Temporary relief measures have been passed to support those affected by disruptions to construction timelines, operations at sales galleries, and home viewings. (Picture: Samuel Isaac Chua/The Edge Singapore)
The government announced temporary relief measures for property developers and individuals affected by disruptions to construction timelines and sales of housing units as a result of the extension of the circuit-breaker to June 1 amid the COVID-19 pandemic.
Announced on May 6, the temporary relief measures which came into immediate effect include a six-month extension to project completion period (PCP) of residential, commercial and industrial developments.
Property developers have also been granted a six-month extension on the commencement and completion period of residential developments, as well as sale of housing units in residential projects in connection with the remission of the Additional Buyer’s Stamp Duty (ABSD).
Foreign property developers have been given up to six months on the extension of the PCP and disposal period for their residential development projects under the Qualifying Certificate (QC) regime.
However conditions apply, such as the original timeline of the PCP, and when the land was purchased in order to qualify for the extensions.
“Construction timelines in particular have been greatly impacted by the circuit-breaker measures,” according to Karamjit Singh, CEO of Showsuite Consultancy. “The recent spike in the spread of the virus amongst the migrant worker population is also a contributing factor.”
On top of the construction bottlenecks, the completion of residential projects have also been delayed by disruptions in the supply chain, says Nicholas Mak, head of research & consultancy at ERA Realty. “The temporary relief measures are mainly to neutralise the effects of the circuit breaker,” he adds
Reprieve for developers with large residential projects
The relief measures will certainly give some reprieve to developers with large residential projects who are already finding it a challenge meeting the five-year ABSD remission deadline, says Christine Li, head of research for Singapore & Southeast Asia, Cushman & Wakefield (C&W). The impact on developments with ABSD and PCP deadlines in 2020 is quite minimal, with only about 30 over units remain unsold across five projects. Next year, only about 15 projects have about 400 unsold units, according to Li.
Developers’ new home sales have already been severely impacted by the circuit-breaker. Even after the circuit-breaker is lifted, Li expects social distancing measures at project sales galleries to continue affecting activities.
Lee Liat Yeang, senior partner of law firm Dentons Rodyk & Davidson is of the view that the six-month extension for property developers’ PCP as well as commencement and completion of residential projects with regards to ABSD remission, is insufficient. “Developers have been urged to give more time to contractors to complete their
developments,” he reasons. “But they have a contractual obligation to their existing buyers to deliver their properties within a stipulated time period, based on the sale and purchase agreements.”
Developers may have built in a time buffer in their committed delivery dates to buyers. But any further extension in the circuit-breaker measures could erode that buffer, putting them in a tight situation, adds Lee.
Married couples get six-month extension to sell existing home
Singaporean married couples will also get some relief: a six-month extension for the sale of the first residential property in relation to ABSD remission for the purchase of their second property. To qualify for the extension, the couple’s second property must be jointly purchased on or before June 1, and the original timeline for the sale of the first residential property to expire on or after February 1, 2020.
Under current housing policies, Singaporean married couples who currently own a residential property but purchase a replacement home may qualify for remission of ABSD. But the condition is that they have to sell their first home within six months. “With the extension, they now have 12 months to sell their first property,” says Karamjit. “The government recognized that the slowdown would likewise resonate in the residential resale market.”
Married couples had complained that the original six-month time period to sell their existing home was too short, says Dentons’ Li. With the circuit-breaker, they are finding it “even tougher” to sell their existing homes. Hence, the. extension is “a very useful concession”, he adds.
With more time to find a buyer, these couples would not be pressured to reduce their prices sharply, thus averting “fire sales”, says ERA’s Mak.
“The temporary relief measures are not considered a relaxation of the property cooling measures, but rather to give some breathing space to anxious developers and individuals who are affected by the extended circuit breaker period,” says PropNex’s Gafoor.
Update from : The Edge Singapore, 6 May 2020