Deputy Prime Minister Lawrence Wong delivered the annual Budget speech in parliament on Tuesday (14 February). Among the announcements, new housing measures were introduced to address rising concerns in the property market such as long waiting time for BTO flats and affordability of resale HDB flats.
In this article, we will be giving a quick rundown of all the new housing measures that were announced during the Budget speech. You can also look forward to the follow-up article on our opinion of the measures that were announced and how it will impact the property market moving forward.
1. Higher Marginal Buyer’s Stamp Duty Rates
The government will be implementing higher Marginal Buyer’s Stamp Duty rates for both higher-value residential and non-residential properties.
For Residential Properties
The portion of the value of the property in excess of S$1.5 million to S$3 million will be taxed at 5%, and the value of the property in excess of S$3 million will be taxed at 6%. The current rate for both tiers is at 4%.
The changes are expected to affect up to 15% of residential properties.
For Non-Residential Properties
The portion of the value of the property in excess of S$1 million and up to S$1.5 million will be taxed at 4%, and the value of the property in excess of S$1.5 million will be taxed at 5%. The current rate for both tiers is at 5%.
The changes are expected to affect up to 60% of non-residential properties.
Transitional Provision
The stamp duty rates currently in effect will be used for situations where a potential buyer was granted an Option to Purchase (OTP) on or before 14 February 2023. This OTP must be exercised by 7 March 2023, or within its validity period, whichever comes first. Starting on 15 February 2023, no modifications can be made to the OTP.
2. More Support for First-Timer Families Buying Resale HDB Flats
The government has acknowledged that young Singaporean couples who wish to start families are being impeded by prolonged waiting times for BTO flats and expensive resale HDB flats. To address these concerns, CPF Housing Grants for first-timer families buying resale HDB flats will be increased.
4-Room or Smaller Flats
CPF Housing Grant for eligible first-timer families will be increased by S$30,000. This brings the grant amount to S$80,000.
5-Room or Larger Flats
CPF Housing Grant for eligible first-timer families will be increased by S$10,000. This brings the grant amount to S$50,000.
On top of the Enhanced CPF Housing Grant (EHG) and the Proximity Housing Grant (PHG), this brings the total grant amount available to up to S$190,000, up from the previous S$160,000.
However, first-timer families with a household income of more than S$14,000 and those who own or have an interest in a private property in the last 30 months prior to the flat application will not be eligible.
Below is a breakdown of the grants available for eligible first-timer families based on the monthly household income:
The higher grant will be applicable for resale HDB flat applications starting from 3:30 pm on 14 February 2023. The extra grant sum will be deposited into the applicants’ CPF account from April 2023 onwards.
3. More Support for First-Timer Singles Buying Resale HDB Flats
Eligible first-timer singles will also receive an increase in their CPF Housing Grant, with a sum of S$40,000 for 4-room and smaller flats, and S$25,000 for 5-room and larger flats. This is up from the previous S$25,000 for 4-room and smaller flats, and $20,000 for 5-room and larger flats.
The income ceiling for singles (under the Single Singapore Citizen Scheme) will remain at S$7,000.
Below is the breakdown of the grants available for eligible singles based on their monthly income:
The higher grant will be applicable for resale HDB flat applications starting from 3:30 pm on 14 February 2023. The extra grant sum will be deposited into the applicants’ CPF account from April 2023 onwards.
4. Additional Ballot for BTO Flats
HDB will also be fine-tuning the balloting system for the application of BTO flats. This is to give priority to families with more urgent housing needs, such as families with children and married couples aged 40 and below who are buying their first home.
The additional ballot for this group of applicants will be implemented later in the year, with more details to be announced.
The government will also be closely monitoring the situation to ensure a stable property market.
Closing Comments
The increase in Buyer’s Stamp Duty rates will likely hit the condo and resale segment as well as the non-residential segment harder. Although the increase may seem marginal, since it is targeting high-value properties, the extra stamp duty may end up pricing out middle-income buyers.
For the HDB segment, more first-time buyers may turn to the resale market for their housing needs with the increased support in the form of additional grants. In addition, the government is also ramping up the supply of BTO flats and reducing the waiting time. These measures will serve to mitigate some of the housing concerns that first-time buyers have been facing in recent years.
What do you think about these changes in the housing policies and how do they affect your property portfolio? Stay tuned for our opinion piece and connect with us to find out more. If you have any questions regarding the announcements, feel free to contact us here.
