns 2 properties at the time of the acquisition of additional interest. If a SPR only owns a partial interest in one property, his acquisition of additional interest in the same property would be subject to ABSD at 5%. If he already owns partial interests in both property A and B, his acquisition of additional share in property A or B or both would be subject to ABSD rate of 10% as he owns 2 properties at the time of the acquisition of additional interest When is ABSD Payable ABSD, like BSD, is payable within 14 days of: (i) Date of exercise of Option to Purchase (OTP) or Contract; or (ii) Date of Sale & Purchase Agreement (where no OTP is granted); or (iii) Date of transfer where (i) and (ii) are not available nor applicable. If the contract, agreement or transfer is signed overseas, ABSD is payable within 30 days of the receipt of such documents in Singapore. 23

24 5.3.6 REMISSION 1. Purchase of HDB Flats and Executive Condominium (EC) Units that are Subject to HDB Regulations on Ownership. Before 12 Jan 2013, ABSD is remitted for any purchase of new HDB flats (BTO and DBSS), resale HDB flats and new EC units. From 12 Jan 2013 onwards, (i) ABSD will be remitted for purchase of HDB flat or new EC by a SC household only (ii) ABSD of 5% will be payable for purchase of HDB flat by SPR. Remission for such purchases can be applied through HDB. 2. Purchase by Married Couples ABSD Remission ABSD remission (by way of a lower ABSD rate or full remission) may apply to co-purchase by a married couple involving a SC spouse or SPR spouse under certain scenarios. An application for the remission has to be submitted to IRAS. While ABSD payment can be withheld pending approval of remission, BSD cannot be withheld. 24

25 ABSD Remission. ABSD Refund on Purchase of Second Residential Property Purchase of second residential property by a married couple involving at least one SC spouse may qualify for ABSD refund subject to the following conditions : (i) ABSD has been paid on the second residential property; (ii) The first property (co-owned or owned separately) is sold within 6 months from the date of purchase of the second property (if it is a completed property) or TOP/CSC (whichever is earlier) of the second property (if it is an uncompleted property). (iii) The married couple has not purchased or acquired a third or subsequent property from the date of purchase of second property to the date of sale of the first property 3. Foreigners under Free Trade Agreements (FTAs) Foreigners from United States of America, Iceland, Switzerland, Liechtenstein and Norway who fall within the scope of the respective FTAs will be accorded with the same treatment as SCs. Such buyers are required to submit an application for remission so as to enjoy the same treatment as SCs. While ABSD payment can be withheld pending approval, BSD cannot be withheld. 25

26 4. Development Sites with 5 or More Residential Units Remission of ABSD is allowed for development projects with more than 4 residential units, on the condition that the developer follows through the intention to develop the residential properties for sale. The developer may be eligible for remission of ABSD only if they are Companies. ABSD on the purchase of vacant residential land (include sites purchased from the Government ), development sites, and en-bloc purchase of residential properties for the purpose of housing development of more than 4 units, may be remitted upfront subject to the buyer (developer) giving the undertaking to: Complete development and sell all the residential units in the development within 5 years of the date of Contract or Agreement to purchase the site. Produce the Qualifying Certificate where relevant and housing developer licence within 2 years of the date of Contract or Agreement. Produce proof of piling and foundation works and any demolition works within 2 years of the date of Contract or Agreement. Produce proof of disposal of all residential units in the development within 5 years of the date of Contract or Agreement to purchase the site. If condition (a) is not met, ABSD (with interest), becomes payable immediately upon 26

27 5.4 SELLERS STAMP DUTY In February 2010, the Government imposed a seller s stamp duty (SSD) on sellers who buy (or acquire) residential properties on or after 20 February 2010 and sell (or disposed of) them within one year of acquisition. The amount of SSD is computed based on the same rates as the buyer's stamp duty. 5.4 SELLERS STAMP DUTY On 30 Aug 2010, the Government further announced that SSD will be payable on residential properties which are acquired (or purchased) on or after 30 Aug 2010 and disposed of (or sold) within 3 years of acquisition. The amount of SSD for the holding period of 1 year is computed based on the same rates as the buyer's stamp duty, but will be reduced to 2/3 and 1/3 of the amount of buyer's stamp duty for holding period of 2 years and 3 years respectively. 27

