The law which governs foreign ownership of landed residential property here will be amended to make it costlier for foreign developers to speculate.
The Bill to amend the Residential Property Act (RPA) also aims to increase the penalties imposed on foreigners who flout the rules.
The Act which was first introduced in 1973, mandates that ‘foreign’ housing developers (developers with overseas shareholders and/or foreign directors) must obtain approval to buy private residential land. They are also required to develop and sell units in a ‘timely’ manner.
The Act also states that permanent residents need approval to buy landed properties and vacant residential land.
They can each buy only one restricted property for owner-occupation and are not allowed to rent out the property. They are also not allowed to sell the property within the initial years.
Foreigners and permanent residents own just over 3 per cent of Singapore’s total landed residential stock of close to 70,000 units.
Currently, the RPA mandates that foreign housing developers must complete residential developments within five years (the specified project completion period). They must also sell all units within two years from the time the project receives its temporary occupation permit.
The developers also cannot sell undeveloped residential land.
The new amendment Bill is now proposing that developers who fail to complete and sell their developments within the stipulated period will be subject to a new extension charge framework.
They will pay for the extension of time beyond the original completion timeframe – similar to what they face under the extension premium scheme for sites sold under the government’s land sales programme.
Other amendments ensure that foreign purchasers who flout the rules of ownership under the RPA will also face increased penalties.
For example, those who break the rules while buying or selling a restricted property will now face a non-compliance fine of up to $200,000 and/or a three-year jail term, as well as a fine of $2,000 a day for continuing offences. Right now, they face a fine of up to just $5,000 and/or a three-year jail term.
Foreign beneficiaries of restricted properties will have to sell their properties within five years, down from 10 years now. And former Singapore citizens and ex-permanent residents will also have to dispose of their restricted properties within two years of giving up citizenship or permanent resident status.
The amendments are expected to take effect by the end of the year.