The prices and ownership of Singapore Property has been very much in the news with the WP (Workers Party) Manifesto for the Singapore General Elections 2011 looming. Frankly, I don't think that their plan to provide housing for Singaporeans at a "Flat Rate" is workable.
On the other hand, I disagree with ruling party PAP Minister Mah Bow Tan's rebuttal last week. I think that a Creative Deflation of property prices is good and desirable. It is not the government's job to protect the interests of investors (I call them speculators), and property developers. They have been living off the fat of the land for far too long at the expense of lower to middle class true blue Singaporeans. If this goes on, most of the property will be owned by well-to-do foreigners and rich individuals/companies.
Anyway, they have many other ways to invest in Singapore, like via the SGX etc or better still set factories or businesses. Moderating the inflow of "hot" funds through property investment will help prevent the Singapore dollar and economy from overheating. The direct result would be affordable housing for Singaporeans beyond the HDB option.
Also, we should give Singaporeans citizens every opportunity to own affordable dream homes that are within their means and to generate income from their investment properties through rental income streams.
Therefore, if I were the PM after the next Singapore General Elections 2011, I would implement the following changes in the Singapore Residential Property Act:
PROPOSED NEW SINGAPORE RESIDENTIAL PROPERTY ACT 2012
1. Landed Property / HDB Property:
Only Singaporeans can own landed property and housing built by HDB and other government organizations. Permanent Residents and Foreigners are not allowed to own landed property and housing built by HDB and other government organizations. PRs and Foreigners owning such property can keep them (for now) but if they choose to sell, it must be to Singaporeans who have been citizens for at least 10 years or have fully discharged their National Service obligations. Should one of the PR/Foreign owners pass away, the property must be sold or transferred to a Singaporean. This law had been in-force in Australia where land is plentiful, so I do see why we can't do it for land scarce Singapore where property prices are spiraling out of control.
On the issue of affordability of housing for lower paid foreign workers, this should be the responsibility of the companies who employ them. If they cannot afford to house them, then they should find ways of being less reliant of them. We have enough border hoppers here already. It is time employers consider the cost of employing locals versus foreigners and create jobs that fit into this new equation. Tax payers should not be burdened by this liability.
2. Freehold Apartments:
Foreigners are allowed to buy new and old freehold apartments but can only sell them to Singaporeans.
3. 99-year Leasehold Apartments
The current law applies for now.
New Property Tax (over and above current taxes, levies etc)
Proceeds of this tax to be used to provide affordable housing for Singaporeans via the HDB and other government authorities.
The Tax Rate is from 10%-50% of the profit derived from the housing sales transaction nett of normal transaction costs like Conveyance etc. This tax will be paid by the seller. Under this law, a seller who can provide verifiable standard documentary evidence that they have lost money /broke even on the property transaction, need not pay for such tax. Rental income derived from such property would not be computed as "profits".
Check and balances will be introduced to prevent under-declaration of the sales proceeds through the set up of the detailed database of property sales by a government agency. Taxes can be retrospectively claimed from errant tax payers, if they are found years later, to have under-declared the sales amount taxable. Criminal charges similar to the Income Tax law will also be applicable.
First time property owners who are the sellers of the property are exempt from this tax.
For every property sold by the seller within 5 years, the seller's tax liability will increase the rate by 10% until the maximum of 50% per property. That means if a seller sells six properties within 5 years, the fifth and subsequent property will attract a rate of 50% per property sold. After the 5 years, the tax base is reset at 10% for the first property of this seller.
This rule applies as long as one common person owns the properties. To illustrate how the tax applies, if A sells properties with one or more parties, i.e. A+B, A+C, A+D, A+E, A+F+G, A+G+H all these properties will attract the increasing rate up to 50%. As lawyers will access to the database of these linked property ownerships, they will be able to apportioned the progressively higher percentage tax charges to A and the rest will attract the lower rate depending on their involvement of property transactions within their 5 year time frame (in consultation with the owners concerned).
Unfortunately, I am not the PM nor am I affiliated to any Singapore Political Party so this law may probably never be passed.
I fully realize that this proposal may have some potholes, but this can be worked out be the implementers who are undoubtedly highly paid for such tasks.
But this is my dream for Singaporeans. May Singapore prosper. In particular, may true blue Singaporeans prosper.
PS: I am a landed and apartment property owner. So I stand to lose if such an Property Act comes into effect. But this is of no consequence as it will benefit the future generations of Singaporeans who are here to stay.
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