27 February 2020
On 6 February 2020, the Ministry of Law (“MinLaw”) announced it will allow for the exemption of publicly listed housing developers with a substantial connection to Singapore from the Qualifying Certificate (“QC”) regime under the Residential Property Act.
Overview of QC regime
The Residential Property Act (“RPA”) requires any housing developer that is not considered a Singapore company to apply for a QC when it purchases residential land for development, other than from the Government. A housing developer with a QC is required to complete the development within five years and dispose of all units within two years of completion. This measure is intended to ensure the timely building and sale of residential units and to prevent hoarding and speculation in residential land.
The RPA defines a Singapore company to be one that is incorporated in Singapore, and whose directors and shareholders are all Singapore citizens or Singapore companies. As such, publicly listed housing developers, even those “essentially Singaporean”, are subjected to the QC regime if they have just one foreign shareholder.
Publicly listed housing developers with substantial connection to Singapore to apply for exemption from QC regime
To align the QC regime and objectives of the RPA, MinLaw will allow publicly listed housing developers with a substantial connection to Singapore to be treated as Singapore companies, as defined by the RPA, when such developers acquire residential land for development.
Such housing developers can now apply for exemption from the QC regime on the basis that they have a substantial connection to Singapore. Applications will be assessed on the following criteria:
- Incorporation in Singapore;
- Primary listing is on Singapore Exchange and principal place of business is Singapore;
- The chairperson and the majority of the company’s board are Singapore citizens;
- A significantly Singaporean substantial shareholding interest in the company; and
- Track record in Singapore.
The changes have been implemented since 6 February 2020 and will be reflected in legislation at a later date in 2020. Applications for exemption may be submitted to the Controller of Residential Property.
Clarification that existing property market cooling measures prevail
In its announcement, MinLaw clarified that existing property market cooling measures are not being changed. In particular, the Additional Buyer’s Stamp Duty (“ABSD”) regime would continue to be applied to all housing developers. The regime requires, among other conditions, developers to sell all units in a residential project within a specified timeline, failing which the ABSD will apply.