The Ministry of Finance announced that an Additional Buyer’s Stamp Duty of 35% will now apply on the transfer of residential properties for all living trusts in Singapore with effect from 9 May 2022. This move is to be seen an interventionist approach from the Singaporean government to reduce the demand of the residential properties from foreigners, hence benefiting residents who for years, have suffered of a highly inflated housing market.
Initially, ABSD was introduced as an instrument to discourage foreigners and entities from purchasing residential properties and stabilize the Singaporean residential market by managing demand and keeping housing prices affordable. With the implementation of such measure, property speculation dropped, and foreign purchasers were deterred from investing due to the high ABSD rates.
The implementation of a 35% ABSD for any trustee or entity buying any residential property will help mitigate the housing demand in Singapore, due to its impact on residential housing prices and grant Singaporeans the opportunity to purchase residential properties at a reasonable price at a time of high demand in the residential market in Singapore.
The law does not operate retrospectively, applying only to instruments executed from 9 May 2022. However, it is not clear what will happen if a trustee of a pre-existing trust subsequently appoints assets to an identifiable beneficiary or distributes assets to any identifiable beneficiary. Although the government has announced the implementation of the changes as per above, the legislator is still providing further details on the specific application of the law.