Govt monitoring ABSD reimbursing

Govt monitoring ABSD reimbursing

Several developers are reimbursing the hefty additional buyer's stamp duty (ABSD) in a bid to move sales in selected projects.

And the practice, which has created concerns about the possible distortion of property and loan values, has drawn the attention of regulators and raised the possibility of intervention should it get out of hand.

These "discounts" could distort property prices as they are given only after a buyer has completed the transaction. This means sales caveats may not reflect the actual purchase price of the property, unlike upfront discounts which are worked into the reported transacted price.

Said one property consultant, who declined to be named: "The ABSD reimbursement is being made in this way so that it does not affect the pricing. If they give a discount on the price, then their pricing is affected, and the developers don't want that because it may upset their earlier buyers who did not get to enjoy the discount."

Developers which have been reimbursing the ABSD include Cheung Kong (Holdings) Ltd, Far East Organization, Allgreen Properties and Aspial Corporation's World Class Land.

Some offer to reimburse fully the additional stamp duty charges, while others cover a part of it.

Aside from price transparency, the practice of reimbursing the ABSD has raised the concern that it could distort loan values.

When contacted, MAS said: "When taking up a housing loan, the consumer is required to disclose to the bank whether he has received any rebates or discounts from the seller or any other party, and if so, the amount of the rebate or discount. The bank will deduct any discount, rebate or any other benefit offered from the purchase price before calculating the loan amount."

Source: Business Times – 30 April 2012