As a wealth builder, I will always try to avoid investing in property stocks because this sector is prone to many restrictive government policies due to the scarcity of land in Singapore. For many property developers, among the most unpopular policies should be the Qualifying Certificate Rules under the Residential Property Act. Under this set of rules, listed property companies are technically considered as “foreign companies” as they would have some foreign shareholders. Thus, they are obliged to sell all their units within 5 years from the date of the Qualifying Certificate or collective sale deal. Failing to do so would incur hefty penalty.
According to property consultancy firm Cushman and Wakefield (C&W), property developers may incur about $238 million of extension charges in 2016. This is certainly not a small amount to be scoffed at and it is also important to note that the extension charges are not one-off penalties. Developers would face annual charges as per the ...
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