What are Land Betterment Charge Rates?
Developers pay a Land Betterment Charge (LBC) for the right to enhance the use of some sites or to build bigger projects on them.
The rates are announced twice a year on 1st March and 1st September, following a review by the Singapore Land Authority (SLA), in consultation with the taxman’s chief valuer (CV). The Land Betterment Charge rates are based on the Chief Valuer’s assessment of land values and take into consideration recent land sales. They are stated according to use groups across 118 geographical sectors in Singapore.
The Land Betterment Charge Act
The Land Betterment Charge Act, took effect on 1st August 2022, and charges for the enhancement of land value were consolidated under the SLA. The LBC regime replaced the development charge (DC), temporary development levy, and differential premium regimes. The DC Table of Rates was correspondingly replaced with the LBC Table of Rates, which continues to be reviewed on a half-yearly basis.
The LBC will be charged and collected by a single agency, SLA. Landowners seeking to develop their sites need not make a separate application to SLA for the payment of LBC once a planning application or plan lodgement for an authorised development has been submitted to URA. If the proposed development results in an increase in land value, SLA will follow up directly with the taxable person by issuing a Liability Order (LO) stating the LBC payable. Payment must be made to SLA within 1 month from the date of the LO.
Computation of Land Betterment Charge
The material date of determination for LBC will be pegged to the date of grant of Provisional Permission (PP) or the start date of the validity of the second and subsequent PP extensions, whichever is later. For development proposals that are granted Written Permission (WP) without a PP and authorised developments under plan lodgement, the material date of determination for LBC will be the respective WP/authorisation dates. For the variation of restrictive covenants where no planning application is required, the material date of determination for LBC will be the date consent for variation is given.
LBC will be computed by:
a) the Table of Rates method, which is based on LBC rates by use groups in each geographical sectors; OR
b) the Valuation method, in which the Chief Valuer of the Inland Revenue Authority of Singapore (IRAS) will ascertain the amount of LBC through a valuation of the increase in land value arising from the chargeable consent.
The Valuation method will apply in specific circumstances where the Table of Rates are inapplicable, such as where there is no suitable or comparable use group for assessment. Taxable persons may also elect to use the Valuation method in lieu of the Table of Rates method, by using a prescribed form.5 Please note that such an election is irreversible.
If the land has a residual unexpired tenure of 99 years or less, the amount of LBC payable will be adjusted based on the current Leasehold Table, which expresses the value of the residual unexpired tenure as a percentage of freehold value.
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