Question 1: What are the transitional arrangements for buyers of residential properties around the implementation date of the increased Additional Buyer’s Stamp Duty (ABSD)?
A: There will be a transitional provision where the ABSD rates before December 16 will apply to cases that meet all of the following conditions:
- The Option to Purchase (OTP) is granted by the seller to the potential buyer on or before December 15;
- The OTP is exercised on or before January 5 of the next year, or within the OTP validity period, whichever is earlier;
- The OTP has not been altered on or after December 16. Buyers should strictly adhere to these conditions to be eligible for the transitional provision.
Question 2: Which loans are subject to the revised Total Debt Servicing Ratio (TDSR) limit?
A: The revised 55% TDSR limit will apply to housing loans for which the OTP is granted on or after December 16. If there is no OTP, the limit will apply to Sale and Purchase Agreements signed on or after December 16.
This limit also applies to homeowners applying for new mortgage equity withdrawal loans (MWL) on or after December 16, unless the Loan-to-Valuation (LTV) ratio does not exceed 50%.
The TDSR applies to individuals, sole proprietorships, and companies established for the purpose of purchasing real estate.
Question 3: What are the arrangements for borrowers’ loans around the implementation date of the tightened TDSR limit?
A: The previous 60% TDSR limit will apply to borrowers who obtained an OTP on or before December 15, or signed a Sale and Purchase Agreement on or before December 15 (if there is no OTP).
Borrowers can utilize this provision regardless of whether they have exercised the OTP when applying for the property loan.
When applying for a property loan, borrowers should provide the OTP or the Sale and Purchase Agreement to the financial institution to take advantage of the previous 60% TDSR limit.
Question 4: Will homeowners who previously took a loan based on the 60% TDSR limit but do not meet the new limit be prohibited from refinancing?
A: Homeowners with existing owner-occupied housing loans will not be affected by the 55% TDSR limit, as the TDSR does not apply to the refinancing of such loans.
For borrowers refinancing existing investment property loans, the Monetary Authority of Singapore (MAS) has provided a temporary exemption from the TDSR requirements for borrowers affected by COVID-19.
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