22 Nov 2010 Posted in Parliamentary speeches and responses
- Mr Speaker, Sir, I beg to move, “That the Bill be now read a second time”.
- The Residential Property Act (RPA) restricts foreign ownership of landed residential properties, including strata landed housing and land meant for residential development. We generally call them “Restricted Properties”.
- In Singapore, only citizens have the right to own landed residential properties. In addition, Permanent Residents who make significant economic contribution, can, with the approval under the RPA, purchase such properties for their own occupation.
- Foreign developers who wish to purchase land for residential development, other than from the Government, must also apply for approval under the RPA. Those who are granted approval are required to develop and sell the residential units in a timely manner.
- We now seek to amend the Residential Property Act to make changes to the penalty provisions as well as other amendments to improve the administrative efficacy of the RPA. I will highlight the key amendments.
Foreign developers – Introduction of a new extension charge framework
- The first group of key amendments relates to foreign developers who are given approval under the RPA to acquire or retain land for residential development. They are required to complete their residential development within a stipulated Project Completion Period, which is currently 5 years. They are then required to sell off all units in the residential development within 2 years from the issue of the Temporary Occupation Permit (TOP). This is to prevent them from hoarding or speculating in residential land. If they fail to meet the stipulated timelines, we may forfeit their Banker’s Guarantee, which is pegged to 10% of the land price.
- With the amendments, the Controller of Residential Property will be empowered to levy an extension charge for any extension of time beyond the Project Completion Period. The extension charge framework is essentially the same as the extension premium scheme that applies to the sale of sites under the Government Land Sales programme today. The key advantage of the extension charge framework is to make the cost of delay apparent to the developers and encourage them to complete the developments in a timely manner.
- We will apply the same penalty regime and extension charge framework to Singapore entities which are given approval to convert to foreign entities and to retain their residential land for development and sale; as well as to foreign entities that have been granted approval to change the use of their land to residential use on the basis that they will develop the land and sell the units.
Purchase of individual Restricted Properties for owner occupation - Fine-tuning the penalty provisions
- In the second group of amendments, the penalties for offences relating to foreign ownership of individual Restricted Properties will be enhanced. Today, Permanent Residents can apply to purchase Restricted Properties. To prevent speculation in such properties, approved purchasers are allowed to purchase only one property, which cannot be sold within the initial period, currently 3 years. Approved purchasers are also required to use the property for their own occupation and are not allowed to rent the property out. Owners who breach these conditions are subject to criminal penalties under the RPA, which have not been updated since 1973.
- These penalties will be revised to ensure that they continue to be an effective deterrent. Foreign owners who illegally dispose of their property during the non-disposal period are currently liable, upon conviction, to a maximum fine of $5,000. This is far below the amount of profit they might have gained from speculating in the property. We will raise the fine to a maximum of $200,000. As an additional safeguard, the Controller of Residential Property will be empowered to lodge a caveat on Restricted Properties purchased pursuant to an approval granted under the RPA. The approval to purchase is granted to selected foreigners on condition that there is no early disposal of the property, and a caveat will prevent such unauthorized disposal.
- There are other offences where sanctions have to be made commensurate with the severity of the offence. For example, a foreign owner who rents out his residential property without approval will now face a financial penalty of up to 3 times the rental income earned over the period of breach, or $10,000, whichever is higher. We will remove the current criminal sanction, as that may not be appropriate.
- Overall, the revised penalties will allow us to take a more calibrated and effective approach in the enforcement of the RPA.
Requiring ex-Singapore Citizens and ex-Permanent Residents to dispose of their Restricted Properties
- The final group of key amendments deals with the disposal of Restricted Properties belonging to ex-Singapore citizens and ex-Permanent Residents (PRs), and to foreign persons beneficially entitled to Restricted Properties through inheritance. Our policy is that only foreigners who are PRs and who have been given specific approval under the RPA can own Restricted Properties. Foreign beneficiaries who inherit such properties and Singapore Citizens and PRs who renounce or lose their citizenship or permanent residency, must dispose of their interests in the properties in a timely manner.
- Currently, the executors or administrators have ten years to dispose of the foreign beneficiaries’ interest in a Restricted Property if the beneficiaries do not qualify for approval under the RPA. As the estate administration process has been simplified with the abolishment of estate duty in 2008, we will shorten the disposal period to five years.
- We will now also require individuals who renounce or lose their Singapore Citizenship or Permanent Residency to dispose of their Restricted Properties. The amendment will address the current anomaly in our laws whereby an ex-Singaporean or ex-PR can continue to hold on to their Restricted Properties.
- Mr Speaker, Sir, I beg to move.
Last updated on 25 Nov 2012