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     FrontPage Edition: Sat 21 July 2007

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Revision of Development Charge (DC)


Revision of Development Charge (DC)

The Ministry of National Development announced today that the Development Charge (DC) rates will be revised from the current 50% of the appreciation in land value to 70%.
The revised rates will be effective from 18 July 2007 and will apply to development applications where Provisional Permission is issued on or after this date.
They will also apply to cases that are granted a second or subsequent extension to their Provisional Permission on or after this operative date.
Principle of Development Charge (DC)
The land value of a site can be enhanced due to the Government¨s action in rezoning the site to a higher value use or increasing the plot ratio.
The DC system, where a part of the enhancement in land value is taxed, allows the State to have a share of the gains from the value enhancement arising from its grant of planning approval.
The portion of the gain taxed by the Government can then be used to offset expenditure on infrastructure improvements, such as road and rail works, and utilities, to support the higher land zoning or intensification of land.
The balance of the gain is retained by the owner and provides an incentive for him to undertake the development work.
Revision of the DC rates
DC rates are set based on the principle of sharing of enhanced land value.
Currently, DC rates are pegged at 50% of the enhancement of value. The current sharing formula of 50/50 is a result of an adjustment made during the recession in 1985.
The DC was lowered from 70% to 50% in 1985 to avoid eroding the share of value enhancement that accrued to developers in a declining market. With the current buoyant property market, the converse is true. Thus, the Government has decided to reinstate the DC to its original rate at 70%.
For land with title restrictions on the use and intensity, which are subject to a levy of Differential Premium by the Singapore Land Authority, the Differential Premium will similarly be adjusted to the 70% rate based on the published Table of DC rates.
Ministry of National Development
18 Jul 2007

Source: Press Release 17 Jul 2007

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