For the first time in three years, the government has cut land betterment charge (LBC) rates for non-landed residential use.
Developers pay an LBC for the right to enhance the use of some sites or to build bigger projects on them.
The government has reduced LBC rates for non-landed residential use by an average of 3.2 per cent for the period Sep 1, 2023 to Feb 29, 2024. This contrasts with a 0.3 per cent increase in the previous revision for the Mar 1 to Aug 31 period of this year.
However, for the use group that covers hotels and hospitals, LBC rates have gone up 3 per cent on average after being raised 1 per cent in the previous revision.
LBC rates for commercial use have inched up 0.4 per cent on average, after being left untouched in the previous revision.
There are no changes in LBC rates for landed residential and industrial uses, place of worship/civic and community institution use, as well as other use groups that cover open space/nature reserve, agriculture, and drains/roads/railways.
The latest LBC rates were announced on Thursday (Aug 31), following a review by the Singapore Land Authority (SLA) in consultation with the taxman’s chief valuer (CV). The LBC rates are based on the CV’s assessment of land values and take into consideration recent land sales. They are stated according to use groups across 118 geographical sectors in Singapore.
For non-landed residential use, the decreases in LBC rates were broad-based, with 111 geographical sectors seeing cuts ranging from 2.5 per cent to 11.1 per cent, with no changes for the remaining seven sectors. The largest drop of 11 per cent was in four sectors in the Marina Bay and surrounding areas. The cut in the Marina Bay area could be attributed to the recent state land tender for a site in Marina Gardens Lane which is zoned for residential, with commercial use at first storey. Out of the four bids submitted, only the top bid was in line with expectations while the other three were much lower.
In Sector 107, which includes the Upper Thomson area, the non-landed residential LBC rate was chopped by 6.3 per cent. This was likely due to the sole bid of S$985 per square foot per plot ratio for the site in Lentor Gardens at a state tender in April 2023. It was the lowest price compared to all the other Lentor sites that preceded it.
Most property consultants, however, do not expect the downward adjustments in the non-landed residential LBC rates to stimulate the en bloc sale market.
For the commercial use group, LBC rates have increased in 12 sectors by between 3 per cent and 4 per cent, with no changes in the remaining 106 sectors. The sectors that saw hikes include Chinatown, Boat Quay, Kampong Glam, Lavender, Rangoon Road, Little India and Balestier. The increases could be due to the buoyant shophouse transactions, an evidence of the resilience of commercial property values
In the hotel/hospital use group, LBC rates were increased in 116 sectors by 2.5 per cent to 5.1 per cent with no changes in the other two sectors. The biggest gains of around 5 per cent were seen in 11 sectors which include areas such as Hill Street, Rochor Road, Raffles Avenue, Fullerton Road, Marina Bay Sands, Stevens Road, Cairnhill Road, Orchard Road, Somerset Road and Orchard Boulevard. The 11 sectors also include locations such as Claymore, Tanglin, Cuscaden and Grange Roads and Sentosa.