14 Feb 2006 Posted in Parliamentary speeches and responses
- Mr Speaker, Sir, I beg to move, that the Bill be now read a second time.
Key changes as announced in Minister for National Development’s statement
- This Bill seeks to amend the Residential Property Act or RPA as announced in Parliament by the Minister for National Development on 19 July last year in his Statement on Policy Changes Affecting the Property Market. At that sitting, Sir, three key changes involving the RPA were announced.
- First, flats in buildings below six levels would no longer be restricted under the RPA; that means with effect from July last year, foreigners could buy such flats without the need to seek approval from the Minister for Law.
- Second, to level the playing field, all foreign companies became subject to Qualifying Certificate or QC requirements if they intended to undertake residential property development. This measure also came into effect on July last year; and
- Third, it was announced that after the RPA is amended, the costs of the QC requirements be reduced as follows:
- the quantum of the Banker's Guarantee would be lowered from 50% to 10% of the land price; and
- secondly, the developers would be given greater flexibility and be allowed up to 6 years to complete the development of the residential land.
Sir, we had a full debate in this House on these and other policy changes announced by Minister of National Development.
- Today, I will move amendments to the Residential Property Act to bring into operation the third key policy change mentioned earlier as well as other more technical amendments to improve the overall administration of the Act. I will now elaborate on these amendments.
Refining the safeguards to prevent developers from speculating in land
- First, as part of safeguards to prevent developers from speculating in residential land, a foreign developer who currently applies for a Qualifying Certificate to develop residential land (i.e. a QC holder) has to furnish a Banker’s Guarantee of 50% of the land price. If, for example, the QC holder breaches the condition prohibiting it from disposing of the land in a vacant or undeveloped state without the prior approval of the Controller of Residential Property, the Banker’s Guarantee will be forfeited.
- Sir, as I had mentioned earlier, we will be lowering the Banker’s Guarantee amount to just 10% of the land price. This will reduce business costs for developers. To ensure that there is effective deterrence when the Banker’s Guarantee quantum is lowered to 10%, we will be imposing a financial penalty on a QC holder found to be in breach of the condition that he is not to sell the land in a vacant or undeveloped state. The financial penalty imposed is capped at 50% of the land price and will take into account any Banker’s Guarantee which has been forfeited.
- Sir, as an additional safeguard, the Registrar of Titles will be empowered to enter a notice in the land-register to alert persons dealing with the QC holder that the QC holder is prohibited from selling the residential land in a vacant or undeveloped state.
- Sir, in short, we will be moving towards a more targeted approach where we lower the business costs for QC holders while ensuring sufficient measures to deter speculation in undeveloped land.
Streamline procedures for Singapore entities with clearance certificates
- Second, Sir, we have streamlined the procedure for a Singapore company when it applies for a clearance certificate from the Controller of Residential Property. Presently, a Singapore company applying for a clearance certificate is required to amend its memorandum or articles of association, and to submit a list of its members and directors containing particulars of their nationality. We have reviewed the requirements and are satisfied that it is sufficient for a Singapore company to submit a list of its members and directors containing particulars of their nationality. We will do away with the requirement to amend the memorandum or articles of association, thus reducing red tape and business costs without a loss of effectiveness. A consequential amendment will be made to section 34 of the Companies Act following the repeal and re-enactment of sections 10 and 14 of the RPA.
- We will also streamline the procedure for Singapore entities (i.e. companies, limited liability partnerships and societies) that have been issued with clearance certificates. Currently, in order to ensure that these Singapore entities remain eligible to acquire and retain residential properties, they are required to file annual statutory declarations, declaring the particulars of all their members, directors, partners or trustees, as the case may be. The proposed amendment will dispense with these annual filings. Instead, these Singapore entities will only be required to obtain the approval of the Controller (if they do not own any restricted residential property), or the Minister (if they own restricted residential property) before they cease to be Singapore entities.
- To ensure that there is sufficient deterrence to achieve compliance after these changes, we will increase the ceiling for the fine from $5,000 to $50,000 for offenders who own restricted residential property but who fail to seek approval before they cease to be Singapore entities. 1
- In other words, Sir, we will take the same targeted approach as the earlier amendment, that is, we lower business costs for those who comply with the requirements, but punish more severely the violators.
Review penalty for holding property in trust for foreign persons
- Third, Sir, we have reviewed the penalty imposed for holding restricted residential property on trust for non-approved foreign persons. Sir, this is a serious breach. The current penalty, which is a fine not exceeding $5,000 and/or imprisonment for a term not exceeding 3 years, does not adequately reflect this. Hence, the Bill seeks to increase the maximum fine that can be imposed for such an offence to $50,0002. In addition, the Court will be empowered to make a confiscation order in respect of benefits derived by any person convicted of an offence under this provision. Sir, the stiffer penalty will ensure that there is effective deterrence to prevent attempts to circumvent the law through an arrangement where a Singaporean buys restricted residential property on trust for a foreigner.
- Mr Speaker, Sir, I beg to move.
The ceiling for the fine for Singapore entities which do not own restricted residential property and did not seek approval before they converted to become foreign entities remains at the current $5,000
The maximum possible jail term will not be adjusted.
Last updated on 28 Nov 2012