The Real Estate Developers' Association of Singapore (Redas) proposed to extend the two-year period for its real estate developers to sell units in new projects after receiving TOP.
Developers are required to pay 8%, 16% and 24% of the property purchase price for the 1st, 2nd and 3rd more years from the 2 years sale period, respectively. The amount is pro-rated based on the ratio of unsold units.
Some housing developers had sought extensions to the two-year window for about 6 projects of which extension charges have been paid by three. These projects are likely to be high-end properties as mass-market properties are selling very well.
Developers with foreign shareholders and directors are required to obtain a Qualifying Certificate (QC) to own residential property for sale and not for investment as a measure to control foreign ownership of land in Singapore. They are required to sell all units within two years after completion of construction and are not allowed to rent out unsold units.
Residences at Emerald Hill obtained TOP in Jun 2011 which means it has to sell all its units by Jun 2013. The developer, Lafe Corp has informed that SLA had not granted its request to rent out its unsold units.
The prices for high-end properties are such that lowering prices too much would 'affect goodwill' with previous buyers and place the developer at risk of not recovering its investment. Recently, foreigners and companies account for 7% of total private home purchases compared to about 20% in 2011.
The Law Ministry said that 'Variations in market conditions are generally not considered as valid grounds for waiver of the charge for extension of time to sell the units.'
Redas president said that since 'projects are getting bigger', it is 'quite reasonable' to expect them to take longer to sell.
Some analysts mentioned that by lengthening the sales period for developers, it would stabilise the market as developers could sell their property in an orderly manner.
18 Jul 2012