Laws to Ensure Transparency in Home Sales

Source: Channelnews Asia. Tuesday 09 April 2013

SINGAPORE: Parliament on Monday passed amendments to the Housing Developers Act, requiring private residential developers to disclose and publish all rebates, discounts or other benefits extended to home buyers. The Act functions as a safeguard for the interests of buyers of uncompleted private residential properties through the control and licensing of housing developers.

Senior Minister of State for National Development Lee Yi Shyan said: “Over the years, we have noticed more and more developers offering discounts to home buyers. More recently, some developers have started to mark their units at higher prices, while offering significant discounts through rebates and other benefits such as furniture vouchers. Such inflated sale prices mask the real transacted prices and undermine transparency in the property market.”

Mr Lee said developers must provide accurate information on residential transactions to the Controller of Housing, as they would to the Monetary Authority of Singapore, for the purpose of loan applications.

This includes the reimbursement of any stamp duty or tax granted to home-buyers. The Act has also been amended to give the Controller of Housing legal powers to collect and publish information pertaining to building projects and sale transactions. Mr Lee said the data will be published to aid home-buyers in their decision making. Developers will also be required to accurately depict homes through show flats.

As many home buyers base their purchases on what they see, it is crucial for show flats to be built to scale and be “what you see is what you get”, said Mr Lee. For example, the ceiling height of a show-flat should be the same as that approved in the building plan. Under the new rules to improve governance, developers will now have to make their audited financial positions public. Should they fail to furnish information concerning the sale of a project, for example, their licences can be revoked or suspended.

Those who fail to comply with any of the conditions spelt out in their licences will also face heftier fines. The maximum fine has been raised by five times to S$100,000, compared to the previous S$20,000. They can also imprisoned up to three years. The Act has also been amended to give the National Development Minister powers to set rules regulating the marketing and promotion of residential units beyond the existing regulatory scope of advertisements.

Mr Lee said: “For instance, rules could be introduced to regulate the practice common among some developers to collect blank cheques from prospective buyers as a form of advance booking for a residential unit. Although developers will retain flexibility in their marketing and promotional activities, the new rules will empower the minister to regulate such activities if there is a need to do so in the future.”

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