Listed housing devs with ‘substantial connection to Singapore' to be exempted from QC

Changes will be implemented with immediate effect and reflected in legislation later this year.

Any listed property developers “with a substantial connection to Singapore” is now allowed to be exempted from the Qualifying Certificate (QC) regime, the Ministry of Law (MinLaw) announced.

Such firms are required to be incorporated in Singapore, listed in SGX, should have a chairman and most Board members who are Singaporean citizens, have a Singaporean with a substantial shareholding interest in the company, and must have a track record in Singapore.

Changes will be implemented with immediate effect and reflected in legislation later this year. Applications may be submitted to the Controller of Residential Property.

“Currently, a Singapore company is defined in the Residential Property Act (RPA) as one that is incorporated in Singapore, and all its directors and shareholders are Singapore citizens or Singapore companies. This definition however means that publicly listed housing developers that are essentially Singaporean will not be considered a Singapore company. If they have one foreign shareholder, they will not be considered a Singapore company,” MinLaw stated.

It added that they will allow listed housing developers that are eligible to be exempted from the regime to be treated as a Singapore company within the meaning of the RPA when they acquire residential land for development. This is said to better align the QC regime and the objectives of the RPA.

Colliers’ head of research Tricia Song described this a “timely move”.

“[I]n our view, creates a win-win-win situation for the real estate developers, the capital markets, and policy makers. The QC rules, along with the additional buyer’s stamp duty (ABSD) – which was hiked to 30% (of which 25% is remittable) in July 2018 – have been seen by developers as a “double whammy”, both carrying hefty penalties if they do not sell all units in a project within the stipulated timeframe,” Song commented.

Song added that the decision will attract new developer listing in the local bourse and encourage re-listings who left SGX due to the QC rules.

Under the Residential Property Act (RPA), any housing developer that is not considered a Singapore company has to apply for a QC when it purchases residential land for development, other than from the Government.

It is required to complete the development within five years and dispose of all units within two years of completion. This is to ensure that such housing developers build and sell the residential units in a timely manner, and do not hoard and speculate in residential land.

Furthermore, MinLaw assured that there will be no changes to the existing property market cooling measures, which were put in place to keep private residential property price increases in line with economic fundamentals. All housing developers continue to be subject to the prevailing Additional Buyer’s Stamp Duty (ABSD) regime.

“However, the more stringent ABSD means that all developers will try to sell their units within five years. The extra two years under the QC regime for public listed developers to sell all their units thus have been rendered unnecessary with the introduction of ABSD,” said Sze Teck Lee, director of research for Huttons Asia.