ST : MPs want stricter curbs on foreign property speculators

Nov 23, 2010

parliament

MPs want stricter curbs on foreign property speculators

By Rachel Chang

MEMBERS of Parliament yesterday endorsed harsher penalties for foreigners speculating in landed property here, but asked the Government to clamp down even more.

They argued that home ownership is an emotional issue for Singaporeans, and that further rules to restrict foreigners dabbling in the local market should be considered.

This arose in the course of a debate over changes proposed by the Government involving foreign ownership of landed residential properties. The changes were passed by Parliament after the debate.

In Singapore, only citizens and permanent residents (PRs) who make 'significant economic contribution' can own landed property. These PRs can buy only one such property, must live in it and cannot sell it for three years.

As for foreign developers, they can buy land to build homes, but the project must be completed in five years and all units sold within two years of it receiving the temporary occupancy permit. This is to prevent hoarding.

When the deadlines are not met, they will forfeit their banker's guarantee, pegged at 10 per cent of the land price. But with the new law, an extension charge will also be levied for the extended time taken beyond the project completion period.

In addition, PRs who sell their homes within three years will pay up to $200,000 in fines.

The previous maximum fine was only $5,000, an amount Law Minister K. Shanmugam noted was 'far below the amount of profit they might have gained from speculating in the property'.

Also, an owner who rents out his property will face a financial penalty of up to three times the rental income earned or $10,000, whichever is higher.

The present criminal sanction will, however, be removed, 'as that may not be appropriate', said Mr Shanmugam.

Non-citizens who inherit landed property will have five years, instead of the previous 10, to dispose of it. And those who give up their citizenship or PR status must sell their landed property, but no deadline was specified. At present, they can continue to keep their property.

MPs like Mr Hri Kumar Nair (Bishan-Toa Payoh GRC) welcomed the changes, but argued for even tighter restrictions, like a capital gains tax on foreigners who sell their property within three years.

While such sellers were in the minority, he said 'property prices are driven by sentiment, and the activities of a few at the fringes can have an impact'.

Nominated MP Paulin Straughan went even further in suggesting that foreign ownership of condominiums and high-rise apartments be restricted.

'This may place the coveted ownership of private property within the reach of more Singaporeans,' she said.

But Mr Shanmugam, while noting that such wider measures were outside the purview of the amendments under debate, said excessive measures could have 'many possible consequences, and most of them are bad for Singapore'.

The drop in demand could cause asset devaluation, and Singapore's reputation as a magnet for capital and talent could be harmed.

He emphasised to MPs that landed homes made up only 6 per cent of residential property in Singapore. Of that 6 per cent, only 3.6 per cent is foreign-owned.