28 5.4 SELLERS STAMP DUTY On 13 January 2011, the Government announced the extension of the holding period for imposition of SSD on residential properties from 3 years to 4 years based on new rates. The new SSD rates will be imposed on residential properties which are acquired (or purchased) on or after 14 January 2011 and disposed of (or sold) within 4 years of acquisition, as follows : Holding period of 1 year : 16% of price or market value, whichever is higher Holding period of 2 years : 12% of price or market value, whichever is higher Holding period of 3 years : 8% of price or market value, whichever is higher Holding period of 4 years : 4% of price or market value, whichever is higher Properties acquired before 20 Feb 2010 will not be subject to SSD Manner of Acquisition and Disposal 28

29 5.4.1 REMISSION AND EXEMPTIONS Licensed housing developers who are governed under the Housing Developers (Control and Licensing) Act need not pay SSD when selling residential properties developed by them. Public authorities in exercising their functions and duties need not pay SSD when selling residential properties, e.g. Housing & Development Board (HDB), Jurong Town Corporation (JTC) REMISSION AND EXEMPTIONS Public authorities in exercising their functions and duties need not pay SSD when selling residential properties, e.g. Housing & Development Board (HDB), Jurong Town Corporation (JTC). Residential property owners need not pay SSD when their properties are acquired by the Government under the Land Acquisitions Act. 29

30 5.4.1 REMISSION AND EXEMPTIONS Bankruptcy or involuntary winding up. Foreigners need not pay SSD when they have to sell their residential properties as required under the Residential Properties Act REMISSION AND EXEMPTIONS SSD remission for sellers/transferors under the following scenerios:- 1. For Non-licensed developers are to be registered companies or businesses and in business of housing development. 2. Dates of acquisition of deceased properties are prior to relevant effective dates. 30

31 5.4.1 REMISSION AND EXEMPTIONS Matrimonial proceedings remission rules Conveyance directions remission rules Transfer of HDB flat within family remission rules Relief from stamp duty upon reconstruction or amalgamation of companies Relief from stamp duty upon transfer of assets between associated companies Additional Information for HDB Flat Owners HDB Flat owners may be eligible for remission when their flats are repossessed or returned to HDB under the SERS. Only applies to flats bought after 20 Feb For flats that are bought after 30 Aug 2010 and disposed thereafter, SERS flats that were sold in the open market before HDB claims them Flats that were returned to HDB due to break up, annulment, separation or divorce within holding period. Owners that surrender their Lease Buyback Scheme or studios to HDB. HDB flat sellers/ transferors who bought their flats between 20 February to 29 August 2010 (both dates inclusive) and dispose them within 1 year holding period in the above three scenarios are not exempted and need to pay SSD. 31

32 STAMP DUTY LEASES WITH FIXED RENTAL All lease documents need to be stamped. These include Lease or Tenancy Agreement to let or sublet the entire property or part of a property such as a room in a HDB flat, Agreement for Lease, Agreement for Variation of Lease, Acceptance to the Letter of Offer, and all other written agreements pertaining to any property leasing transactions. Lease renewal or extension of lease is considered a fresh lease. Full stamp duty rates will apply. Any written agreement to renew or extend the lease also needs to be stamped. The Rates payable Where the lease term is for a period Where the annual rent exceeds $1000 Up to 1 year More than 1 year and up to 3 years More than 3 years or for an indefinite term For every $1 $2 $4 $250/- or part thereof of the average annual rent 32

33 5.6 PROPERTY TAX Annual value is the estimated annual rent the property can fetch if it were rented out. Calculated on the basis of base rent. Tax will be based on a percentage of the AV Current tax is 10% Owner occupied properties can apply for tax concession Property tax is computed as follows: Property tax payable yearly = Annual Value X Tax Rate Hence if the Annual Value is $24,000 and the tax rate is 10%, Property Tax payable = $24,000 X 10% = $2,400 yearly 33

