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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%. |
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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. |
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They will also apply to cases that are
granted a second or subsequent extension to their Provisional Permission
on or after this operative date. |
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Principle of Development Charge (DC) |
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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. |
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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. |
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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. |
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The balance of the gain is retained by
the owner and provides an incentive for him to undertake the
development work. |
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Revision of the DC rates |
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DC rates are set based on the
principle of sharing of enhanced land value. |
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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. |
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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%. |
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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. |
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Ministry of National Development |
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18 Jul 2007 |
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Source:
www.mnd.gov.sg Press Release
17 Jul 2007 |
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FrontPage Edition: Sat 21 July 2007
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