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Additional Buyer’s Stamp Duty: Relief for Singaporean Home Buyers

Me with "stamp duty" on my forehead

I was flipping through the papers this morning, and when I saw the news I choked and blew Milo out my left nostril. From pure joy, believe me. Singapore is RAISING STAMP DUTIES, with regard to foreign buyers. Right now, this cooling measure is the equivalent of an air-conditioner in hell. But what does it mean for the Singaporean Home Buyer?

 

What Is the Additional Buyer’s Stamp Duty?

There will be an additional stamp duty, for the following:

  • Foreigners – 10%
  • Non-individuals (companies and associations) – 10%
  • Permanent Residents buying a SECOND and subsequent home  - 3%
  • Singaporeans buying a THIRD and subsequent home – 3%

The additional stamp duty is in addition to the existing 3%. Here’s a table from the Straits Times, demonstrating the cost difference:

 

*Based on an assumed property price of $1 million

Foreigners and Non-Individuals

PRs owning one and buying the second and subsequent residential property

Singaporeans owning two and buying the third and subsequent residential property

Existing Buyer’s Stamp Duty Payable:

$24,600

$24,600

$24,600

Additional Buyer’s Stamp Duty Payable:

$100,000

$30,000

$30,000

Total Buyer’s Stamp Duty Payable:

$124,600

$54,600

$54,600

But what does this mean for Singaporean Home Buyers?

 

A “Singaporeans First” Policy (Finally)

Before anyone starts yelling “racist” or “xenophobe”, I’d better explain that foreign buyers have been driving property prices sky high. Singapore property is desirable, and rich foreigners have been buying at absurd prices. In the second half of 2011, foreign buyers accounted for a staggering 19 % of property purchases.

 

Our property, as seen by wealthy foreign buyers

 

That means if you were Singaporean, and looking for a first home, it was like hunting elephants with peanuts. And even if you beat a foreigner’s offer, you’d owe so much money that if the bank repossessed they’d take back the promotional calendar.

The new stamp duties will mean two things:

(1) Fewer foreigners will buy at all, and

(2) Their bids will be lower, since they have the extra 10 % to cover.

Finally, after too many years, the government is levelling the playing field.

 

It Means Homes for Home Buyers, Not Speculators

Next to foreigners, speculators bear the biggest blame for rising property prices. If you’re a home buyer, your offer is being pitted against theirs. The difference is:

  1. They’re just out to make a buck; you don’t have a roof over your head.
  2. They have millions in a bank account, and all you have is your savings account or whatever.
That’s about as fair as an Olympic boxer fighting a nine year old girl. The new stamp duty helps to rectify this somewhat; notice that the additional 10 % applies to “non-individuals”. This primarily targets companies or associations that buy property, drive up the price, and then try to re-sell to you at a huge profit.

 

You can identify property speculators with birds. They get defensive about their nest when he’s close.

 

It Means Property Prices Will Drop, and It’s ABOUT TIME

In one of our syndicated posts, I noted there was no sign of slowing property rates. Admittedly, this out-of-nowhere policy proved me wrong. I don’t think any of us saw this coming. That said, I’ve never been happier to be wrong.

With the additional 10 % stamp duty, the number of buyers all around will drop. With an increased supply and less demand, property developers will be forced to accept lower bids (and profit margins). The Real Estate Development Association of Singapore (REDAS), has already been complaining.

Hey REDAS, you hear that sound?

It’s the sound of NO ONE CARING.

 

Property developers? Talk to the walls, speak to the windows. ‘Cause the residents…ain’t listening.

 

Because lower property prices mean affordable homes for Singaporeans. Property development firms may see a drop in shares and profits, but it’s hardly unfair: after years of squeezing home buyers, money is a viable alternative to toilet paper in their offices.

And trust me, you won’t be seeing a property developer sitting at a street corner and begging for loose change. Even now.

 

An Optimistic Conclusion

Looks like we may have voted right after all. Let’s hope the additional buyer’s stamp duty marks a new direction for the government, one that focuses on sustainable market growth. With any luck, our marriage rates will go up as well.

Image Credits
nancyarora
tourist_on_earth
Mikebaird
Alantankenghoe

What are your thoughts on the additional buyer’s stamp duty? Comment and let us know! 

Ryan Ong

I was a freelance writer for over a decade, and covered topics from music to super-contagious foot diseases. I took this job because I believe financial news should be accessible and fun to read. Also, because the assignments don't involve shouting teenagers and debilitating plagues.

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