20 projects could benefit from new extension rule

About 20 residential properties could enjoy an extended project completion period under new rules announced by the Singapore Land Authority (SLA).

Usually, developers with any foreign shareholder have up to seven years to sell all the units in a new project - or they could face hefty charges for an extension.

But the rules are being relaxed as the developers concerned had responded to a government call in 2008 to defer the redevelopment of collective sale sites.

They had rented out the properties to alleviate a rental housing supply crunch then, the Ministry of Law told The Straits Times.

No charge will apply to extensions granted under the new rule.

City Developments' project on the former Lucky Tower site in Grange Road is one project for which an extension has been sought. The site was sold in May 2006 for $383 million but construction started only last year.

The Straits Times understands GuocoLand's Leedon Residence also qualifies for the extension.

GuocoLand is developing Leedon Residence on the former Leedon Heights site which it clinched in a collective sale in 2007 for $835 million.

Industry players say that some of the projects that might benefit are high-end collective sale sites that were largely sold during the en bloc boom in 2006 and 2007.

This extension, if awarded, will be a relief for developers as the luxury market has seen tepid volumes and languishing prices.

The SLA said in a circular last month that the Land Dealings (Approval) Unit will grant a one-time extension of the project completion period upon application, commensurate with the period of tenancy, without charge. 

But applicants will have to submit documentary proof for consideration, the circular from SLA noted.

Under the Residential Property Act, housing developers whose shareholders and directors are not all Singaporean are required to get a qualifying certificate (QC) to buy residential property for development.

This is imposed to control foreign ownership of land here.

The rule gives developers up to five years to build the project and requires them to sell all the units within two years of obtaining the temporary occupation permit. They are not allowed to rent out unsold units.

To ensure compliance, a developer has to put up a banker's guarantee of 10 per cent of the purchase price of the property, which may be forfeited if the developer fails to fulfil the QC's conditions.

Source: The Straits Times –10 January 2013