Singapore is renowned for being one of the most business-friendly nations in the world. It has an efficient and transparent system and foreigners are welcomed with open arms.
The market is predicted to grow much over the decade as foreigners find Singapore to be a safe place to invest their money.
Buying real estate is also fairly easy, even if there are some regulations toward foreign ownership that you should beware of beforehand.
In this article, you’ll learn the following:
- Can foreigners buy property in Singapore?
- Process When Buying Property in Singapore
- Singapore Property Prices
- Singapore Property Taxes
- Renting Out Property in Singapore
- Property Websites in Singapore
Can foreigners buy property in Singapore?
In a word, yes. But the regulations differ depending on what property type you buy.
Before we go into details, let’s check how Singapore’s government defines what a foreigner is. According to the government, a foreigner is a person or entity that is not a:
- Singapore citizen
- Singapore company
- Singapore limited liability partnership
- Singapore society
Buying Landed Property in Singapore
If you want to buy landed property, you need to get approval from the government first. Landed properties can be terraced houses, semi-detached houses, and bungalows.
The application is made online on the Singapore Land Authority (SLA) website and they’ll review your application individually. As explained on SLA’s website, you need to meet the following two requirements, at a minimum, to buy landed real estate:
- You need to be a permanent resident for at least 5 years
- You need to make ‘significant contributions’ that are primarily based on your income assessable for tax in Singapore
The second requirement is a bit vague, I agree. If you’ve been a permanent resident and had a decent track record for 5 years, it can be worth giving it a try.
If you don’t meet these criteria: try to buy a non-landed property instead, like a condo unit or an apartment.
Buying Condos in Singapore
You have no particular issues to buy condos as a foreigner in Singapore. It doesn’t even come with a minimum ownership quota for locals, as we normally see in other Southeast Asian countries.
Just be prepared financially as prices can be in the multiples of what we see in places like Ho Chi Minh City and Manila. Luxury condo prices in Ho Chi Minh are 16% on average of those in Singapore.
It’s not strange as Singapore is a corporate haven with low taxes and a well-functioning system. Even if Singapore’s property market might cool down a bit due to the increased Additional Buyer’s Stamp Duty and tightened lending policies, it will perform well long-term.
Just listen to this: Morgan Stanley predicts that the house prices will double by 2030, which kind of speaks for itself.
Buying HDB Apartments in Singapore
Singapore’s government has introduced so called subsidized housing through its Housing & Development Board (HDB). This kind of real estate is also referred to as public housing.
As it speaks, these flats are sold at subsidized prices and is a preferred option among young people, but also families with children. Public flats are only available to Singapore citizens or foreigners that are permanent residents.
In case you’re not a permanent resident, private flats and condos are better options.
Process When Buying Property in Singapore
It’s important that you understand how the buying process works, before engaging in the real estate market.
Below I’ve listed the different steps involved when buying either condos or private apartments.
1. Determine Your Budget
As mentioned, property is expensive in Singapore when compared to neighbouring countries like Malaysia, Thailand, and the Philippines.
Prices have cooled down a bit, due to measures introduced by the Government. Still, be prepared to pay everything between USD 300,000 – 3 million for a unit in a condo.
It’s not strange that 80% of Singaporeans reside in HDB apartments as prices are eye-watering.
If you are not capable to pay with cash, you’ll need to apply for a mortgage to finance the deal (see step 5 for an explanation about how to get a mortgage).
2. Find a Real Estate Agent
Many Singaporeans find properties through local real estate portals and through agencies.
You can check the Council for Estate Agents (CEA) website to find reputable and licensed agents, that can help you through the whole process.
You’ll not have any issues finding a real estate agent that communicates fluently in English, Mandarin, and sometimes even Cantonese.
Real Estate Agent Commissions
Sellers generally pay 2% in commissions to the estate agent, but the rates can stretch up to 4%.
Buyers don’t pay anything except in transactions of HDB apartments where sellers normally pay 2% and buyers pay 1% in commissions to agents.
