Budget 2024 had a lot to offer single Singaporeans. Singaporeans aged 55+ can claim their refund for the Additional Buyer Stamp Duty on their second house, subject to certain conditions.
The ABSD is a substantial amount as a Singaporean purchasing a second residence pays ABSD (20%). The ABSD total refund for a Singaporean buying a second house for S$1.5m is S$300,000.
For a full refund the local single must also sell his first house within six month of the purchase date for a property that is completed, or, if unfinished at the time of sale, either the date the Certificate of Statutory Completement/Temporary Occupation permit was issued, whichever date comes earlier. Also, the second house must have a lower value than the home that was sold.
Currently, married pairs that have at least 1 Singaporean in their group can get ABSD rebates when they buy a new home together.
Even though married locals enjoy different advantages over singles when it comes to the housing market, singles represent a large segment of the population.
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Singles will account for 30.4% in 2023 of residents who are in their 30s. They will also make up 14.9% in those in the 40s. In 2010, the proportions of singles were 24,5% among residents aged 30 to 60, 14,8% among those in their 40s, 11,7% among those in their 50s, and 7,5% for those in their 60s.
Singapore has a limited amount of land and therefore, the majority of homes built should be for owner-occupation. All stakeholders should welcome the introduction of curbs on the housing market in order to create a more stable market with lower prices and fewer boom-bust cycles.
Singapore’s impressive rate of home ownership is envied by many. In 2023, 90 percent or more of the resident households will be homeowners.
However, the mobility of housing is important too. Many households will see their housing needs changing over time. If households encounter significant obstacles to moving from a home that meets their needs to another, they may not achieve the best results.
The changing size of the household can be one of the main reasons for moving. If a couple moves in with children or their parents are elderly, then the household size can increase. Or, a household shrinks when adult children leave the home of their parents.
Some families want to live close to their workplace or school, saving time and money on travelling.
The financial aspect can also play a major role in moving home. Maybe a family wants to move up to a luxury condominium in the district, or a land-based home to celebrate their career or business achievements.
The owner may trade in a expensive home for a less expensive one when his finances are declining or he retires. In the process, a large amount of cash can be released and financial strain is greatly reduced.
Some elderly Singaporeans, whose health is declining, may move to a more convenient or suitable home.
The peace and harmony of a family can be improved by owning the perfect home.
A household that exchanges an owner-occupied house for another home is not seeking to expand its number of properties. So, it seems unfair that a household trading one owner-occupied house for another would be charged the ABSD applicable to residents purchasing a secondary home.
In fact, could ABSD become more accommodating to locals who, at present, are eligible for ABSD that is more favourable when they purchase a second house, if they, among other things, sell their first property within a predetermined time frame?
Allow these locals first to receive a refund without paying ABSD. You can make them pay ABSD if their home isn’t sold in the stipulated timeframe.
The cash flow of many households can be severely affected by paying ABSD and then receiving a subsequent refund. For some, this could prove to be a huge obstacle in moving.
Additionally, you might consider extending the ABSD to other groups of people who exchange a homeowner-occupied house for another. For example, local singles aged under 55 or married permanent resident couples.
In many cases, the contribution of PRs to the economy can be used as a justification for helping couples. In the current ABSD system, citizens are clearly given a higher rate of ABSD for purchasing a home.
In order to avoid the ABSD, local singles below 55 years and PR couples must first sell their solely owned home before purchasing a replacement.
This may mean that local couples and singles will have to deal with the inconvenience and cost of renting an apartment in the meantime. If prices increase, those who sold their own home before buying their replacement could find themselves in an awkward situation.
The ABSD refund may also be applicable to eligible singles when they exchange their owner-occupied existing home for one more expensive.
Singapore is a housing-mobility leader thanks to its world-class planning and high quality public housing. Locals can move easily from public to privately owned housing or vice-versa. They may also relocate to any part of the island.
But the transaction costs of moving to a new home from one that’s been occupied by an owner can hinder housing mobility.
The Buyer’s Stamp duty is around 3% for a S$1.5M home and 4% for a S$3M home. ABSD costs can be significant.
ABSD could be a great way to support residents who wish to move from one home to another.
