Developers get further six-month extension on ABSD and project completion period; no extension to sales period

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/ EdgeProp Singapore
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June 28, 2021 11:41 PM SGT
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SINGAPORE (EDGEPROP) - The government is extending temporary relief measures for property developers affected by disruptions to construction timelines due to heightened Covid-19 alert restrictions imposed from April to May 2021. “The sector may experience manpower shortages and further disruptions to construction timelines due to the tightening of border measures from April and May 2021 that limit the inflow of migrant workers,” according to the Ministry of National Development (MND) in its release on June 28. (See also: MND: More temporary relief measures for property sector hit by Covid-19)
The project completion period (PCP) for qualifying residential, commercial and industrial developments will be extended by six months.
Residential development projects will also receive an additional six-month extension in the commencement and completion timeline in relation to the remission of the additional buyer’s stamp duty (ABSD) for qualifying developers.
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PCP for residential development projects under the Qualifying Certificate (QC) regime for foreign housing developers will also be granted a six-month extension.
“In view of the construction disruption and rising cost, this certainly comes as a well-deserved and welcomed relief to developers,” says Karamjit Singh, CEO of Showsuite Consultancy.
It provides much needed time for the construction sector to resolve the manpower constraints and contract costs, according to Mark Yip, CEO of Huttons Asia. “It has a direct impact on the eventual selling prices of residential projects and some of these increased cost will flow through,” he says. “Through this relief, the cost pressure may be relieved to a certain extent.”
Developers who purchased their residential development land on or before May 7, 2021, will qualify for the six-month extension in the ABSD completion timeline. For developers who purchased the residential development land on or before 1 June 2020, and those whose original timeline for completion of the residential development expired on or after 1 February 2020, the six-month extension to the ABSD completion timeline will be in addition to the cumulative 12-month extension to the timeline that was provided via the temporary relief measures announced on 6 May 2020 and 8 October 2020.
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However, there is no further extension to the sales period for ABSD remission. Developers still have to sell out all the units in their residential projects within five years in order to qualify for a remission in the ABSD. The six-month extension in the sales period announced as part of the temporary relief measures on May 6 last year applied only to land purchased on or before June 1, 2020. No further relief has been granted. Hence, developers still have to sell out the units within 5.5 years.
Developers are still concerned about fulfilling their obligations to the homebuyers of their residential projects: “To deliver the keys and handover the units by the stipulated Vacant Possession Date as stated in their sale & purchase agreements with buyers, failing which they have to pay liquidated damages in form of interests”, notes Lee Liat Yeang, senior partner of Dentons Rodyk’s corporate real estate practice. “Sales efforts were thwarted by Covid-19 events including restrictions on viewings of showflats. Developers should be given more time to sell out all their units within the relevant period to meet their contractual obligations to buyers.”
Meanwhile, the residential property market cooling measures remain in place “to ensure that private residential property prices are broadly consistent with economic fundamentals”, according to MND.
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