Foreign developers to face tighter rules here

Published October 19, 2010

Amendment Bill also raises penalties for foreign buyers who flout rules


By UMA SHANKARI


(SINGAPORE) The law which governs foreign ownership of landed residential property in Singapore, will be amended to make it costlier for foreign developers to speculate in land here.

The Bill to amend the Residential Property Act (RPA), introduced in parliament yesterday, also aims to increase the penalties imposed on foreigners who flout the rules.

The RPA, which was first introduced in 1973, mandates that 'foreign' housing developers - that is, developers with overseas shareholders and/or foreign directors - must obtain approval to buy private residential land. They are also required to develop and sell units in a 'timely' manner.

The Act also states that permanent residents need approval to buy restricted properties - that is, landed properties and vacant residential land.

They can each buy only one restricted property for owner-occupation and are not allowed to rent out the property. They are also not allowed to sell the property within the initial years.

Right now, foreigners and permanent residents own just over 3 per cent of Singapore's total landed residential stock of close to 70,000 units.

The RPA was last amended in 2006. The new amendment Bill introduced yesterday refines safeguards to prevent developers from speculating. In addition, the penalty framework will also be enhanced to ensure that it continues to be effective and relevant.

Many penalties have not been revised since 1974, despite significant increases in the standard of living and residential property prices in Singapore.

Currently, the RPA mandates that foreign housing developers must complete residential developments within five years (the specified project completion period). They must also sell all units within two years from the time the project receives its temporary occupation permit.

The developers also cannot sell undeveloped residential land.

With the new amendment Bill, the Law Ministry is now proposing that developers who fail to complete and sell their developments within the stipulated period will be subject to a new extension charge framework.

They will pay for the extension of time beyond the original completion timeframe - similar to what they face under the extension premium scheme for sites sold under the government's land sales programme.

Other amendments ensure that foreign purchasers who flout the rules of ownership under the RPA will also face increased penalties.

For example, those who break the rules while buying or selling a restricted property will now face a non-compliance fine of up to $200,000 and/or a three-year jail term, as well as a fine of $2,000 a day for continuing offences. Right now, they face a fine of up to just $5,000 and/or a three-year jail term.

In addition, foreign beneficiaries of restricted properties will have to sell their properties within five years, down from 10 years now. And former Singapore citizens and ex-permanent residents will also have to dispose of their restricted properties within two years after giving up citizenship or permanent resident status.

The amendments are expected to take effect by the end of the year.

http://www.businesstimes.com.sg