Latest Development Charge Rates
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Landed residential use reports a 4.8% increase in DC rates, while non-landed residential use reports a 0.3% rise according to the latest revisions.
Development Charge (DC) rates have been recently revised by the Ministry of National Development (MND), with landed residential properties registering the highest rate hikes.
DC rates across multiple property groups are revised every six months by the Chief Valuer (CV) of the Inland Revenue Authority of Singapore (IRAS).
All property groups witnessed increased rates as compared to six months ago except groups such as agricultural land, worship/ community institutions, open spaces and roads/railways/.
The latest revision rates saw a modest increase of only 0.3% for non-landed residential properties, which recorded an average increase of 10.9% in the previous half.
The Development Charge rates indirectly affect property prices since bidding amounts for a few competitive parcels of land can sky-rocket and reach record-highs.
A higher land sale price causes a higher per square foot pricing for the landlords and residents; hence bidding amounts need regular monitoring.
The low-interest rates, high liquidity and the country’s recovering economy, attract digital economy entrepreneurs and new citizens to leverage the consistent rise in DC rates.
What are development charges Singapore?
Development Charges in Singapore are a tax levied by the State while giving planning permission on land enhancements.
Any form of development that results in an increase in land value, such as increasing the plot ratio or rezoning for a higher value, use incurs DC.
The Chief Valuer of the Inland Revenue Authority of Singapore (IRAS)advises on the development charges after assessing if the land’s value has increased and is subjected to the tax.
The rates are revised every six months on 1 March and 1 September and are based on the property group type and on the geographical sector.
Singapore currently has 118 geographical sectors and 9 Property Group types.
What is development charge exemption?
Few areas/lands in the country listed in the Planning Act (Chapter 232, Section 40(1)) incur development charge exemptions based on the purpose of development in the area.
Any person(s) is exempted from the liability to pay development charges if the purpose or area of development falls under any of the criteria mentioned in the Act.
Examples include the exemption in respect of land within a conservation area or land zoned for main shopping, local shopping, commercial shopping, or hospital and healthcare purposes.
Conservation permissions are required for lands listed as conservation areas.
There are also exemptions on land for which the premium is payable to the President, exemptions on Government land sales or land leased by the State.
Do DC rates affect property prices?
Property prices are indirectly affected by the development charges rates in the country.
An increase in the DC rate for any landed or non-landed properties will translate into a price hike in these properties.
As land banks reduce for developers, the en bloc bids or the tender submissions to the government may rise.
Such high bidding amount will lead to residents or homeowners paying a higher price per square foot for properties.
Average DC rate for landed residential rises 4.8%, while residential non-landed sees a 0.3% hike
The property market in Singapore recently had its DC rates revised, with landed residential properties seeing the largest hike.
The average rate for landed residential properties shot up to 4.8% against 3.6% in the previous revision.
Such a hike is mainly attributed to the growing wealth creation and inflows in the country.
Hotspots like Scotts Road/ Orchard Road/ Orchard or the Cairn Hill/ Orchard are one of the many places that have seen a consistent increase in DC rates lately.
In contrast, the residential non-landed property saw a modest DC rate increase of 0.3%.
This, in part, is due to the cooling effects of governmental measures that were initiated in December 2021.
High DC rates discourage developers from making aggressive en bloc offers, thus preventing en bloc sale fever like in the past.
Revision Of Development Charge Rates March 2022
According to the latest revision of DC rates in March 2022, few groups/sectors saw rate hikes after consecutive reductions.
One such group is Group A( commercial use), which increased by 0.7% on average after three consecutive reductions since September 2020.
However, only 29 out of 118 sectors in the group realised an increase in the rates, with the majority of hikes centred around commercial centre points.
Nutmeg Road/ Mount Elizabeth/ Claymore Road are spots in the Orchard that saw a reasonable hike in DC rates.
Another group that saw increased DC rates is Group D (industrial), which had its first biggest increase since September 2018.
The effect is due to industrial investment sales, which doubled in 2021 compared to the previous year.
Non-landed residential use (Use Group B2) only rose by 0.3% on average, while landed residential use (Use Group B1) rose by 4.8%.
112 sectors out of 118 sectors under non-residential land use saw zero change in DC rates, with only 6 sectors experiencing a hike between 3% to 15%.
Whereas, Use Group C (Hotel/Hospital) DC rates decreased because of the limited sale of hotel properties and recovery of the tourism sector.
Places like Lebar Road/ are planning areas that are major attractions for future investments.
What is the difference between differential premium and development charge?
A differential premium is an amount paid to lift the State title restrictions on state land if subsequent development plans are intended on the land.
When State lands are sold to developers, they come with certain development restriction covenants based on the intensity of use and the purpose.
The Planning Act covers all restrictive covenants and the chargeable consent with reference to State lands.
If the developer wishes to enhance the land value by introducing more development plans, then he/she has to pay an amount to lift the earlier restrictions.
The premium is generally calculated based on the Development Charge (DC) Table of Rates unless the State Title restrictions call for another method.
However, in cases where the State lease does not specify any maximum intensity restrictions, the DC rates are applied based on the development proposal value.
In contrast, a development charge is a tax paid on any kind of property (commercial, non-residential or residential property) enhancement.
The Planning Act also makes provision for a temporal development levy which is paid when temporary enhancement of land occurs.
How do you calculate development charges?
The DC is calculated using the following formula:
DC=Development Ceiling – Development Baseline – Development Charge Exemption
The development charge exemption is the value listed in the planning act.
The development baseline value is approved for development based on the intensity of the intensity and the approved use.
The development ceiling value is the proposed development value permitted for planning by the URA.
Along with these values, the URA also considers other information while calculating the DC, such as the geographical sector number, date of the provisional permission and more.
Development charge rates for the commercial industry, residential raised
Real estate experts were not astonished by the DC hikes seen in the commercial industry and residential rates reporting the largest increase of 4.8% on average.
After a season of unchanged DC rates, the commercial industry reported an average DC rate hike of 0.7%, with most increases concentrated in the Downtown Core Planning Area.
Few residential sectors saw a jump of up to 10%, with most DC rate increases seen in landed housing developments in central or GCB regions.
Also, the consistent hike in DC rates can be attributed to the high demand for Good Class Bungalow Sector, usually located on Nassim Road and Clementi Road.
How often is the Development Charge Table reviewed?
The Development Charge Table is reviewed every six months in consultation with the Chief Valuer (CV) of the Inland Revenue Authority of Singapore (IRAS).
For more information on Development Sectors and the rates, consumers can go to URA SPACE and use the Search DC Sector Map Service.
It shows you the list of development charges and the relevant development charge rate.
Are there any alternatives available to me if I am dissatisfied with the Development Charges determined by the Fixed-rate method?
If you are dissatisfied with the DC determined by the fixed-rate method, then you can use the case-by-case valuation method.
You can request the competent authority to do so within 14 days after the Interim Order has been given to you.
Can I appeal against the Development Charge determined?
Yes, you can.
If your DC was determined following the case-by-case valuation method, then you can appeal to the authorities.
However, this provision is not applicable if the fixed-rate method has been used.
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