A Foreigner Guide to Purchasing Property in Singapore 🏘️

If you are an international student like me who struggles with the types of housing you can buy for your own stay or for investment, I've done some digging for you, and here is the most comprehensive guide! 🕵️ ♂️

What can Foreigners Buy in Singapore?

Refer to Residential Property Act and check your eligibility criteria for foreign property ownership in Singapore. Certain restrictions may apply, and it's essential to ensure that you qualify.

Checklist before buying property of your choice

Do a self-check

It is highly recommended to conduct a self-check to commit to possibly the largest purchase in your lifetime!

Ask yourself a few questions:

• Big or Small development?
• Does the property suit your family members? (for own stay purpose)
• Transportation, Amenities and Convenience (for own stay purpose)
• How many years left if it’s a leasehold property?

Factors to consider:

• Affordability Check
• Property Type Choice
• Brand New or Resale
• Indicative Valuation (for Resale Property)
• Vacant Possession or Tenanted

Read more: A Comprehensive Property Investment Checklist (Updated 2021)

Engage a Real Estate Agent

It's advisable to engage a licensed real estate agent who is familiar with the local market and regulations. They can provide valuable insights and guide you through the process. For detailed information on the process of engaging a property agent and understanding the role of an agent in a property transaction, please refer to the CEA Website.

Know the Taxes that you need to pay

Additional Buyer’s Stamp Duties (ABSD)

The biggest hurdle faced by most foreign property investors is ABSD. When you get started on owning a second or subsequent property, additional tax is applied on top of the standard Buyer Stamp Duty (BSD), which is called ABSD.

BSD vs ABSD

ABSD is a tax that’s levied on top of BSD, depending on certain criteria such as residency status and the number of property ownerships. This computation is based on the valuation or the property price, whichever is higher.

ABSD Rate Structure

Source: IRAS (Updated on 27 Apr 2023)

The ABSD regulations permit the exclusion of specific nationalities based on their inclusion in Free Trade Agreements (FTAs). Foreigners hailing from countries with FTA affiliations with Singapore may qualify for ABSD Remission.

Individuals from the following countries, who are Nationals or Permanent Residents under their respective Free Trade agreements, will be subject to the same Stamp Duty rates as Singapore Citizens:

• Switzerland, Norway, Liechtenstein, and Iceland Nationals and Permanent Residents
• United States Nationals

Exclusion from ABSD

Whether you are an experienced investor or a first-time homebuyer beginning the journey of property ownership, familiarity with these ABSD mitigation strategies is pivotal for making well-informed choices in a market where each financial decision holds significance.

Check out 8 Ways to Avoid ABSD legally in Singapore 2023 for more details.

ABSD Calculator

Property Guru Finance has an user-friendly ABSD calculator to calculate the accurate amount of ABSD you are entitled to pay according to property value, purchase type, residency status as well as existing property owned. Other useful tools such as affordability calculator, mortgage calculator and mortgage comparison tool can be found on their website too, do check each of them out!

For more information, read the ABSD Fact Sheet from Inland Revenue Authority of Singapore together with the ABSD Guide from Property Guru.

Search for Property

Browse Property Listings

The top two real estate portals in Singapore are Property Guru and 99.co

View Properties

Schedule property viewings to get a firsthand look at the condition and surroundings. Take note of any issues or concerns.

Property Valuation

Get a professional property valuation to ensure that the asking price is reasonable. This can be done through property valuation services or your real estate agent.

Apply for Mortgage Loan

If you are concerned about your finances, FRET NOT! Foreigners can also seek a mortgage plan for property acquisition in Singapore. However, it is important to take note of the loan-to-value (LTV) ratio of your mortgage as well as the mandated minimum cash down payments. The LTV ratio varies across different banks and typically ranges between 50 and 70%.

Comparing rates and packages from banks

Different banks offer different loan rates and packages, so you might be overwhelmed. Check out MoneySmart! It streamlines the process by providing a comprehensive overview of existing home loan options for foreigners in the current market. There's no requirement for you to independently compare rates across various banks. All the essential information you need will be consolidated, allowing you to save time and make well-informed decisions!

Documents Required

• The latest certified true copy of your proof of income (payslips and bank statements for the last 3 months)
• Notice of assessment
• A copy of your passport, NRIC

• Property’s Option to Purchase (OTP) or Sales and Purchase Agreement (SPA)

Step-by-Step Guide to Making an Offer

In-Principal Approval (IPA)

It's advisable to apply for In-Principle Approval (IPA) before making an offer on a property. This ensures that you are eligible to purchase the chosen property and helps prevent complications later in the OTP process. IPA is usually valid for a limited period, so you should be mindful of the timeline when considering property transactions. Also, getting multiple IPAs is not recommended, as this involves numerous Credit Bureau checks that will directly impact your credit standing.

Option to Purchase (OTP)

The Option to Purchase (OTP) fee serves as a reservation or 'booking fee' for securing a property, typically amounting to 1% of the property's purchase price. For example, for a $1 million private property, this translates to a $10,000 OTP fee. Certainly, this is not a small amount and hence, it's essential to note that if you pay the OTP fee and later discover that you do not qualify for a loan, there is no legal recourse for the seller to refund the OTP fee. In such a case, any potential refund would be at the seller's discretion, except for buildings under construction (BUC), where the option fee is 5%, and if canceled, you can only recover 75% of it. This shows how important it is to get your IPA approval so that you can confidently make an offer on the property at this stage!

Sale and Purchase (SPA) Agreement

Sale and Purchase Agreement (SPA) is a legally binding contract that outlines the terms and conditions of the sale and purchase of a property. This agreement is a crucial document in the property transaction process, and it is typically prepared by legal professionals involved in the transaction, such as solicitors.

Key Collection

Once Temporary Occupation Permit (TOP) is issued and you have paid the progress payment due upon TOP, collect keys and any relevant documents, such as the title deed from the seller (or developer). WOOHOOO🥳! But wait! Before celebrating the successful completion of your property purchase, do remember to inspect your unit and report any defects in it! The developer will be responsible for carrying out rectification works within the 1-year defects liability period.

Conclusion

When considering investing in real estate in Singapore as a foreigner, it's crucial to stay updated with the current regulations set by the SLA. These regulations may change over time, and it's advisable to always consult with professionals such as real estate agents or lawyers who are well-versed in the property market and regulations. It's also important to stay organized and adhere to deadlines to ensure a smooth and timely completion of the property transaction.

Disclaimer: The information presented is intended for general informational purposes only. Although every effort has been made to ensure the accuracy, reliability, and completeness of the information at the time of writing, it should not be solely relied upon for making financial, investment, real estate, or legal decisions. It is strongly recommended to seek advice from a qualified professional who can consider your individual facts and circumstances. Seedly assumes no liability for any decisions made based on the information provided.