The measure was implemented last year in response to soaring demand for HDB.
In September 2022, Singapore imposed a wait-out period of 15 months for former and current private property owners wanting to downgrade to HDB flats to moderate demand in the market. Almost five months after its implementation, an expert from Savills believes it is time to “fix” the measure.
In an interview with Singapore Business Review, Savills Singapore’s Executive Director of Research & Consultancy, Alan Cheong, said there is no longer a need for the wait-out period since the market is already “starting to clear.”
“The wait-out period was to alleviate pressures on the HDB resale market, more for people who wish to downgrade from private properties to public properties. I don’t think that there have been that many downgraders for people of non-retiring age,” Cheong said, ahead of the 2023 budget.
Homebuyers aged 55 and above were exempted from the 15-month wait-out rule.
Waive upfront ABSD
Apart from fixing the wait-out period for HDB downgraders, Cheong also urged the government to waive the upfront Additional Buyer’s Stamp Duty (ABSD) that upgraders need to pay.
“In current circumstances, I think that is going to be a pretty hefty upfront payment, given the fact that if you buy a $2m private apartment property, you need to pay 17% cash first. Although you will be reimbursed or rebated back that 17% six months later if you show proof your show sold the first property, that’s still a lot of money,” Cheong said.
“Rather than doing that, the [government] should actually start to think of allowing people to buy first, and then six months later, if they have not shown proof that they have sold the first property, then they will have the ABSD. So letting the ‘no cash upfront’ rather than ‘cash upfront’ will alleviate not only the cash burden on upgraders, that [will] also alleviate the rental market, because people today have to sell in order not to pay the ABSD upfront and they start to rent and that adds pressure to the rental market,” Cheong explained.
Lastly, Cheong would want to see the government allow vacancy allowances for property tax cases.
“[Currently] if you leave your property empty or vacant, you will still be levied a property tax base on as if it is tenanted so there has been a bigger financial burden for some of these investors who are faced with higher interest payments,” Cheong said.
“It is good to reduce or remove this non-vacancy allowance [because it will] allow [investors to have] a lower property tax based on as if it is owner-occupied during the period of vacancy,” he added.