ST : Impact of new landed property rules 'negligible'

Oct 20, 2010

Impact of new landed property rules 'negligible'

Foreigners, PRs make up just small part of this housing sector: Experts

By Esther Teo



PLANNED changes to rules on foreign ownership of landed property are not expected to make much of a splash, with demand and prices for these high-end homes set to stay the same, experts said.

Foreigners and permanent residents (PRs) make up only a small portion of the landed housing market - an average of 6.6 per cent of total transactions over the last 10 years according to CB Richard Ellis (CBRE).

Any ripple effect from the new rules would be 'negligible', the experts added.

One of the proposed changes set out in the Residential Property (Amendment) Bill, introduced in Parliament on Monday, states that home owners with landed property would have to dispose of their property within two years if they give up their Singapore permanent residency or citizenship status.

Failure to do so could see owners faced with a fine not exceeding $20,000 or a three-year jail term, or both.

PRs who are uncertain about where they want to be based permanently, however, might now choose to purchase a condo rather than a landed property as doing so would come without such obligations, the experts added.

On Monday, National Development Minister Mah Bow Tan released figures showing that locals make up the bulk of private home buyers in Singapore. PRs made up 13 per cent and foreigners 12 per cent of sales in the second quarter, respectively.

Mr Ong Teck Hui, Credo Real Estate head of research and consultancy, said that since the landed housing market was primarily driven by locals, the impact of the new rules would be insignificant.

'A PR who is interested in purchasing a landed home is unlikely to be deterred unless he has a sense of uncertainty over staying on in Singapore,' he added.

Cushman & Wakefield managing director Donald Han said the changes served to 'tie up the loose ends', bringing the existing Act - introduced in 1973 - in line with housing policies as it prevented foreigners from speculating in Singapore's property market.

OrangeTee's head of research and consultancy Tan Kok Keong said the rules might provide a push for PRs to buy high-end condos instead as PRs who could afford landed homes were affluent.

He said that foreigners made up only a small segment of the landed housing market as the Government had been quite strict with them owning such properties. Foreigners need permission from the Land Dealings (Approval) Unit (LDAU) before they can own landed property.

On mainland Singapore, the main criteria are that they are PRs and that they make an adequate economic contribution. However, non-PR foreigners may buy landed homes at Sentosa Cove, subject to LDAU approval.

Usually, foreigners may buy landed homes not exceeding 15,000 sq ft in land area. They may, at any one time, own just one landed home in Singapore and it must be for owner occupation only.

On the mainland, foreigners also have to hold the property for at least three years before selling. There is no minimum holding period for Sentosa Cove.

CBRE said PRs were responsible for 165 - or 5.5 per cent - of 3,007 landed home transactions from Jan 1 to Sept 9.

This figure ranged from a low of 4.4 per cent in 2000 to a high of 6.8 per cent in 2006 over the past 10 years.

Most of the PRs bought terrace houses this year, with the highest number of landed home transactions taking place in District 15 - which includes Katong, Telok Kurau and East Coast Road - followed by Districts 10 and 19.

esthert@sph.com.sg