Cut ties with Singapore and lose your right to own land

Cut ties with Singapore and lose your right to own land
But PRs seem unperturbed by new ownership rules

SINGAPORE - Those who cut their ties with Singapore should not expect to own the city's scarce land resources.

That, according to analysts, is the message that the Government is sending through its Bill to amend the Residential Property Act, which was tabled in Parliament on Monday.

However, permanent residents whom MediaCorp spoke to said they were unperturbed by the new rules.

"I'm not concerned," said Indian hedge fund manager Samir Arora, who owns a house in upscale Sentosa Cove. "I have no plans to leave Singapore anyway."

Individuals who give up their citizenship or PR status in Singapore will now have to dispose of their landed properties within two years.

The Bill, which is expected to be debated in Parliament next month, could be passed by the end of the year. It seeks to impose a penalty of $20,000 or a three-year jail term for failure to adhere to the rules.

Foreigners inheriting landed property will have to sell it in five years instead of the current 10.

The new rules will be able to better respond to challenges presented by a population that is more mobile than in 1973, when the existing law came into force, analysts noted.

"Perhaps it will be a bit harsh for those PRs or citizens who inherited properties or who have since moved because of work or because of social reasons," said Dr Chua Yang Liang, head of research and consultancy at Jones Lang LaSalle. "But the issue is, if they have given up their citizenship or permanent residency, then they should be treated like a foreigner."

According to analysts, the impact on the market is expected to be minimal, as PRs currently own only 3 per cent of landed homes and landed housing makes up just some 5 per cent of Singapore's total real-estate market.

But rules are also being tightened for foreign property developers - developers with foreign directors or any amount of foreign ownership - who may feel the squeeze.

Developers who fail to complete and sell developments within the current stipulated period will now have to pay for any extension of their time frames.

Said Cushman and Wakefield managing director Donald Han: "I think the measures are being updated to create more of a 'hurt aspect' so that developers will be incentivised to use the two-year period to fully sell off their units."

HDB imposes 7-day cooling-off period for flat sale

SINGAPORE: From November, sellers of Housing & Development Board (HDB) flats will have to observe a seven-day cooling-off period before they can grant an Option-to-Purchase (OTP) to the buyers.

The cooling-off period starts after they complete a resale checklist which will have to be submitted online to the HDB website.

The checklist was introduced in 2008 to ensure flat sellers and buyers are aware of the key resale and financial policies before they commit to sell or buy a resale flat.

The HDB said the enhanced resale checklist would also require sellers to state their next housing arrangement.

HDB added if sellers intend to buy another flat, they have to work out their estimated sales proceed of their current flat, and submit a financial plan for their next flat purchase

Buyers of resale flats, acting with or without agents, will also be required to complete and submit the resale checklist.

The HDB said the enhancement was part of regular reviews to better protect the interests of sellers and buyers and help them make informed and prudent decisions.

Currently, agents engaged by sellers or buyers are required to go through a resale checklist with the sellers or buyers to highlight key policies and procedures before the sellers or buyers would grant or exercise the OTP.

After the OTP is granted or exercised, sellers or buyers are required to submit the completed checklist to HDB together with the resale application form.

Sellers and buyers without agents are encouraged, but not required, to go through a separate Do-It-Yourself (DIY) resale checklist.

They also do not need to submit the checklist to HDB.

-CNA-

Five reasons why you should buy a property now

With house prices on the rise, despite the new cooling measures, is now really the right time to buy a property? Award-winning property agent Kelvin Fong thinks so. Here are his five reasons why buying a property today could be the best decision you ever make.

1. Low interest rates
People with money to invest can use the current low interest rates – which are as low as 0.88% at present – to leverage a passive income from their purchased property. In fact, the returns from a property can be more than what a bank’s fixed deposit account can offer.
For example, a unit at Southbank costing about $1.2million could generate a rental income of about $4800 per month, while the mortgage is about $3000. The buyer would enjoy a passive income of $1800 per month, as compared to depositing it in the bank to get 0.4% of around $1000 per year.

2. Property is an appreciating asset (eventually)
Barring any dramatic economic upheavals, property prices will likely stabilise or slowly, but progressively, increase from now till 2011. Most sellers will not want to sell at a lower price today, and will not suffer when paying a relatively high mortgage due to low borrowing costs. The 30% down payment rule will actually act as an incentive because purchasers, having come up with this capital, will not want to sell.
Provided you do not sell your property during the downturn – as you will almost inevitably lose money on it – the value should increase. The key is that the buyer must have holding power when the market deteriorates and should not buy until they have the holding power to weather any market conditions. Prices will eventually rise again – as witnessed in 2008, when prices were down but did eventually rise to and, in some cases surpass, the 2007 peak.

3. Assets beat playing the market
Many people will choose to purchase an asset like property because the market liquidity – essentially the asset’s cash value – is still strong and, due to the last financial crisis in 2008, people felt safer putting the money in asset rather than financial instruments. The asset will always be there, and even when market conditions are not as good, as long as you do not sell it, you will not lose money.

4. Market conditions don’t matter
Buyers who are looking at property as a long-term investment will be less concerned about the market’s movement up or down.. Property will – nearly always – appreciate in the long term in Singapore due to the scarcity of land and available real estate. While having a diverse portfolio is preferred, as a long-term investment, property is generally going to make more money than other comparable instruments. Investing in bonds, for example, is a safe investment instrument, but capital appreciation is weak.
Property is not the ideal market for speculators though – not only has the government introduced measures to discourage property speculation – but you will be much more at risk of market fluctuations.

5. Property keeps on giving
Buying public housing in today’s market is not cheap, with HDB’s executive condominiums going at around $600 – 700psf, close to mass market private property prices. A HUDC unit has already reached the $1 million mark, and the trend looks set to continue. Parents may see buying an asset, not only as a hedge against inflation, but also as an eventual inheritance to their children. If house prices continue to rise – and with the cost of construction materials inevitably going to rise too – there is the fear that the younger generation could be priced out.