Effective September 23, the land appreciation fee for non-landed residential land increased by an average of 12.9%, significantly higher than the 0.3% increase in March this year.

The very active collective sale activities in the past six months have pushed up the land appreciation fees for non-preferential private residential land. This will affect developers' profits and prompt them to be more cautious when bidding for lots.

According to a statement from the Land Authority of Singapore (LAS), out of 118 districts, only two districts saw no change in value-added fees for non-owned residential land, while the remaining 116 districts saw increases of between 6 and 20 percent.

The land appreciation fee replaces the development fee previously set by the Ministry of National Development. It is paid to the government by developers to cover the difference between the increased density and value of land use, and reflects the demand for land by developers.

On August 1, the land appreciation levy took effect and the LPA is responsible for collecting all land appreciation fees and will issue updated fee adjustments.

The LPA sets the latest land appreciation fees, which are adjusted twice a year. This round of adjusted fees is effective from September 23 until February 28 next year.

The land appreciation fee increase for non-landed residences is the largest of all land use groups and the highest since March 2018, when the average increase was 22.8 percent.

The biggest increases were in Garden View Road, Enterprise Road, Jurong West Road 2, PIE, KJE, Choa Chu Kang Road 1, Choa Chu Kang Avenue, Choa Chu Kang Road, Woodlands Road, Bukit Timah Road Upper, Bukit Batok, and the area around Bukit Panjang.

Collective sale activities grew strongly in the past six months with as many as eight residential units and two commercial sites being sold, pushing up land appreciation fees.

The Land Authority has also adjusted the cost of the remaining land, further increasing the cost borne by developers.

The significant increase in costs to developers may re-evaluate the bids for collective sale lots and affect the winning rate for some lots.