Singapore eases rules on seller's stamp duties

The rules on total debt servicing ratio were also adjusted.

Homeowners looking to avoid paying for seller's stamp duties (SSD) will only have to wait for three years now instead of four as the Ministry of Finance (MOF), Ministry of National Development (MND), and Monetary Authority of Singapore (MAS) announced changes in property measures.

The SSD is currently payable by those who sell a residential property within four years of purchase, at rates of between 4% and 16% of the property’s value. Since this measure was introduced, the number of property sales within the four-year window has fallen significantly over the years.

Due to this, Singapore will impose SSD on holding periods of up to three years, down from the current four years, and will lower the SSD rate by four percentage points for each tier. The new SSD rates will range from 4% (for properties sold in the third year) to 12% (for those sold within the first year).

Meanwhile, the government will also be making adjustments on the total debt servicing ratio (TDSR) rules. The TDSR framework aims to encourage prudent borrowing by households and strengthen credit underwriting standards by financial institutions. Under this framework, property loans extended by a financial institution should not exceed a TDSR threshold of 60%.

"However, some borrowers have given feedback that the TDSR framework has limited their flexibility to monetise their properties in their retirement years, i.e. to borrow against the value of their properties to obtain additional cash," a joint release by MAS, MOF, and MND said.

In order to meet such needs, MAS will relax the rules and will no longer apply the TDSR framework to mortgage equity withdrawal loans with LTV ratios of 50% and below.

The two adjustments will take effect starting 11 March 2017.