SINGLE Singaporeans were able to celebrate from Budget 2024, particularly on the housing front. If they meet certain requirements, a single Singapore citizen aged 55 or above can now claim the refund of the Additional Buyer’s Stamp Duty (ABSD) that they paid on the second home they buy.
The ABSD refund is a substantial amount, as the Singaporean buying a second home pays ABSD at the rate of 20%. In other words, the complete ABSD refund for an eligible local totals $300,000 for a S$1.5 million second home purchase.
In order to be eligible for a refund in full for the local single, they must to sell their primary residence within 6 months after purchasing the second home. This is also the case if it was a finished property. In addition, the value of the second house must be less than the value of the home that was sold first.
As it stands, married couples comprising at the very least one Singapore citizen are entitled to ABSD relief when they purchase a second property, subject to observing different conditions like the requirement to dispose of the first home within a predetermined time.
Although married locals have many advantages over singles in the housing market, helping singles is important as singles are a large segment of the population.
In 2023, singles accounted for 30.4 percent of the population in their 30s, 14.9 per cent of those in their 40s, 11.8 per cent of the 50s and over, and 10% of people in their 60s. In comparison, the proportion of singles in their 30s, 40s 50s and 60s stood at 24.5 percent, 13.8 per cent, 11.7 percent and 7.5 percent in 2010.
Because of the land shortage in Singapore houses should be designed for personal use. A curbing of the private market for housing to ensure an even market in which prices don’t swell and the market does not have boom and bust cycles must be embraced by the various stakeholders such as agents, owners, developers and buyers.
Singapore’s home ownership rate is enviable 90% of Singaporeans will own their homes in 2023.
However, mobility of housing is important also since many households see housing needs change in time. Families may also have subpar outcomes if they encounter major obstacles when moving from one home to another.
Changing household size can be a key reason for the need to move house. A household can grow because an elderly parent is moved in with adult children, or a couple has children. A household can shrink as grown-up children move out of their parents’ home.
Some families may wish to relocate to a place close to their school or place of employment to cut down on cost of travel and expenses.
The financial aspect can be a major reason behind moving homes. Maybe a family wants to upgrade to a luxury district condominium or a land-locked home to celebrate career or business success.
If an owner’s financial fortune declines or a person retires, he may seek to exchange a house that is expensive for a cheaper one. This could free up some cash and alleviate financial stress.
In addition, in an ageing Singapore, some elderly folk may want to move to a house which is more manageable or better suited for their needs, as their health declines.
Ultimately, owning a home that’s the right size, price, location or other specifications can contribute to the peace and harmony and boost the health of its residents.
A family that exchanges an owner-occupied residence for another is not looking to add to the number of properties it owns. Thus, it would appear unfair that such a household could be required to pay for the ABSD rate for homeowners who purchase a second house.
In reality, can the ABSD system be more accommodating to residents who are in the position of being eligible for a more favorable ABSD treatment when they purchase their second home, provided that, among other things, they are able to sell their primary residence within a prescribed time frame?
Perhaps allow them to not pay ABSD on their second house first, prior to receiving the refund. Instead, they may be forced to pay ABSD on their second home in the event that their primary home isn’t sold within the prescribed time frame.
In the end, having to pay ABSD first, and then requesting the refund later can strain the cash flow of some households and could be a potential stumbling block to moving houses.
Additionally, you should consider creating ABSD treatment friendlier for other groups who trade the home of an owner to another, for example local singles that are less than 55 and married permanent resident (PR) couples.
The benefits of helping PR couples could be justified by the contribution to the economy that PRs contribute to the economy. As it stands, ABSD rates for home purchase clearly favors citizens over PRs.
Presently, singles in the local area who are under 55 and couples with PRs would have to sell their solely-owned home first before they buy another home, in order not to pay ABSD applicable to purchasing another home.
Local couples or singles from PR might have to rent a house during the interim. This could result in hassle and cost. If prices rise, those who decide to sell their own home before buying a new residence could find themselves in a difficult spot.
The ABSD rebate for singles who qualify be available when they make a change their home to a more expensive one.
The world’s best planning, top quality public housing and excellent transport connectivity support housing mobility in Singapore. Locals can fairly seamlessly move from public to private housing and vice versa, or move to any part of the island.
The cost of the move from a house that is owned by an owner to another can limit house mobility.
Buyer’s Stamp Duty is about 3 percent for an S$1.5 million home, and 4 per cent for a home worth S$3 million. ABSD is a major cost to the transaction.
To help with housing mobility to help people move around, let’s create ABSD much friendlier for residents who want to move from one owner-occupied home to another.