34 WEF 1 Jan 2011 Annual Value ($) Tax Rate (%) First 6,000 0 Next 59,000 4 Amount exceeding 65,000 6 Annual Value ($) Tax Rate (%) Tax Amount ($) First 6,000 Next 59,000 First 65,000 Amount exceeding 65, ,360 2,360 Budget

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36 5.6.1 WHO QUALIFIES FOR CONCESSIONARY RATE PROPERTY TAX If you own and live in a private residential property, you may apply for owner-occupier concession. For new and resale HDB flat owners, you need not apply. The owner-occupier concession will be automatically granted to you as you are required to live in your HDB flats. 36

37 5.6.2 ANNUAL VALUE The AV is the estimated annual rent of your property if it were to be rented out, excluding the furniture, furnishings and maintenance fees. It is determined after analysing the rents of similar or comparable properties. The basis of determining the AV is the same whether the property is rented out, owner-occupied or left vacant. If your property is rented out, the AV could be higher or lower than your actual rents as the AV reflects the market rent at the time of review, while your actual rents were committed earlier. Annual Value Yearly review based on prevailing market rents If rents are static, no adjustment Market rent may be affected if you have made improvements to your property. 37

38 Objections to Annual Value (AV) 21 days upon receipt of Valuation Notice to object against proposed AV You can also OBJECT to the current AV of your property as shown in the Valuation List at any time of the year even if you do not receive a Valuation Notice. The Valuation List contains the AV of all the properties assessed for property tax purpose. Need to stated your desired AV and reasons with evidence in your Notice of Objections Vacancy Refund Property tax is payable REGARDLESS of whether the property is vacant or occupied. However, you may apply for refund of tax on a property which is continuously vacant for at least 30 days or a calendar month AND your property is undergoing repairs. An owner claiming a refund of property tax for any period commencing from 1st November in any year to 31st October in the ensuing year, has to submit his claim to the Comptroller not later than 15th November in the ensuing year. 38

39 Vacancy Refund The claim can also be made within 30 days after the property has been vacant for one year, or as soon as the property is occupied, whichever is earlier. the building is in good repair and fit for occupation; every reasonable effort to obtain a tenant has been made; the rent demanded is a reasonable one; and the building has been vacant during the whole of the period in respect of which the refund is claimed. Remission of Property Tax for Residential Building Works You can apply for Remission of Property Tax under the Property Tax (Building Works in Residential Premises) (Remission) Order 1991 if: you are an individual property owner; and carry out additions and alteration works to your residential property. What are the conditions? the residential property is vacant during the period of claim for remission; the building works have been approved by the Building Authority; the building works have been completed and certified by the Building Authority; the residential property has been owner-occupied for at least one year following the completion of the building works. The remission will not be granted if you have transferred the property or did not wholly owner-occupy the property for one year after the completion of the building works. 39

40 What is the period of remission? The period of remission is for a MAXIMUM OF TWO YEARS from the date of vacation of the residential property or the date of submission of building plans to the Building Authority, whichever is later; to the date of completion of the building works. Remission of Property Tax for Residential Properties Undergoing Reconstruction Works if you have demolished your dwelling house for reconstruction. What are the conditions? the land is not occupied; no rent or fee is charged or received for the occupation or use of the land or any part thereof; you are not enjoying the owner-occupier concession on another property during the concession period; (If you are currently enjoying owner-occupier concession on another property, you may inform us to withdraw the owner-occupier concession on that property). the reconstructed house is owner-occupied for at least one year following the Temporary Occupation Permit (TOP) date or the Certificate of Statutory Completion (CSC) from the Building Authority. 40

