The Residential Property (Amendment) Act 2006 (Act 9 of 2006) ("RPA Changes") came into effect on 31 March 2006. The RPA Changes have advantages all round for developers and home purchasers. It has also simplified some of the procedures for submission of documents.

The key highlights of the RPA Changes are as follows:

For Developers

Developers Under A Qualifying Certificate

  • Banker's Guarantee reduced to 10%

This is the most significant of the changes as it reduces the costs to developers. The banker's guarantee (as security for compliance with the conditions in the Qualifying Certificate) is now at 10% of the purchase price of the land instead of 50%, and will not be progressively reduced after each stage of the development is completed.
  • Restriction on sale of vacant undeveloped land/sale of shares

In the past, these restrictions were contained in the Qualifying Certificate but they are now are captured in the legislation. Section 31(2) of the Residential Property Act (as amended by the RPA Changes), provides that the developer cannot sell the residential land in its undeveloped or vacant state and the sale of shares in the developer company is prohibited except with the consent of the Controller of Residential Property ("Controller"). The penalties for breach amount to 50% of the purchase price of the land.

Developers Under A Clearance Certificates (Singapore Members)

The RPA Changes provide that the developer shall submit a list of the developer's members and directors with particulars of their nationality and such other particulars as required by the Controller. The application process for the Clearance Certificate and compliance to retain the Clearance Certificate has also been made much simpler. There is no requirement to file the Memorandum and Articles of Association or a yearly statutory declaration in relation to the status of the developer's members and directors. However, the developer may be required to produce the register of members and directors for the Controller's inspection at any time.

For Purchasers

Foreigners Buying Residential Properties

Under the RPA Changes, there is more flexibility to allow a foreigner to buy any flat used for residential purposes. This includes a unit in a condominium or an executive condominium. There is no change to the existing position that foreigners cannot buy dwelling houses (ie landed properties, including strata landed developments).

Where consent is required from the Controller, Section 25 of the Residential Property Act (as amended by the RPA Changes) continues to apply but with a new provision that the Controller may require security (which may be in the form of a banker's guarantee) to be provided by the foreign person to ensure compliance with the terms imposed by the Controller on the foreign person buying the dwelling house.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.