Deputy Prime Minister and Minister for Finance, Mr Lawrence Wong, delivered Singapore’s FY2023 Budget Statement on Tuesday, 14 February 2023, in Parliament. It seems that there is some positive news for those in search of flats. It appears that higher CPF grants may make resale flats more affordable, and a specific group of home buyers will also have increased chances of balloting. However, there may be a downside for some private property buyers who may face higher taxes.
From a property standpoint, here’s the rundown of the 2023 budget statement:
1. Higher chances during BTO balloting for first-timers
During BTO balloting, first-time applicants such as families with children and married couples under the age of 40, will receive an extra chance to obtain their queue number for a BTO flat. As a result, they will have a total of three opportunities to secure a flat, in contrast to the usual two chances provided to other first-timers.
In summary, the two aforementioned groups, namely families with children and married couples aged 40 and below, are being given preferential treatment compared to other first-timers. This prioritization aims to distinguish them from individuals who are deemed to be in less need, including those who own a property but have yet to receive housing subsidies and are also classified as first-timers.
The additional balloting opportunity is just one of several measures that will be implemented to expedite the process of obtaining the keys to their flats for these two groups. The complete details and procedures will come into effect later in the year, following Parliamentary discussions that will finalize the budget for the Ministry of National Development.
2. Resale Flat Buyers to Benefit from Higher Housing Grants
First-time buyers of 2-room, 3-room, or 4-room HDB flats can take advantage of an increased CPF Housing Grant of up to $80,000 (previously capped at $50,000). Similarly, buyers of 5-room or larger resale flats can now receive a grant of up to $50,000, up from the previous cap of $40,000.
This change raises the maximum available grant for first-time families purchasing resale flats to $190,000.
If you submit a resale application on or after 1 April 2023, you will be eligible for the revised grant. In addition, for those who have not completed their resale transaction by 3.30 pm on 14 February, or who submit their application between now and 31st March, the difference between the previous and revised grant will be disbursed within three months of completing the resale transaction.
The standard grant eligibility criteria still hold true, which include having at least one Singapore Citizen spouse, a monthly income ceiling of $14,000, no private property sold in the preceding 30 months, and other relevant requirements
3. Increased Housing Grants Offered to First-Time Single Buyers
The CPF Housing Grant for first-time single buyers purchasing 4-room or smaller resale flats has been increased to $40,000, up from the previous amount of $25,000. Similarly, those purchasing 5-room or larger resale flats can now receive up to $25,000 from the revised grant, which was previously capped at $20,000.
4. Most Private Properties to Incur Higher Stamp Duty Rates
Under the new policy, the Buyer’s Stamp Duty (BSD) will have an impact on properties values above $1.5 million. The amount of the property value that is between $1.5 million up to $3 million will now be subject to a five percent tax, which is higher than the current four percent. Any value that remains above $3 million will be taxed at a rate of six percent.
During this transitional period, the earlier and lower BSD rates will continue to be applicable under certain conditions. To be eligible for the older rates, you must meet the following criteria:
- Your option to purchase (OTP) was granted on or before 14th February
- You exercise the OTP on or before 7th March or its validity period ends, whichever comes first
- The OTP is not modified on or after 15th February
Important Note: Changes to Stamp Duty Rates also Impact Non-Residential Property
It’s important to note that the changes in stamp duty rates also apply to non-residential properties. The amount that is between $1 million and $1.5 million will be taxed at a rate of four per cent, while any amount above $1.5 million will be taxed at a rate of five per cent, an increase from the previous rate of three per cent.
The recent budget announcement is generally good news for home buyers, with flat buyers finally receiving some much-needed support. While stamp duties have increased, most are relieved that it does not constitute a significant cooling measure. Instead, we see a slight increase in grants to account for rising inflation, as well as a modification to the balloting system to better distinguish between the different types of first-time buyers.
Wondering if it’s the right time to buy, sell, or wait it out?
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