The government announced increases in the Additional Buyer’s Stamp Duty (ABSD) rates to promote a sustainable property market. The revised rates will take effect from April 27, 2023. The implementation of property market measures in 2021 and 2022 have moderated the market, but property prices have shown signs of accelerating in 2023, especially demand from locals purchasing homes for owner-occupation. To prevent prices from exceeding economic fundamentals, the government will raise the ABSD rates to prioritize housing for owner-occupation and manage investment demand.
What is ABSD?
ABSD is a tax imposed on certain property purchases in Singapore. It is payable on top of the Buyer’s Stamp Duty (BSD). The ABSD was introduced in December 2011 to cool the property market, which was experiencing a surge in prices.
What are the revisions?
The specific ABSD rates increases are as follows:
- Raise ABSD rate from 17% to 20% for Singapore Citizens (SCs) purchasing their 2nd residential property;
- Raise ABSD rate from 25% to 30% for SCs purchasing their 3rd and subsequent residential property, and Singapore Permanent Residents (SPRs) purchasing their 2nd residential property;
- Raise ABSD rate from 30% to 35% for SPRs purchasing their 3rd and subsequent residential property;
- Raise ABSD rate from 30% to 60% for foreigners purchasing any residential property; and
- Raise ABSD rate from 35% to 65% for entities or trusts purchasing any residential property, except for housing developers.
| Additional buyer’s stamp duty (ABSD) | Rates before 27 Apr 2023 | Rates on or after 27 Apr 2023 | |
| Singapore Citizens | First residential property | 0% | 0% |
| Second residential property | 17% | 20% | |
| Third and subsequent residential property | 25% | 30% | |
| Permanent Residents | First residential property | 5% | 5% |
| Second residential property | 25% | 30% | |
| Third and subsequent residential property | 30% | 35% | |
| Foreigners | Any residential property | 30% | 60% |
| Entities, Trustees | Any residential property | 35% | 65% |
| Housing Developers | Any residential property | 35% (remittable, subject to conditions) + 5% (non-remittable) | 35% (remittable, subject to conditions) + 5% (non-remittable) |
Source: Ministry of Finance, Ministry of National Development and Monetary Authority of Singapore
In the case of joint property acquisitions involving individuals with different profiles, the ABSD rate that applies will be the highest rate applicable to any of the parties involved.
Married couples who have at least one Singapore Citizen (SC) spouse and are jointly purchasing a second residential property can still apply for an ABSD refund, provided they meet certain conditions. These conditions include selling their first residential property within 6 months after (a) the date of purchase of the second residential property if it is a completed property or (b) the issue date of the Temporary Occupation Permit (TOP) or Certificate of Statutory Completion (CSC) of the second residential property, whichever is earlier, if the second property is not yet completed at the time of purchase.
Buying an HDB flat or Executive Condominium unit from a housing developer with an upfront remission will not be affected by ABSD, as long as one of the joint purchasers is a Singapore Citizen. This policy will remain unchanged.
Transitional provision?
The revised ABSD rates will only apply to residential properties that are acquired on or after 27 April 2023. However, there is a transitional provision in place for cases that meet specific conditions, where the ABSD rates that were in effect on or before 26 April 2023 will apply.
These conditions include:
- The sellers granting an Option to Purchase (OTP) to potential buyers on or before 26 April 2023;
- The OTP is exercised on or before 17 May 2023, or within the validity period of the OTP, whichever is earlier; and
- The OTP is not being altered or changed on or after 27 April 2023.
How will the revisions impact the property market?
Foreign buyers, in particular, are likely to be significantly affected by the new measures, as ABSD rates have doubled for them. Many foreigners were already impacted by the previous hike, where ABSD was raised to 30 per cent on 16 December 2021. This has led some to refer to the new measures as “freezing measures” for foreign buyers, as they may find the rates to be prohibitively high. However, it remains to be seen how the market will react in the long term and whether the measures will have the desired effect of stabilizing property prices in Singapore.
Local buyers and Permanent Residents (PRs) who are purchasing their second or subsequent homes may hesitate in the short term as they wait to see how the market will react to the new cooling measures. Some may choose to delay their purchase in the hopes of a price correction. This could lead to lower transaction volumes and a possible decline in price growth as demand wanes. However, first-time buyers will not be impacted by the changes in Additional Buyer’s Stamp Duty (ABSD) rates, and their demand is expected to remain stable.
If the number of transactions decreases and demand weakens, the supply of homes in the market may also decrease as sellers and developers may choose to hold back their sales and wait for better market conditions. As a result, even if demand decreases, the prices of homes may not drop significantly due to the low supply and the sellers’ ability to wait for favourable conditions to sell.
I hope this information has been helpful in understanding how the recent cooling measures may impact the property market. If you have any further questions or would like guidance on how to navigate these changes, please feel free to reach out to me.
