Additional Buyer’s Stamp Duty for housing developers

Currently, housing developers pay Additional Buyer’s Stamp Duty (ABSD) at a rate of 40% on land purchased for residential development. To obtain an ABSD remission (currently at 35%), the developer is required to sell all the units in the residential development within five years from the acquisition of land. Failure to do so will result in a clawback of this ABSD remission, with interest.

It was proposed that housing developers will no longer face a clawback of the entire amount of ABSD remitted if they fail to sell all the units within the residential development within the five year period. Instead, the claw back may range from 25% to 35%, depending on the percentage of units in the residential development sold at the end of five years. Interest, however, will continue to apply on the ABSD remission clawed back.

With effect from 16 February 2024, projects with at least 90% of units sold at the five-year sale timeline will be subjected to a lower clawback rate on the ABSD remission, if the commencement and completion of works criteria are also fulfilled. This applies for projects where the residential land was acquired on or after 6 July 2018. The table below shows the amount of ABSD remission that can be clawed back against the percentage of units sold at the five year deadline.

While the proposals would provide relief to housing developers who have been grappling with rising construction costs and funding costs, failure to sell all units within the residential development can still result in significant additional costs for housing developers.