No U-turn as clock ticks for developers

The authorities are standing firm on the rule that all units in projects with any foreign ownership must be sold within two years of the project receiving its temporary occupation permit (TOP), even as developers lobby the government to extend the timeframe.

Last year, the Real Estate Developers' Association of Singapore (Redas) submitted a proposal to extend this two-year period.

According to the Ministry of Law, however, "the disposal period remains as two years after the developer has achieved the Temporary Occupation Permit (TOP) or Certificate of Statutory Completion (CSC) for the project, whichever is earlier".


The ministry has received 17 applications to extend the disposal period since 2011, of which six developers have paid extension charges.

Projects with less than a year to move their units include Wheelock Properties' Scotts Square which has 71 units unsold, Lafe Development's Residences at Emerald Hill which has 21 units unsold, and Keppel Land's Reflections at Keppel Bay, which has 243 units unsold as at December last year.

SC Global Development's 66-unit The Marq on Paterson Hill, 241-unit Hilltops, and 88-unit Martin No 38 too feature on the list.

That being said, the developer - the first to announce that it would have to pay $5.5 million in extension charges for The Marq - may potentially sidestep some of these charges, following a successful privatisation bid by chairman and chief executive Simon Cheong.

This is because under the Residential Property Act (RPA), the residential projects of all developers, except those which are fully owned by Singapore citizens, fall under Qualifying Certificate (QC) conditions, one of which is that all units in a project must be sold within two years after the project receives its TOP.

That Mr Cheong is now able to privatise the company means he can potentially apply to the Singapore Land Authority (SLA) for an exemption.

"In general, if a foreign company becomes a Singapore company as defined under the RPA, it can apply to SLA for a Clearance Certificate to purchase residential properties henceforth," said the Ministry of Law.

"SLA will determine if the applicant company meets the requirements for a Singapore company under the RPA. If an application is made, SLA will also determine if the Qualifying Certificate(s) issued for the purchase of residential land when the applicant was a foreign company would be cancelled."

If units are not sold within the stipulated two-year period, foreign developers have to fork out pro-rated extension charges based on the proportion of unsold units, of 8 per cent, 16 per cent, and 24 per cent of the property purchase price for the first, second and third extra years respectively.

The extension charges weigh heavy, particularly on the high-end market which has been languishing with slow sales and prices that are still below their peak.

This segment was dealt a fresh blow earlier this month, when the government announced the seventh round of cooling measures. Specifically, the additional buyers' stamp duty (ABSD) imposed on foreigners and non-individuals purchasing any residential property, will be raised from 10 per cent to 15 per cent.

While most projects will still have to comply with the QC terms, some projects could potentially be granted a one-time extension on the project completion period.

Developers, specifically those who responded to the government's call in 2008 and deferred the redevelopment of property purchased through a collective sale and rented out the property to alleviate the rental housing supply crunch, could be be granted a one-time extension, commensurate with the period of tenancy.

According to the Ministry of Law, about 20 properties under qualifying certificate holders could benefit from the extension. Projects which qualify include City Developments' project on the former Lucky Tower site in Grange Road, and GuocoLand's Leedon Residence.

No charge will apply to extensions granted under the new rule which was announced by SLA in December last year.

Source: Business Times –24 January 2013