ABSD and project completion period for developers extended for further six months; no extension for sales period
The government is extending temporary relief measures for property developers affected by disruptions to construction timelines due to heightened Covid-19 alert restrictions imposed from April to May.
“The sector may experience manpower shortages and further disruptions to construction timelines due to the tightening of border measures from April and May 2021 that limit the inflow of migrant workers,” according to the Ministry of National Development (MND) in its release on June 28.
The project completion period (PCP) for qualifying residential, commercial and industrial developments will be extended by six months.
Residential development projects will also receive an additional sixmonth extension in the commencement and completion timeline concerning the remission of the additional buyer’s stamp duty (ABSD) for qualifying developers.
PCP for residential development projects under the Qualifying Certificate (QC) regime for foreign housing developers will also be granted a six-month extension.
“In view of the construction disruption and rising cost, this certainly comes as a well-deserved and welcomed relief to developers,” says Karamjit Singh, CEO of Showsuite Consultancy.
The extension provides much needed time for the construction sector to resolve the manpower constraints and contract costs, according to Mark Yip, CEO of Huttons Asia. “It has a direct impact on the eventual selling prices of residential projects and some of these increased costs will flow through,” he says. “Through this relief, the cost pressure may be relieved to a certain extent.”
Developers who purchased their residential development land on or before May 7 will qualify for the sixmonth extension in the ABSD com
pletion timeline. For developers who purchased the residential development land on or before June 1, 2020, and those whose original timeline for completion of the residential development expired on or after Feb 1, 2020, the six-month extension to the ABSD completion timeline will be in addition to the cumulative 12-month extension to the timeline that was provided via the temporary relief measures announced on May 6, 2020, and Oct 8, 2020. This brings the total extension to 18 months.
However, there is no further extension to the sales period for ABSD remission. Developers still have to sell out all the units in their residential projects within five years to qualify for a remission in the ABSD. The six-month extension in the sales period announced as part of the temporary relief measures on May 6 last year applies only to land purchases made on or before June 1, 2020. No further relief has been granted. granted. Hence, the sales period remains at 5.5 years.
Developers are still concerned about fulfilling their obligations to the homebuyers of their residential projects, says Lee Liat Yeang, senior partner of Dentons Rodyk’s corporate real estate practice. “They still have to deliver the keys and hand over the units by the stipulated Vacant Possession Date as stated in their sale & purchase agreements with buyers, failing which they have to pay liquidated damages in form of interests,” he explains.
“Sales efforts were thwarted by Covid-19 events including restrictions on viewings of showflats,” adds Lee. “Developers should be given more time to sell out all their units within the relevant period as well as meet their contractual obligations to buyers.”
Meanwhile, the residential property market cooling measures remain in place “to ensure that private residential property prices are broadly consistent with economic fundamentals”, according to MND.