Private residential properties are expected to see a 15-25% increase in rental rates, and some even more. These increases are a reflection of the movement in the market rents for the respective properties.

AV increases were not announced for 2023. Iras had said that the market rental rates of HDB and private homes have risen more than 20% since Jan 1, 2023. AVs on residential properties will reflect this.

The increase in tax rates and the AV will most likely affect those who invest in high-end properties, but analysts don’t expect that demand for residential property or its prices will suffer.

As a result of higher property taxes, landlords may resist lower rents.

Landlords may have to reduce their expectations if the rental markets continue to soften. Otherwise, they could face higher taxes and vacancy costs.

Lawrence Wong, Singapore’s Minister of Finance, announced in Budget 2022 that rates on both owner-occupied homes and non-owner occupied houses would increase by two steps, starting from 2023. Property tax is Singapore’s main method for taxing wealth.

Condo rentals were up 19.3 percent year over year in the third-quarter of 2023. HDB rents rose 14.1% in October compared to a similar period last year, according to data from 99.co SRX.

MOF & IRAS stated on Thursday that the rising AVs and increases in property tax rate announced in Budget 2020 will lead to an increase in taxes for residential properties by 2024.

In FY2022, property tax revenue accounted for 7.4 % of total revenues collected or S$5.1billion. The amount collected in FY2022 increased 9.1 per cent compared to S$4.7 billion.

The property tax rate on non-owner-occupied properties, including investment properties, was raised from 10 to 20 percent in the past, to 11-27 percent by 2023. In 2024 the tax rates are expected to increase from 10 per cent to 20 per cent.

Singapore homeowners can expect to pay more in property tax next year, as both the annual values and the tax rates increase. To ease the pain, the government will offer a special rebate.

MOF, in response to the Business Times queries, said that HDB owners of HDB flats can expect an increase of 20 to 25 percent for 2024.

Lentor Mansion Floor Plan

Budget 2022 announced a tax increase but the market was still buoyant. Prices of private homes rose 8.6% that year.

Luxury residential property owners will be able to accept the increase in property taxes as the additional property tax due from next year is only a tiny fraction of the value of the property.

In the future, buyers may be pushed to buy slightly smaller houses due to higher property taxes. In order to keep land prices down, developers will have to be more careful in the bids they make.

In order to ease concerns over rising property taxes and cost of living, the Ministry of Finance of Singapore (MOF) announced a rebate for residential property owners in 2024.

The owners of the smallest HDB units will no longer pay tax following a rebate of 100 percent. Owners who own executive flats or three-room, four-room, five-room and six-room flats can receive rebates between 30 and 70 percent. Private property owners-occupants get a 15 to 20 per cent rebate.

Investment property owners will not receive a rebate on their non-owner occupied homes and will be hardest hit by the double impact of rising taxes and higher property values.

Property taxes are calculated on the basis of AVs. They are updated annually to reflect the estimated annual rental if a property were rented. The AVs are also rising in tandem with the market rental prices of both public and private housing since 2022.

Also, the property tax for residential properties owned by owners for AVs exceeding S$30,000 was raised. The rate increased to between 5 and 23 percent in 2023 from previously between 4 and 16 percent. In 2024, rates will rise to between 6 and 32 percent.