SINGAPORE (EDGEPROP) - The Singapore Land Authority (SLA) has announced the revision of land betterment charge (LBC) rates for the period of Sept 23 to 28 Feb, 2023.

Read also: SLA and Redas sign MOU to spur adoption and innovation of geospatial technology

The revision follows the Land Betterment Charge Act which entered into force on Aug 1, allowing for the consolidation of charges for the enhancement of land value under SLA.

Previously, landowners and developers had to apply to SLA for the payment of differential premium, and separately to the Urban Redevelopment Authority (URA) for the payment of development charge (DC) or temporary development levy (TDL) for proposals which result in an enhancement in land value.

The new LBC regime replaces the DC, TDL and differential premium regimes. To that extent, the DC table of rates is replaced with the LBC table of rates, which will continue to be revised on a half-yearly basis.

The revision in LBC rates comes on the back of a strong pick-up in en bloc activity following the last review of the DC table of rates (under the previous regime) done in March, remarks Lee Sze Teck, senior director (research) at Huttons Asia. He notes that in the past six months, eight residential and two commercial sites have been sold en bloc.

Non-landed residential properties saw the highest increase in LBC rates, rising by 12.9% on average. 116 out of the 118 geographical sectors saw an increase in LBC rates ranging from 6% to 20%, with the remaining two sectors seeing no change.

The largest increase of 20% applies to sector 113, which covers Yuan Ching Road, Corporation Road, Jurong West Ave 2, PIE, KJE, Choa Chu Kang Ave 1, Choa Chu Kang Way, Choa Chu Kang Road, Woodlands Road, Upper Bukit Timah Road, the Bukit Batok area and the Bukit Panjang area.

Huttons' Lee says the sector saw the biggest increase due to the en bloc sales of Lakeside Apartments and Park View Mansions as well as the Government Land Sale of the Dairy Farm Walk site. (See potential condos with en bloc calculator)

For landed residential properties, the LBC rates have increased by 10.2% on average. 116 out of the 118 geographical sectors saw an increase in LBC rates ranging from 9% to 14%, with the remaining two sectors seeing no change. The largest increase of 14% applies to sector 67, which covers Cluny Road, Napier Road, Tanglin Road, Anderson Road,  Stevens Road and Dalvey Road.

For commercial properties, LBC rates have increased by 5.4% on average. 116 out of the 118 sectors saw an increase in LBC rates ranging from 3% to 8%.

Meanwhile, LBC rates for industrial rates rose by 2.3% on average. 94 out of the 118 sectors saw an increase in LBC rates ranging from 2% to 5%, with the remaining 24 sectors seeing no change.

Huttons’ Lee highlights that apart from the revised LBC rates, SLA has also revised the rate for the sale of remnant land, effective from Sept 1. “Currently it is based on 50% of the full land value. From Sept 1, all residential, commercial and industrial land where the sale would result in gross floor area (GFA) transfer, the rate is doubled to 100%,” he says. (Find Singapore commercial properties with our commercial directory)

On Sept 1, URA released a circular on harmonisation of GFA by government agencies to be implemented next June. From thereon, all strata areas will be included as GFA. This means that areas such as air-conditioner ledges will be counted as GFA under the new regime, Lee points out.

Taken together, he believes the costs to developers will “rise considerably”, eating into their margins.  Hence, he anticipates developers may reassess potential bids for en bloc sites.

Check out the latest listings near Lakeside Apartments, Park View Mansion