MND: More temporary relief measures for property sector hit by Covid-19

/ EdgeProp Singapore |
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SINGAPORE (EDGEPROP) - The Government announced additional temporary relief measures for property developers affected by disruptions to construction timelines resulting from the COVID-19 pandemic. This comes on top of the temporary relief measures announced on May 6, 2020.
Property developers will also be granted an additional six months for the commencement and completion of residential development projects in relation to the remission of the additional buyer’s stamp duty (ABSD) for housing developers (Photo: Samuel Isaac Chua/EdgeProp Singapore)
The latest measures, implemented with immediate effect, will see an extension of the project completion period (PCP) by a further six months for residential, commercial and industrial development projects.
Property developers will also be granted an additional six months for the commencement and completion of residential development projects in relation to the remission of the additional buyer’s stamp duty (ABSD) for housing developers.
Foreign housing developers whose projects are under the Qualifying Certificate (QC) regime will also be accorded a six-month extension on their PCP.
This time however, “there is no further extension of the remission condition timeline for the sale of all housing units in the residential development project,” says the Ministry of National Development (MND) in its Oct 8 release.
“A similar six-month deferment for developers to sell out their projects and avoid ABSD probably couldn’t be implemented because of the reissue of Options to Purchase (OTP),” says Alan Cheong, head of research for Savills Singapore. “The authorities, I suspect, need to ascertain the true housing demand. But the reissue of OTPs confounded their analysis and made it difficult for them to gauge real housing demand.”
Lee Liat Yeang, senior partner of Corporate Real Estate practice at Dentons Rodyk sees MND’s latest measure as “a gesture that should go some way to give comfort to developers genuinely affected by Covid-19 events in their construction time schedule.”
Unfortunately, unlike the earlier round of temporary relief measures announced earlier (May 6), there is no deferment of the sales period which is also affected by COVID-19 events. Further, Lee points out that developers are still bound by their contractual obligations to deliver vacant possession of units to homebuyers stipulated in the sale and purchase agreements. “That remains unchanged and the concern has not been dealt with,” he adds. “Developers not wanting to test the patience of their buyers will still push to complete their projects.”
Ismail Gafoor, CEO of PropNex agrees. “Most developers would not want to drag out their construction period to six years because the longer they take to complete their projects, obtain temporary occupation permit and handover the completed units to homebuyers, the higher their interest costs to banks will be.”
To be fair, the latest six-month extension in PCP will certainly help developers who have either substantially sold or fully sold their projects but haven’t yet completed their construction as a result of Covid-19 disruptions, says Dentons Rodyk’s Lee.
MND added in its latest release, that these temporary relief measure “do not affect other existing residential property market cooling measures which remain relevant to ensure that private residential property prices are broadly consistent with economic fundamentals”.
Developers, agents and others have mixed feelings about the latest relief measure. “REDAS [Real Estate Developers’ Association of Singapore], PropNex, and others have been pitching for a recalibration of the cooling measures, in particular, the remission of ABSD for the genuine HDB upgraders,” says PropNex’s Gafoor. “Given the economic downturn and challenges, that would certainly help. Unfortunately, that is not on the cards yet.”
Savills’ Cheong believes, “The government is listening and fully aware of the situation on the ground”.

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