Development charge for new buildings up to 70%

Development charge for new buildings up to 70% 
THE government has raised the Development Charge (DC) for new building projects to 70 per cent from 50 per cent.
A land development charge is levied on developers when there is an increase in the value of land site due to rezoning.

The revised rates will apply to development applications where provisional permission is issued from Wednesday.

They will also apply to cases that are granted a second or subsequent extension to their provisional permission on or after this operative date.

Property analysts say the move will take some heat off the en block frenzy, which has pushed up prices of such collective sales in recent months as sellers will now get less.

A statement from the National Development Ministry (MND) on Wednesday said the DC rates have been revised to reflect the appreciation in land value, and is a reinstatement of what it was in 1985.

For land with title restrictions on the use and intensity, which are subject to a levy of Differential Premium by the Singapore Land Authority, it will similarly be adjusted to the 70% rate.

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 movements, such as road and rail works, as well as utilities, to support the higher land zoning or intensification of land.

The balance of the gain is retained by the owner and provides and incentive for him to undertake the development work.
The Straits Times, 18 July 2007

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