41 Property Tax Exemption Section 6(6) of the Property Tax for public religious worship ; as public schools which are in receipt of grant-in-aid from the government; for charitable purposes ; and for purposes conducive to social development in Singapore. Partial exemption may be granted if only parts of the building qualify for exemption. To apply for exemption, you need to write to the Comptroller of Property Tax with supporting information for approval. Property Tax for Vacant Land The Annual Value of your land is determined at 5% of the estimated freehold market value of the land. The basis is the same for land that is let, vacant or under development. Example: The market value of your land is $1,000,000 Annual Value is: 5% x $1,000,000 = $50,000 41

42 5.6 Housing Developers (Control & Licensing) Act and Rules Any developers who intends to carry out a project of MORE THAN 4 UNITS of housing accommodation is required to obtain a housing developer s license from the Controller of Housing before he commences construction of the housing project. This is a requirement under the Housing Developer s (Control and Licensing ) Act the Act Licensed housing developers are also subject to the rules made under the Act, namely the Housing Developers Rules and the Housing Developers (Project Account) Rules Housing Developers (Control & Licensing) Act and Rules-Overview Can only sell after Sales Licence and Building Plan approval. Only Standard OTP and S&P to be used Monies paid by buyers to be deposited into a Project Account Licence is valid till TOP or SSCT or COT 42

43 5.6.2 PRE-REQUISITES TO COMMENCE SALE Can apply for Sale or No Sale Licence. Sale Licences allows developer to sell after obtaining BP approval No Sale Licence allows only construction and not sell. Sale can only be carried out after TOP Developers are required to use a standard form of OTP and S&P Agreement. Required to open a Project Account under the Act. The licenced developer must deposit into the Project Account : (a) all monies paid by a purchaser (including the booking fee) towards the purchase of a unit up to the issue of Temporary Occupation Permit for the unit and; (b) all loans obtained for the construction of the housing project. Monies in the Project Account can only be withdrawn by the licenced housing developer for purposes related to the housing project. 43

44 VALIDITY PERIOD OF LICENCE Validity will cease when the project has obtained the CSC and issuance of COT or SSCT When a licence ceases to be in force, the developer will longer be subject to the Act and its Rules in relation to the completed housing project BUYING FROM DEVELOPERS WHO ARE NOT LICENSED When sales done after CSC, not required to use standard form of OTP or S&P agreements. This is the same for developers who are not required to be licensed under the Housing Developer s (Control and Licensing ) Act. 44

45 5.6.7 OPTION TO PURCHASE An Option to Purchase is a right or option given by the vendor of a property to an intending purchaser to buy the property at a specified price within a specified period of time (the validity period of the option) Overview Booking fee payable is between 5% to 10% of purchase price. Licensed developers are required to use standard Option to Purchase. All intending purchasers must be named in the Option. Option is valid for 3 weeks from delivery of Sale & Purchase Agreement to purchaser. To exercise option, Sale & Purchase Agreement has to be signed and balance downpayment has to be paid. 45

46 Standard Option to Purchase Standard form of OTP to be used. The developer is required to seek approval from the Controller of Housing for any change to be made to the standard Option to Purchase. The standard Option to Purchase cannot be amended even by mutual agreement between the buyer and developer unless approval is given by the Controller of Housing. Non-assignability of Option The purchaser is not allowed to assign or transfer the Option to Purchase that has been granted to him by the developer to any other persons. Hence, he needs to ensure that all persons who are intending to purchase the property are correctly identified and named as the 'intending purchasers' in the Option to Purchase. Only the intending purchasers named in the Option to Purchase may exercise the option and sign the Sale & Purchase Agreement for the property as purchasers. After an Option has been granted, the Controller's approval has to be obtained for any change of name in the Option. 46

47 Validity Period of Option If a purchaser is granted an Option to Purchase, the developer is required within 14 days from the date of the Option, to deliver the Sale & Purchase Agreement in duplicate and the original or copies of the title deeds to the purchaser or his lawyer for review. The option is valid for 3 weeks from the date of delivery to the purchaser or his lawyer of these documents. The intending purchaser has to exercise the Option to Purchase within its validity period if he decides to buy the property. Process to Exercise Option Within the 3 weeks validity period, the intending purchaser may exercise the Option to Purchase (i.e. sign the S&P) Sign all the copies of the Sale and Purchase Agreement; Return all copies of the signed agreement to the developer; and Pay to the developer the balance downpayment* (which could be between 5% to 15% of the purchase price). The developer may, instead of the 3 weeks mentioned above, allow purchasers to pay the balance downpayment* within 8 weeks from the Option date 47

