The Land Betterment Rates reflect differences between popular suburbs, and prime condominium areas.
Land Betterment Charge Act – which came into force on 1 August 2022 – consolidates charges for the enhancement in land value.
The LBC regime has replaced the development charge, temporary development levy and differential premiums regimes. The DC Table of Tariffs was subsequently replaced by the LBC Table of Tariffs. This table continues to be updated on a semi-annual basis.
Rates are up on average by 3.8% for commercial and 7.8% for residential use.
The latest Land Betterment Charge (LBC) rates announced on Thursday, February 29, reflect the polarised sentiment and performance in the private condo market between the suburbs versus prime locations.
On the other hand, LBC rates have been raised by 14% in the West Coast/Clementi and by 10% in Braddell/ToaPayoh.
Developers can pay LBC a fee to improve the use of certain sites or build larger projects on them.
The polarised performance was a reflection of the different sentiments expressed by state land tenders for suburban and nonsuburban sites over the past six-months.
Particularly, lower than expected bids at the Orchard Boulevard prime site lowered rates in the surrounding areas. Meanwhile, higher than anticipated bids at Toa Payoh, Clementi and Toa Payoh sites raised rates.
Market watchers point out that the divergence of sentiment between suburban and prime locations is due to the fact that in April 2014, the Additional Buyer’s Stamp duty (ABSD), which was imposed on foreign purchasers of private residences in Singapore, doubled to 60%. In the past, foreigners have dominated Singapore’s prime residential property market.
Developers must pay a LBC in order to increase the value of some sites, or to construct larger projects. The rates will be announced twice a years, on the 1st of March and the 1st of September. They are based on a review conducted by the Singapore Land Authority in consultation with the chief valuer.
In the most recent revision, LBC rates on non-landed residential uses increased by an average of 0.1 percent.
LBC rates reflect recent land sales and are based upon the CV’s assessment. These rates are listed according to 118 geographic sectors and 118 use groups in Singapore.
Rates for LBCs in non-landed residential sectors increased by 3-14 percent. Rates were reduced in 27 sectors with decreases ranging between 1 percent and 19 per cent. SLA reported that rates were unchanged for 54 other sectors.
Experts do NOT expect that the downward revisions to LBC rates for selected geographic sectors will boost the residential collective-sale market, because there are many more difficult obstacles. They cited the price gap between buyer and seller, developers’ low appetite for risk and property cooling measures.
LBC rates for business use have increased on average by 3.8%. This is probably due to the return of investors’ interest in commercial assets.
The LBC rate for commercial use was increased in 104 of 118 sectors geographically by between 3 and 9%, while the rates for the 14 remaining sectors remained unchanged.
CBRE’s Song explained that the rise in sales was due to a small number of high-profile office and retail transactions, including Far East Shopping Centre (FEC) and Shenton House. We anticipate that this will dampen the sentiment of commercial collective sales for the short term.
LBC rates on land for residential use have increased 7.8% in average. In 116 sectors the rates rose between 7 to 8 percent; there were no changes in the two remaining sectors.
The cost of new landed homes is high, but the appeal remains.
While new landed homes developed by boutique developers are costly due to high material and construction costs they still appeal to buyers as compared to the alternative of rebuilding older properties themselves.
LBC rates for hotels and hospitals were increased on average by 0.7%. The rates increased by approximately 5 per cent for 18 geographical areas; however, there was no change in the 100 remaining sectors. The largest increases were found in places such as Robinson Road, Orchard and Orange Grove. Observers report that Singapore tourists are a big part of the hotel business.
The rates for the industrial group were increased on average by 1,7%. This group’s LBC rates have increased between 3 and 5% in 42 sectors. For the remaining 76 sector, there were no changes.
The chief appraiser will likely have taken into consideration the performance of the entire industrial property market which has seen rents and price increases for the 13th consecutive quarterly in Q4 2020, as well land transactional evidence from September 1, 2023 until February 29, 2024.
JLL Research’s analysis shows that the sharpest cut of 19.2 per cent for LBC rates for non-landed residential use was in the Tanglin/Cuscaden area, followed by chops of 18.8 per cent in the Ardmore/Draycott/Claymore area, Orchard, One Tree Hill, Paterson/Lengkok Angsa and Nassim/Orange Grove/Ladyhill/Fernhill areas.
LBC rates are unchanged for places where worship is held or places that are used for civic and communal institutions. Also left untouched were the rates for other use groups covering open spaces/nature reserves, agriculture and drains/roads/railways.
Land Betterment Charge Act – which came into force on 1 August 2022 – consolidates charges for the enhancement in land value.
The LBC regime has replaced the development charge, temporary development levy and differential premiums regimes. The DC Table of Tariffs was subsequently replaced by the LBC Table of Tariffs. This table continues to be updated on a semi-annual basis.
