The government of Singapore announced that it would offer temporary assistance to real estate developers for a further six-month extension, with Covid-19 continuing to disrupt the construction industry.
This extension is on top of the previous six-month extension announced previously following a temporary stop work for construction work during the Covid-19 circuit breaker span by BCA.
Extension of ABSD Remission
The extended six-month extension would give building firms more time to complete residential , commercial and industrial growth, in lieu of the delays caused by worker quarantines and lockdowns.
For developers to obtain a remission of the Extra Buyer’s Stamp Duty (ABSD) for residential projects , the government has proposed an initial six-month extension of the start and finish period.
Developers must build and sell all units on residential premises by five years prior to the implementation of the measures in order to qualify for the ABSD remission of the selling price of the land. If they struggle to sell all the units, the developer will have to pay 25 percent ABSD and extra interest rates.
A pending ABSD deadline has historically driven developers to perform fire sales in order to avoid incurring the ABSD number.
Under the extra extension, developers now have an extra 12 months to complete residential projects. This allows them to complete residential projects for six years in total.
The six-year period also means that there will be three years for eligible residential developers to start construction work on a project, rather than two years without additional relief.
However, developers will not be given a further extension to the sale of units in a residential scheme. In order to seek ABSD remission, developers must now sell all housing units within two and a half years of issuing the Temporary Occupation Permit (TOP) or Certificate of Regulatory Completion.
That said, real estate developers have workaround to avoid the sale-of-units deadline for ABSD remission by creating companies to buy up the unsold units in a development.
Foreign Property Developer to get further QC extension
Under the QC regime, the Project Completion Period (PCP) will be extended another 6 months following application for qualifying residential projects for foreign housing developers.
Developers who have already applied for an earlier extension of delivery deadlines in May will automatically be issued a further six-month waiver of extension payments.
However, in addition to the original six-month waiver issued in May 2020, there will be no additional waiver of extension payments on the selling of all residential building units by the deadline. The total length of the exclusion presently stands at 2.5 years , depending on the sale-of-units criteria.
The announcements were made in a joint statement by the Departments of National Development, Finance , Law and Trade and Business. As the ministries observed, developers have asked concerns about the increased costs and financial fines that could be imposed due to delays caused by the Covid-19 pandemic.
To date, the complete resumption of on-site operations has remained an challenge due to workers and safe distancing regulations. Jobs who have come into “close contact” with Covid-19 cases are also automatically placed under quarantine.
As such, after circuit breaker measures were lifted in June, construction work on construction sites only resumed at partial capacity.
“The joint declaration of the ministries declared that” the government needs developers to continue to provide relief and assistance to their main contractors in a manner equivalent to these additional help measures, “such that” everybody involved in the development bears an undue share of the responsibility put by the pandemic of Covid-19.
The eligibility conditions for the new extensions remain unchanged. For eg, land for residential projects must have been purchased on or before 1 June, or the land must have been expressly alienated, or the lease has been renewed by the Singapore Land Authority (SLA) on or before 1 June.
In addition, the original five-year deadline must be on or after 1 February 2020 for a developer to complete the project.