It will address historical anomaly that allowed some landowners to avoid paying fees.
A SIMPLER way of calculating development charges will kick in from next year.
The net effect is that the Government is set to collect slightly more in the form of these charges, which are paid by landowners who want to enhance a site’s value - for example by redeveloping an existing project into a bigger one.
However, not all landowners will be affected. The impact on the market as a whole is expected to be minimal, involving perhaps 2 per cent of private land, or about 1,700 plots, said the Urban Redevelopment Authority (URA) yesterday.
The URA has also added safeguards to help those landowners who are affected by the change.
Broadly, the owners concerned own land that have very high development baselines, thanks to decades-old master plans. A development baseline is the highest maximum floor area allowed under master plans released in 1958 or 1980, or under an existing development already on the site.
These old master plans gave properties in some central parts of Singapore such as Holland Hill, unusually high development baseline values.
Because of this historical anomaly, owners of these land plots previously paid no development charges when they enhanced their land use.
But in future, they will have to fork out like everyone else if they want to build a bigger development on their sites.
This change, and its implementation start date, were announced back in 2003 in order to give landowners ample time to adapt to the change. Yesterday, the URA issued a reminder of the new calculation.
From Jan 1, the development baseline will be simply defined as the value of the approved development. The historical baseline values in the master plans of 1958 and 1980 will no longer play any part in the calculation.
The change will affect a small number of owners who own land with a high historical development potential, said Knight Frank’s director of research and consultancy Nicholas Mak.
If future master plans allow for a bigger development that is within their historical potential, these owners would have been able to redevelop their land without having to pay a development charge, he said.
With the change, they would have to pay the charge to do so.
To mitigate the impact of the change, the Government said the affected landowners may not have to pay a higher charge as long as they keep to the allowed use under the current master plan.
The master plan is revised every five years, but the next one expected around the middle of next year is unlikely to have major changes. The Government has said that there will not be a big exercise to raise a site’s development potential.
Still, if future master plans allow higher plot ratios, the affected owners would have to pay the charge to build up to the maximum space allowed, said Credo Real Estate’s managing director, Mr Karamjit Singh.
In the past five years, the URA has collected on average about $250 million in development charges a year.
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