[SG] Government to Regulate Real Estate Agents' Commission?
The crosshair of the Singapore government may now be on the real estate agent's commission, says a report by the Business Times released on 05 Feb 2021. It was reported that the Urban Redevelopment Authority of Singapore had recently requested private developers to release information on how much commission they are paying real estate agents for marketing their new launches.
The industrial norm for such commissions is 1-3% but could go as high as 10% for units which are unique and are harder to sell, e.g. penthouses, odd-shaped units. Sales which are sold above the expected price could also entitle the agents to higher tier commissions. As of today, there are no regulations governing such commissions. While there are certain guidelines on commissions by the Council for Estate Agency, these guidelines are hard to enforce and hence, are susceptible to circumventions. One of such instant is agents giving a cut of their commission to the buyers as a deal sweetener and guised these payments as cash backs or referral fees to family/friends of the buyers. Such practices are undesirable as it could indirectly force the prices of private houses upwards.
This sparks the interest of the government of Singapore. While there is no formal report to quantify the impact of such malpractices, it is believed the impact has reached a level which the government could not ignore. Just last month, Deputy Prime Minister of Singapore, Mr Heng Swee Keat, said the government is paying close attention to the real estate market to ensure its stability and so that young Singaporeans is still able to own their home.
One of the probable measure would be having a hard cap to the commission paid for new launches. However, it is believed that the impact for such a measure would be minimal to the overall housing demand and would only slow the sales of those unique units.