More changes ahead for flats & landed property market

More changes are on the way for the regulation of Singapore’s property market.

From November, sellers of Housing & Development Board (HDB) flats will have to observe a seven-day cooling-off period before they can grant an Option-to-Purchase (OTP) to the buyers.

And foreign owners of landed property could face tougher rules under changes being proposed by the Law Ministry.

The HDB said in a statement on Monday that the seven-day cooling-off ruling is part of the enhanced resale checklist and submission procedures to better protect the interests of sellers and buyers and help them make informed and prudent decisions.

From November 1, sellers of HDB flats, acting with or without agents, will have to observe a seven-day cooling-off period after they have completed the resale checklist, before granting an OTP to the buyers.

The enhanced checklist also requires flat sellers buying another HDB flat to work out the estimated sale proceeds of their current flat and a financial plan for the purchase of the next flat.

Additionally, buyers of resale flats, acting with or without agents, will also be required to complete and submit the resale checklist, which was introduced in 2008 to ensure that HDB flat sellers and buyers are aware of the key resale and financial policies before they commit to a transaction.

New rules are also in store for foreign ownership of landed residential property, if a new Bill introduced in Parliament on Monday is passed.

The Law Ministry is proposing to amend the Residential Property Act, which regulates foreign ownership of restricted properties in Singapore, so as to enhance its penalty framework.

The Act was introduced in 1973 and imposes restrictions on foreign ownership of restricted properties, namely landed homes, strata-landed housing and vacant residential land.

Foreigners, in this case referring to PRs, must get approval from the Singapore Land Authority before buying. The penalties have not been revised since 1974, despite significant increases in residential property prices.

Among the proposed changes set out in the Residential Property (Amendment) Bill is that landed home owners must dispose of their property within two years if they lose their permanent residency or citizenship status.

Failure to do so could see them facing a S$20,000 fine and/or a 3-year jail term.

Foreign beneficiaries of landed properties must also dispose them within 5 years, instead of the earlier 10-year time-frame.

And currently, foreigners who purchase landed properties are not allowed to rent them out.

Under new rules, those caught doing so will face a penalty of S$10,000 or up to three times the rental income collected during the period of breach, whichever is higher.

The new HDB ruling and the proposed changes by the Law Ministry follow a slate of property-cooling measures announced at the end of August.

These included barring buyers from owning both a HDB flat and a private home within the Minimum Occupation Period.

National Development Minister Mah Bow Tan told Parliament that it is too early to assess the full impact of the recent measures, but said there are signs of greater stability in the market.

He cited a slower increase in private residential property prices over the quarters – 3.1% in the third quarter of FY2010 compared with 5.3% in Q2.

Mr Mah said: “The take-up of private residential properties has decreased in September this year as compared to August. And the recent level of sub-sales has been relatively low. In the public housing market, the number of resale flat transactions in September has decreased by 25 percent compared to August.”

On foreign ownership of landed properties, Mr Mah said: “The proportion of landed residential properties purchased by PRs and foreigners has also been relatively low, accounting for less than 6 percent of all landed housing transactions for the past two years.”

In the light of recent changes in HDB policy on the ownership of overseas properties, MP for Ang Mo Kio GRC, Lee Bee Wah, wanted to know if HDB would allow exemptions for those who inherited foreign properties out of bequests.

Mr Mah clarified that this would not be possible. He said: “HDB is unable to allow exemptions for those who inherited these overseas properties, as a general policy. However, I will ask HDB to look into the circumstances of special cases upon appeal.”

Source : Channel NewsAsia – 18 Oct 2010

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