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Overview of legality in Outlook on Singapore's Real Estate Sector

Published on : 30 Mar 2024

Outlook on Singapore's Real Estate Sector

Singapore's real estate industry stands as a testament to the nation's remarkable economic growth and strategic vision. From its humble beginnings as a land-scarce island to becoming a global business hub and a beacon of innovation in real estate development, Singapore has continuously evolved its real estate sector to meet the demands of a dynamic economy and a growing population. With its strategic location, robust infrastructure, and pro-business environment, Singapore has attracted both local and foreign investors seeking opportunities in the dynamic real estate market. However, to ensure the integrity and stability of this vital sector, regulatory measures are continuously refined and updated to address emerging challenges and evolving market dynamics.

In recent years, Singapore has witnessed several significant developments in its regulatory frameworks aimed at promoting transparency, fairness, and security within the real estate sector. These refinements reflect the government's commitment to maintaining a competitive and resilient real estate environment while safeguarding the interests of all stakeholders. Let's delve into three key refinements in regulatory measures that have been implemented to enhance the integrity and efficiency of the real estate sector.

Updates to the list of non-residential properties governed by the Residential Property Act.

One of the crucial aspects of Singapore's real estate regulatory framework is the Residential Property Act 1976, which governs the ownership and transactions of residential properties in the country. In a bid to ensure proper oversight and regulation of transactions involving non-residential properties, the Ministry of Law and Singapore Land Authority introduced refinements to the definition of non-residential properties under the act.

Effective from 20 July 2023, these refinements include the separation of land zoned as commercial and residential from non-residential properties. This means that foreign individuals and entities intending to acquire land zoned as commercial and residential are now required to obtain approval from the Land Dealings Approval Unit before completing the purchase. By delineating non-residential properties more clearly, this measure aims to prevent speculative activities and promote transparency in the real estate market.

Formalizing the Code of Conduct for the Leasing of Retail Premises in Singapore.

In addition to regulating property transactions, Singapore has also focused on fostering fair and balanced negotiations between landlords and tenants in the commercial leasing sector. To achieve this, the government introduced the codification of the Code of Conduct for leasing retail premises in Singapore.

The Code of Conduct, comprising 11 key tenancy terms, applies to all commercial lease agreements for qualifying retail premises entered into on or after 1 June 2021, with mandatory compliance starting from early February 2024. Designed to promote fairness and transparency in lease agreements, the Code sets out mandatory requirements and best practices to be observed by both landlords and tenants.

The Fair Tenancy Industry Committee (FTIC) oversees compliance with the Code of Conduct during lease negotiations, ensuring that both parties adhere to fair leasing practices. In case of disputes regarding non-compliance with the Code of Conduct post-lease agreement, authorized dispute resolution bodies are available for parties to seek resolution, further enhancing transparency and accountability in commercial leasing transactions.

Enhanced Anti-Money Laundering Measures for Developers

Another significant area of regulatory refinement in Singapore's real estate sector is the strengthening of anti-money laundering (AML) measures for developers. With the aim of combating illicit financial activities, the Developers (Anti-Money Laundering and Terrorism Financing) Act 2018 has been enhanced with new responsibilities imposed on developers in Singapore.

Effective from 28 June 2023, these measures apply to developers of both residential and commercial properties. Developers are now required to conduct customer due diligence checks on new and existing property purchasers, maintain proper records of these checks, report any suspicious transactions, and implement internal policies and controls to manage AML and terrorism financing risks.

Additionally, the Controller of Housing has been granted new enforcement powers to compel developers to provide relevant information and retain documents for investigation purposes. These measures aim to bolster the regulatory framework against financial crimes and ensure the integrity and security of transactions within the real estate sector.

In conclusion, the recent refinements and enhancements to regulatory measures in Singapore's real estate sector underscore the government's proactive approach to maintaining a transparent, fair, and secure environment for all stakeholders. By addressing emerging challenges such as speculative activities, promoting fair leasing practices, and strengthening measures against financial crimes, Singapore reaffirms its commitment to fostering a resilient and competitive real estate sector that contributes to sustainable economic growth and development. Through these regulatory refinements, Singapore continues to uphold its reputation as a global hub for real estate investment and innovation.

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