ABSD – A Bad Stupid Deal if you’re not married

A couple of days I go, I wrote about the discriminatory practice of the Finance ministry in the implementation of the Additional Buyer’s Stamp Duty. I wanted to alert property owners that singles are treated differently from married couples when it comes to paying the ABSD. That was the shock I got when I wanted to upgrade. (I’m declaring my interest here)

Seems like The Straits Times picked up on the issue although all it would acknowledge was that there was “uncertainty over whether stamp duty concessions for married people would also apply to singles’’. It carried a report today.

Doesn’t matter.

What matters is that the MoF has clarified the matter, or rather, confirmed what I said. A single, or for that matter any Singaporean household that doesn’t have a married couple at its core, (think dad and son combinations or siblings), will be treated differently. How?
These non-married people will have to pay 7 per cent ABSD when they buy a second home without disposing of their existing home first. Married couples will have the same 7per cent extra to pay too, except that they get their money back if they sold the existing house within six months.
This, the MoF says, is a concession or relief.

An MOF spokesman said that the Government raised the ABSD rates to moderate demand for properties and help cool the market.
It limited ABSD concessions to a narrow group of buyers, namely Singaporean married couples, to help them acquire and upgrade their matrimonial homes.
The MOF spokesman said that if more groups, such as singles, were able to qualify for ABSD concessions, it would defeat the purpose of the cooling measures.
“As such, Singaporeans will need to dispose of their first residential property if they wish to avoid ABSD on their next purchase. Singaporeans, including Singaporean singles, can buy their first residential property without any ABSD,” he added.
“The ABSD measures announced in January are significant, but they are temporary. They will be reviewed in future depending on market conditions.”

Let’s see what the ABSD is about. It is to stop people from over-leveraging themselves and buying second and third homes for investment or speculation purposes which they can ill afford and driving prices up. The bubble will burst if mortgage rates go up.
So levying ABSD on those who buy a second or third property for speculative or investment activity is quite the right measure to use for those who already have a roof over their heads and to keep prices moderate.
But for those who want to upgrade, the ABSD doesn’t make much sense. After all, they are buying a place to live in. It just makes upgrading more difficult. To escape ABSD, you have to sell your home first.

Now what does a buyer’s marital status have anything to do with this?

Married couples pay up 7 per cent if they want to secure their second home first before selling their first home – in fact, that’s what people usually do. But they can get it back as a concession if they sold that existing home in six months. Singles do not get this concession.

You know, it is by the grace of the Government that married people get relief. And that sort of assumes that the G can decide what group to prefer and what group to discriminate against. As usual, singles get the wrong end of the stick. Even if they paired up with those related by blood.

Now, how come?

MoF appears to be raising the spectre of a whole lot of singles hotting up the cooling measures (or defeating the purpose, as it put it). I wish it will tell me how this will happen. Maybe singles will suddenly buy a second property, then sell their first for a quick buck in six months, and then repeat the process again and again? If so, married couples can do the same. Then again, it describes married couples as a “narrow group of buyers”. Seriously??

Is there some other message that the G wishes to send with such unequal treatment? That being married has its privileges so everyone had better get married? Never mind if you are moving in with your mother? What will it do with all that 7 per cents from non-married households?
Also, it is silly for the MoF to talk about how singles can buy their first property without any ABSD. Has it forgotten that the A stands for Additional?

No matter how the MoF couches this, it stinks.

ST said some experts disagree with the policy, as singles who buy a home for owner occupation will end up with one home eventually. And if they do so within six months, they should get the same relief as married couples. I don’t see other experts who agree with the G’s rule. Of course, singles agree that it’s discriminatory. And I really don’t think married couples would say any differently.

MoF acknowledges that the ABSD measures are significant, “but they are temporary’’. MoF will need more than just statements to sweep this issue under the carpet. Unequal treatment, even if temporary, is just plain wrong.