48 Non-Exercise of Option If the Option to Purchase is not exercised before it expires, the developer will be entitled to forfeit 25% of the booking fee. The other 75% of the booking fee will be refunded to the purchaser. Thereafter, the developer can sell the property to any other interested party. 48

49 SALE AND PURCHASE AGGREEMENT A Sale & Purchase Agreement is a private contract between the vendor and the purchaser for the sale and purchase of a property. Licensed housing developers are required to use the standard form of Sale & Purchase Agreement in the sale of the units in a licensed housing project. Share Value Each unit is allocated with a share value according to the size of the unit. Used to compute the amount of maintenance fee he needs to pay. It is perceived that the bigger the unit, the more the usage of the common facilities of the project. 49

50 Share Values Sub-sale of Unit If the purchaser wishes to sub-sell the unit after signing the Sale & Purchase Agreement with the developer and completion of the sale of the unit has not taken place, the purchaser will have to inform the developer of the proposed sub-sale. If a purchaser has purchased the unit under a deferred payment scheme, he should note that the developer may or may not extend the deferred payment scheme to the sub-purchaser. 50

51 Normal Progressive Payment Deferred Payment Scheme 51

52 Other Payments Under the S&P, the purchaser is required to make the following payments:- 1. All property tax payable thereafter he receives vacant possession from the developer 2. Monthly maintenance charges from the date of vacant possession or the 15 th day after he receives the Notice of Vacant possession whichever is earlier. Taking Possession Developer will issue a Notice for Vacant Possession when TOP is issued. Purchaser is to inspect the property for any defects. If there are defects, to follow the procedure set out in the S&P Agreement to rectify defects 52

53 Overview 1. Developer shall hand over the completed property by the date stated in the S&P. It could be handed over earlier if all requirements are met. 2. Defect is defined as any faults which is due to defective workmanship or materials or if not constructed in accordance to Specifications 3. Defect liability is 12 months, which covers defects in the unit, common property or housing project. 4. To follow procedures set in the S&P for rectifications or claims for cost of rectification. 5. Owners can expedite by helping to be more specific on the defects in the rectification forms. Overview (Part 2) 6. Developer is to deliver VP to purchaser on or before the date set out in the S&P 7. To obtain TOP status before delivering VP 8. Developer will issue a Notice of Vacant Possession to purchaser before handover. 9. Must deliver to the purchaser:- TOP or CSC certificate Certificate from architect/professional engineer to affirm that all construction works are done in accordance to plans and all water, electricity supplies have been connected 53

54 Definition of a Defect 1. Fault in the unit due to defective workmanship and/or material. 2. It also cover the common areas in a strata subdivided project. 3. Purchasers are to seek professional advice if unsure of defects in units. Defects liability Period Defects may also mean as not constructed in accordance to plans or specs. Covers common areas too in strata projects Period shall be 12 months. If defects are made known to developer and still not rectified within the period, purchasers can still claim for compensation from developer 54

55 Completion of Sales When ready, developer will issue a Notice for Completion Must be given in date stated in S&P or 3 years after purchaser gets vacant possession, whichever is earlier. Rights to claim liquidated damages if developer fails to deliver as stated in S&P. Procedures for Completion of Sales Notice of Legal Completion must be accompanied with a cert from the architect/professional engineer that the subdivision of project is approved. Completion must take place at the developer s solicitors office within 14 days of Notice. Developer must properly transfer title to purchaser and also handover a duplicate copy of the SSCT or COT. These are the official documents, by the Registry of Titles, with the owners name in it. 55

56 Liquidated Damages Purchaser can claim for liquidated damages if the Developer does not issue the Notice of Completion by the date stated in the S&P. A formula is also specified for the quantum in the S&P. 56