Here's why the ABSD remission system should be abolished for HDB upgraders

It’s common knowledge that, when an HDB owner buys a condo unit, they have to fork out an Additional Buyer’s Stamp Duty when purchasing a second property. Even if the HDB owner is an upgrader who intends to sell the flat and keep only one property, the ABSD must still be paid within 14 days of exercising the new home’s Option to Purchase ., but only if the flat is sold within six months of the upgrader finalising the purchase or the issue of the Temporary Occupation Permit .

Although the HDB entertains appeals from upgraders wanting to extend the six-month timeframe for ABSD remission, HDB will only approve a request for an extension if it deems there are sufficient factors to support that the upgrader merits such an extension.For genuine HDB upgraders, there are a few compelling reasons why removing the requirement to pay ABSD upfront can prove to be a win-win, for both Singaporeans and the government’s own interests and objectives.

This is harmful for Singapore’s housing stock in the long run, as it accelerates the downsizing of homes and the skewing of our housing stock towards smaller homes.This is related to our first point, but it merits emphasis. As the affordability of upgraders are reduced due to the upfront ABSD, they can only afford smaller sized condos. Developers will try to match that demand by reducing average unit sizes and building smaller apartments, accelerating the trend of shrinking homes in Singapore.

Especially in times of economic uncertainty, we should not simply take money out of the system where no one benefits. In 2020, the President of the Real Estate Developers’ Association of Singapore called on the government to reconsider levying the ABSD for first-time upgraders. PropNex CEO Ismail Gafoor also raised the issue inInstead of levying the ABSD upfront, the Business Times article reported that Gafoor suggested “genuine HDB upgraders” can instead provide an undertaking to the HDB stating that their HDB flat would be disposed of within six months.

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