Our Ref : 141/3-04
Fax : 6321 6596
Date : 19 July 2005
President
Real Estate Developers’ Association of Singapore
190 Clemenceau Ave #07-01
Singapore Shopping Centre
Singapore 239924
President
The Law Society of Singapore
39 South Bridge Road
Singapore 058673
EXTENSION OF PERIOD FOR PROJECT COMPLETION FOR HOLDERS OF QUALIFYING CERTIFICATE
Objective
On 19 July 2005, the Government announced several changes to the requirements of Qualifying Certificates (QCs) issued to foreign developers of residential properties. The changes are to the period for completion of projects and the amount of security to be provided for QCs. This circular is to inform you of the implementation details of these policy changes.
Effective date
With effect from 19 July 2005 only for the extension of period for completion of projects.
Who should know
Developers and solicitors.
Background
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Under Section 31 of the Residential Property Act (RPA), any foreign developer who intends to purchase residential land to construct dwelling houses for sale must first obtain a QC from the Controller of Housing (COH). QCs are issued to foreign developers subject to various conditions imposed by the COH.
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As part of these conditions, QC holders are currently required to complete their housing project, i.e. obtain Temporary Occupation Permit (TOP), within 3 or 4 years1 from the date of issuance of the QC and to sell off all units in the development within 2 years after completing the project. These requirements ensure that foreign developers do not purchase residential land for speculation or hoarding.
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QC holders are also currently required to furnish a Bankers’ Guarantee amounting to 50% of the purchase price of land as a security to guarantee their compliance with the QC conditions.
Extension of period for completion of projects
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To give developers more flexibility to ride out unexpected changes in market conditions, the Government has decided to extend the period for all QC holders to complete their projects from the current 3 or 4 years to 6 years from the date of issuance of QC.
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With effect from 19 July 2005, all existing and new QC applicants will be given a completion period of 6 years from the date of issuance of QC.
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All existing QC holders who are eligible for the extended period for completing their projects will be informed separately of the new completion date for their development.
Reduction in Banker’s Guarantee
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The Government also announced that the Bankers’ Guarantee required from QC applicants will be reduced from the current 50% of the purchase price of land to 10%. This is to help reduce business costs. With the reduced Banker’s Guarantee amount, the Government has to put in place other measures to ensure that foreign developers do not speculate and hoard land.
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Hence, the reduction in the amount of Banker’s Guarantee from 50% to 10% will only be implemented when these safeguards have been put in place. The Ministry of Law will announce at a later date the implementation date and the details on the reduction in Bankers’ Guarantee. Until then, the current amount of Banker’s Guarantee required from QC applicants will remain at 50% of the purchase price of land.
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1 At present, QC holders developing projects with 20 or less units are required to obtain Temporary Occupation Permit (TOP) for their projects within 3 years from the date of issuance of QCs. QC holders developing projects with more than 20 units, are required to obtain TOP for their projects within 4 years from the date of issuance of QCs.
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We would appreciate it if you could convey the contents of this circular to your members. If you or your members have any queries concerning this circular, please do not hesitate to contact Mr Tan Kok Keong at Tel: 6321 8276 or Ms Fong Fook Leng at Tel: 6329 3512. This circular as well as past circulars issued by the Controller of Housing are available from our website at http://www.ura.gov.sg.
Thank you.
RICHARD HOO
CONTROLLER OF HOUSING
SINGAPORE
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