Source :  The Straits Times – Jessica Cheam

Property tax on HDB flats going up. One-off rebate to cushion rise; one- and two-room owners will pay nothing.

HOMEOWNERS: be prepared to pay higher property taxes next year.

In line with the rally in home prices, the taxman is revising upwards the value of Housing Board (HDB) homes. The Inland Revenue Authority of Singapore (Iras) announced yesterday that the annual values (AV) of all types of HDB flats will be raised with effect from Jan 1. This will mean a hike in property taxes for 2010.

The property tax rate in Singapore is currently set at 10 per cent of a property’s AV, although owner- occupied residential properties enjoy a concessionary 4 per cent tax rate. To soften the impact, a one-off rebate is being introduced to help HDB homeowners adjust to the increase. With this new rebate and ongoing GST rebates, low-income households who live in one-room or two- room flats will not have to pay any tax for 2010, Iras said.

Industry analysts yesterday said that Iras’s latest move was ‘not totally unexpected’. HDB resale prices have risen a hefty 31.2 per cent in the past two years, and a further 3.8 per cent in the first nine months of the year. ‘As HDB resale flat prices have exceeded the property peak of 2007, this was inevitable,’ said Ngee Ann Polytechnic real estate lecturer Nicholas Mak.

What was more surprising, however, was the timing of the announcement. ‘There are households who are still reeling from the recession, and unemployment is still high. It could have come a bit later when the job market has recovered,’ said Mr Mak.

Iras last revised AVs on Jan 1, 2008. It said yesterday that it reviews all property AVs annually, including HDB flats, to ‘ensure that they reflect prevailing market rental values for the purpose of determining property tax’. AVs of HDB flats were not revised last year, despite HDB rentals increasing by between 31 per cent and 37 per cent in 2008 relative to 2007, it said.

This adjustment was deferred in view of the uncertainty in market rental trends caused by the economic recession. Iras added that there was evidence of rental value declines due to the negative economic outlook at the time. However, market sentiment has since changed dramatically. Iras noted that HDB rentals stabilised after a moderate decline from late 2008 to the middle of this year, and have since begun to rise.

As a result, current values of HDB rentals, as well as resale prices, are still significantly higher than levels seen in 2007. ‘The AVs of HDB flats will, therefore, have to be adjusted beyond the last revision in January 2008,’ said Iras.

But to help HDB homeowners adjust to the rise, the Government is granting a new property tax rebate to all HDB owner-occupiers for property tax payable in 2010 – set at 50 per cent of the property tax payable and capped at $120. Low-income households will be assisted because flats with a property tax of $50 and below will not need to pay property tax next year.

The average three- room HDB owner-occupier will face an increase, after rebates, of $72 for the year. The rise will be about $97 for four-roomers, $107 for five-roomers and $103 for executive HDB flat owners.

PropNex chief executive Mohamed Ismail said the rebates will help cushion the blow. He pointed out that HDB owners have enjoyed higher rentals and resale values over the past two years, so the increase in taxes was ‘to be expected’.

HDB homeowner Lim Chye Boon, 48, said he had expected the tax increase to come ‘at some point’ so was not too bothered. But for Mr Kenny Koh, 27, who has just bought his five-room flat in Sengkang, it was not welcome news. ‘I just spent so much money buying my new home and now have to pay more again,’ he said. ‘But at least, the rebate helps a bit.’

Source: The Business Times

DAVID Lawrence has a suggestion for dealing with the problem of rogue housing agents whom the government is trying to rein in: by introducing legislation. Either the Ministry of National Development or Housing and Development Board could set up a separate statutory body and give it exclusive rights to deal in resale HDB flats, he says.

Such legislation may be difficult to apply retroactively for the existing flats, he notes. But when HDB sells new flats, it could write in the agreement that when the lessees wish to re-sell their flats after the five-year minimum occupation period, they will have to go through the new stat body.

‘If you wish to sell your flat, all you’ll have to do is to list it with this new stat body,’ Mr Lawrence, who is chief executive of Wheelock Properties (Singapore), told BT in a recent interview. ‘The new body would not have to be involved in the pricing. People can put their own price, as in a free market. If it doesn’t sell within three months, then they’ve priced it too high,’ he said.

