As earlier announced in Parliament today, Government has decided to fine-tune the RPA in three aspects.

(A) EASING OF RESTRICTIONS ON FOREIGN OWNERSHIP OF RESTRICTED RESIDENTIAL PROPERTIES
With immediate effect, foreigners can buy apartments in buildings of less than 6 levels in non-condominium developments without first obtaining approval.

Background
In 1973, the Government imposed restrictions on foreign ownership of private residential properties in Singapore through the RPA. While Singaporeans can buy all properties without restriction, foreigners can buy restricted residential properties only with approval and if they meet approved criteria.

Situation Before The Change
Currently, the RPA restricts foreigners (includes both individuals and companies) from buying restricted residential properties, viz:
(a) vacant residential land;

(b) landed properties – terrace houses, semi-detached and detached (bungalows) houses;

(c) landed properties in non-condominium strata developments; and

(d) flats in a building of less than 6 levels.
Foreigners who wish to buy any of the above must seek prior approval from the Land Dealings (Approval) Unit of the Singapore Land Authority. In the case of individuals, they must also be Singapore permanent residents.

Situation After the Change
Effective today, foreigners no longer need to seek prior approval to buy any flat, regardless of the number of levels in the building. In addition, they can continue to buy any dwelling unit in a condominium development as classified by URA (which could be a flat or a house).
This means foreigners will still need prior approval to buy:
(a) vacant residential land;

(b) landed properties; and

(c) landed properties in non-condominium strata developments.

(B) REVOCATION OF EXEMPTION FOR FOREIGN COMPANIES
Government has decided to revoke the exemptions granted to 43 foreign companies effective from 5pm today.

Background
Under the RPA, foreign companies are defined as those with either one or more non-Singaporean shareholder or non-Singaporean director. While Singapore companies can freely acquire, hold and develop residential lands, the RPA requires all foreign companies to obtain approval if they want to:
(a) acquire and hold restricted residential properties;

(b) buy residential land for development. (They will have to obtain a Qualifying Certificate (QC)1 ); or

(c) change the use of non-residential land (eg industrial or commercial land) to residential use.

Situation Before The Change
Between the 1970s and 1990s, 43 foreign companies were exempted from the RPA restrictions. These exempted foreign companies can acquire, hold and develop residential lands without having to obtain prior approval from the Government. In other words, they enjoy a status similar to Singapore companies.

1 The purpose of the QC is to ensure that foreign companies proceed to complete the development and sell off the completed units in the development and not speculate in and hoard residential land.

Situation After The Change
With the revocation, there will now be a level playing field for all foreign companies in Singapore. The currently-exempted companies will henceforth be subject to all the RPA provisions. Like any other foreign company, they will have to apply for prior approval under the RPA to: (a) buy residential properties which are still restricted; (b) buy vacant residential land for development and sale; or (c) change the use of non-residential land (eg industrial or commercial land) to residential use.
As a concession to these 43 currently exempted companies, Government has decided to allow them to keep all the restricted residential land they have acquired for development before 5pm today without any application for QC. Likewise, they can retain all the restricted residential properties they have acquired before 5pm today, without any application for approval.
In addition, if they have concluded legally binding contracts or have been granted options to buy restricted residential property before 5pm today, they will be allowed to complete the formal transfer of legal title to these properties, without having to apply for approval to retain or for QC to develop them.

(C) REVISION TO REQUIREMENTS ATTACHED TO GRANT OF QC
Government will also be revising the QC requirements to reduce the Banker's Guarantee (BG) for developers, and to give them more time to develop the land. The first change will take effect after the RPA is amended, whilst the second change will be effective from today.

Situation Before The Change
At present, a foreign company that develops residential land must comply with these two conditions (amongst others) to obtain a QC:
(a) Provide a BG of 50% of the land price to assure compliance with the QC requirements; and

(b) Commit to complete the development in 3-4 years.

Situation After The Change
After the RPA is amended, the cost of the QC requirements will be reduced as follows:
(a) The Bankers’ Guarantee will be lowered to 10% of the land price; and

(b) Developer is allowed 6 years to complete the development.
However, when the QC holder sells undeveloped or partially developed land, the QC holder (and its directors) will be charged a civil penalty of up to 50% the price that it paid for the land. This is in keeping with the spirit that the QC holder is granted permission to purchase the land only for development and sale of residential property, and not to trade in land.
In addition, we will insert a notice in the land register to alert potential buyers that the undeveloped or partially developed land cannot be sold, or any interest therein disposed of, without the written consent of the CRP.
When the BG is reduced to 10%, existing QC holders may opt into the new scheme where the BG is 10%, and where the safeguards above will apply.
The BG will be reduced from 50% to 10% when the RPA is amended to transfer the duties for the issuance of a QC from the Controller of Housing to the Controller of Residential Property.

Issued by:
Singapore Land Authority
19 July 2005