Government Eases up On Seller Stamp Duty, Relaxes TDSR Rule For Retirees Needing Cash Loans
Certain residential property measures related to the sellers’ stamp duty (SSD) as well as the total debt servicing ratio framework (TDSR) has been relaxed. However, there would still be no change to the additional buyers’ stamp duty (ABSD) charge, as well as the loan-to-valuation (LTV) limits.
The SSD is currently payable by those who sell a residential property within 4 years of purchase, at rates of between 4% and 16% of the property’s value.
The changes will see the SSD holding period cut to 3 years instead of 4 years.
The SSD rates will also be lowered by 4 percentage points for each tier, and the new SSD rates will range from 4% (for properties sold in the 3rd year) to 12% (for those sold within the 1st year).
The current TDSR framework aims to encourage prudent borrowing by households. Under this framework, property loans extended by a bank are unable to exceed a TDSR threshold of 60%.
This means that a borrower’s total loan obligations cannot exceed 60% of their monthly gross income.
However, this 60% threshold will no longer apply to mortgage equity withdrawal loans with loan-to-value ratios of 50% and below. These refer to loans in which borrowers in their retirement years borrow against the value of their properties to obtain more cash. This move is expected to affect only a small minority of owners.
MND, MAS and MOF said in a statement released on Friday that the current set of property measures remain necessary to promote a sustainable residential property market and financial prudence among households.
The new rules take effect from March 11. As such, the rates would apply to all homes bought on and after March 11.
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