The proposed new stat body would employ agents who have been screened and found suitable. ‘The commission charges could be low but it will still pay for this stat body to handle all these sales,’ Mr Lawrence said. The body would have an approved panel of lawyers and valuers with all money going through proper controls, he suggested. ‘That will cut out crooked agents ripping off some of the old people on HDB estates and taking double fees. I don’t agree with all that nonsense.’

According to Mr Lawrence, since HDB built and sold the flats, he sees no reason why a public sector body such as the one he is suggesting should not be sole agent for their resale. On another front, Mr Lawrence says he is not alarmed by the recent increase in HDB’s resale flat price index. Viewed over a 10-year period, the index has risen 34 per cent, which works out to an average increase of 3.4 per cent per annum. He describes this as ‘fairly gentle capital appreciation’ that is good for the 82 per cent of the population that live in HDB flats.

Source: The Straits Times

Senior Minister Goh Chok Tong announced during the 50th anniversary of the Real Estate Developer’s Association of Singapore (REDAS) how housing board flats remained the foundation of Singapore’s home ownership scheme.

It is in accordance with his vision for the nation: “A Distinctive City, A Harmonious Home”.

Mr. Goh said the government will ensure the affordability of public housing for every citizen.  Eighty percent of Singaporean families are eligible for HDB subsidies. This is based on their current household income ceiling of $8,000.00. Increasing demands from Permanent Residents in the resale market will also be considered.

He also expressed understanding of the concerns of many Singaporeans about being priced out of the property market after its recovery from the financial crisis. He said young Singaporeans might feel the frustrations of being unable to purchase their first homes. Public housing policy however, will make sure they are able to adhere to the government’s pledge.

He also allayed fears about the price increase of units. The MND has made an assurance of the adequacy of the supply of homes. The Minister added the Government’s commitment to releasing more land to make sure property prices remain aligned with economic fundamentals.

In his speech, Mr. Goh highlighted the significance of being a competitive business venue. Businesses should be able to offer two things. The first is to keep rentals on par with other key financial hubs like Shanghai, Hong Kong, New York and London.

Second, is the ability to offer more affordable office solutions at the fringe of the city in addition to Grade A offices in the Central Business District.

Source: Channel News Asia

The Housing and Development Board (HDB) has reported a S$2 billion deficit before government grants in its latest annual report. The figure is more than double the loss reported in the previous financial year.

HDB said the huge deficit for the financial year ending March was due mainly to more flats being sold. These flats are highly subsidised by the government. Higher construction costs also led to the large deficit. Other reasons that contributed to HDB’s loss included upgrading works for lifts and rental flats.

Between April last year and March this year, HDB pushed out 8,000 flats under its Build-To-Order Scheme. That was 2,000 more than what it supplied the year before.

At a media briefing on its latest annual report, HDB also gave an update on the Lease Buyback Scheme which allows low—income elderly Singaporeans to get a portion of cash upfront while HDB buys back the tail—end of the lease of their flat.

HDB has received more than 400 applications since the scheme was launched earlier this year. Some 25,000 households are eligible for the scheme, but the elderly have other options to monetise their flats.

HDB’s CEO, Tay Kim Poh, said: “Some of them will sublet their entire flat, and the rental for even a three—room flat is very good nowadays. They can easily get S$1,500 per month from the rental and they (then) move in to stay with their children.”

Despite the global downturn, HDB said the mortgage arrears rate has dropped 0.4 percentage point to 7.5 per cent. Market watchers said this may be due to the high resale prices of HDB flats.

Eugene Lim, associate director of ERA Asia Pacific, said: “There was an upswing in the market since the beginning of this year. And what happens is that those households in arrears probably made use of this opportunity to sell their flat and downgrade to a flat that they can afford.”

Moving forward, HDB said it will focus on improving community relations. A new department has been set up within the housing board to look at strengthening social cohesion and integrating newcomers.