News Analysis

Impact of Budget 2009 on property market

You’ve heard and read about the government’s generous Resilient Package in the Budget 2009 speech. So what does this mean to property owners?

Here’s a quick breakdown on the impact of the budget on the various property segments.

First time home buyers:

• Additional CPF Housing Grant (AHG)
  Monthly income ceiling for first time buyers qualifying for the additional grant up from $4,000 to $5,000
  Grant Maximum amount raised from $30,000 to $40,000.

Impact:
This will translate to a slight increase in demand for resale flat as more people can enjoy higher subsidy. However, the increase in demand may be for smaller flats.

 

Owner-occupied residential properties

• 40 per cent property tax rebate
• Owners who own higher-value homes (homes with a net annual value of more than $150,000) or secondary residences have to pay income tax on the net annual value of their property. This tax will be removed from year of assessment 2010 onwards.
• Inland Revenue Authority of Singapore will bring forward its property tax assessments for 2009.

Impact:
Home owners may get to enjoy slight savings in their property tax. This savings does not impact 2nd property owned, hence residential rental is not impacted in any way.

Industrial and commercial properties owners:

• 40 per cent property tax rebate

Impact:
We are seeing more landlords extending this rebate by lowering their rentals.

 

Industrial and commercial tenants

• Businesses renting hawker stalls, factories, offices or land from the Housing Board, JTC Corporation, Singapore Land Authority (SLA) and the National Environment Agency (NEA) will get a 15 per cent rent rebate from Jan 1 to Dec 31 this year.

 

Developers

• one-year extension of the project completion period (PCP) allowed for private residential projects on sites sold by the government (without developers having to pay an extension premium) as well as for private residential projects undertaken by foreign housing developers with Qualifying Certificates (QCs), a category that covers effectively all listed developers.
• In both instances, if any units have been sold in the project, the PCP extension is only up to the date of delivery of vacant possession for sold units as stipulated in the sale & purchase agreement signed between the developer and buyers.
• Extension of the period for developers with QCs to dispose of all residential units in their projects, from two years currently to four years from the date that the project is issued with Temporary Occupation Permit.
• Developers will be allowed to rent out unsold private homes for a maximum of four years (from the date of TOP or date of application, whichever is later).
• Property tax deferment of up to two years for all land (not just residential) approved for development. However, this is not an exemption as developers will have to pay back the deferred tax later.
• Reassignment of government sale sites and private residential land owned by QC holders allowed.

Impact:
This may delay some launches, and hence preventing a more severe over supply situation.