URA Revises Development Baseline

Source : TODAY, Thursday, December 6, 2007

Developers seeking to raise the plot ratios of properties will be subject to a new definition of the development baseline, used in the computation of the property development charge, from Jan 1.

The amendment, announced in 2003, had been deferred to allow the industry to adjust to the change, the Urban Redevelopment Authority said yesterday.

“Basically we want to have a more equitable tax system,” said URA’s deputy CEO (Development Control and Corporate Development) Tan Siong Leng.

“Somehow, because of historical reasons, the baseline is not related to what is existing on the site.”

Under the revised definition, the value of the approved development for a development site will form the development baseline, above which a development charge is payable.

The two historical baseline values in Master Plan (MP) 1958 and 1980 — which now form part of the definition of development baseline — will no longer be applicable.
Currently, development baselines are determined by the highest baseline in MP 1958, MP 1980 or that of the approved development. This creates an anomaly where some landowners do not need to pay development charge due to high historical baselines while other landowners will need to pay a development charge for planning approvals granted on their land.

To mitigate the impact of the revised baseline definition, the government has safeguarded the historical baseline up to the use and intensity allowed in the MP 2003.

Thus, private landowners who develop their land in accordance with the development potential of the current MP are not affected by the change and can make use of the safeguarded baseline to offset the DC payable after Jan 1 next year.

About 2 per cent or 1,700 land plots may be affected in the future.

The Government collects $250 million yearly in development charges and this could increase in the long term with the revised development baseline, noted Knight Frank’s head of research and consultancy, Mr Nicholas Mak.

Even though this means that developer’s profits may drop, it is unlikely to affect property prices as the sale price of a project is based on what the market can bear and not on the development charge, he added.