3. Singapore Property Lawyers
Dealing with private flats and condos is straightforward and usually doesn’t require the involvement of a separate lawyer.
This might be the case if you buy landed property as there are stringent regulations to foreign ownership of landed property, as we’ve seen.
Normally, your agent should have good connections with reputable lawyers. Banks can sometimes help you to get in touch with lawyers as well.
The Benefits of Hiring a Lawyer
The lawyer understands the state’s regulations on a more in-depth level and can help you with the communication on the seller’s side, review documents, draft contracts, and so it goes on.
The lawyer will also help you to check the title deed and confirm that there are no hidden encumbrances on the property.
The extra cost of USD 1,500 – 2,000 can help you to save a great deal of money, in comparison to if you handle the complete process by yourself.
4. Getting an Approval in Principle (AIP)
If you plan to apply for a bank loan, you should get an AIP (Approval in Principle) earliest possible. The AIP guarantees that the bank will offer you a loan later on.
To get an AIP, banks check your credit history and finances to assure that you have a good track record.
If you don’t get an AIP, you might be rejected to get the sufficient finances needed from the bank later. This can create a lot of problems if you’ve already initiated a buying process with a seller.
The AIP will be valid for a period of 1-3 months, thus, be prepared to be efficient once received.
5. Getting a Mortgage in Singapore
I recommend you to contact a handful of banks earliest possible to understand what mortgage options you have. You should do this prior to paying any deposits or making any bookings.
There are many banks, such as UOB, who offer mortgages to foreigners covering up to 80% of the purchase value for your first property.
If you decide to buy a second property, the rate will decline a little, and you’ll be able to get a mortgage of up to 50% of the property value.
What is the repayment period of mortgages in Singapore?
If you buy a freehold property, you’ll be able to keep paying off the loan during a period for 35 years. But, you can be a maximum of 75 years old when the loan period ends.
Let me explain:
Let’s say that you are 35 years old, then you’ll get a payback period of 35 years (35 years old + 35 years = 70 years old, that is less than 75).
However, if you would be 45 years old, you would only be granted a payback period of 30 years.
In case you’ve decided to buy a leasehold property, the same regulation applies to a freehold property. On top of that, you’ll need to have at least 35 years left of your lease period.
Mortgage application documents
At UOB, you need to submit the following documents to apply for a loan:
- A filled in application form
- A passport copy
- Proof of income: A pay slip, or a bank statement that is less than 3 months old and your employment letter
- If you have your own business, you need to provide bank statements for the last 3 months and the last 2 years’ tax bills (Notice of Assessment)
- Submit a copy of the SPA (Sales and Purchase Agreement) or the OP (Option to Purchase)
Other Banks Offering Property Loans to Foreigners in Singapore
Other bank options than UOB are HSBC and DBS. These banks have a strong presence in Singapore and cater to foreigners. Give them a call and send them an email, they’ll be more than glad to help you.
The bank will determine how much you should be granted in loan value, beforehand. This will be done by a Valuer at the bank.
By doing this, you can avoid potential discrepancies between the actual purchase price and the appraised value, which could bring you some hurdles.
Getting a Letter of Offer (LO)
Finally, you’ll receive an LO from the bank (Letter of Offer). The document will contain information, such as the loan conditions (for example, your loan amount and your repayment period).
Review the LO together with the lawyer if needed and sign it, prior to submission to the bank.
6. Pay your deposit / Option to Purchase (OP)
When you’ve found a property that suits your needs, you can put an Option to Purchase (OP) on the property.
By doing so, you need to pay a fee of 1% of the total property value, making it impossible for other speculators to put offers on the property for the next 1-3 weeks.
However, you’ll also need to pay additional parts of the deposit during this time, as agreed upon with the seller.
The OP is usually issued by the seller’s solicitor. After you’ve submitted your OP to the seller, you can start to prepare your complete offer.
7. Submit your offer and sign the deal
If you’ve come this far, it’s time to prepare your final offer.
The offer should be written and reviewed together with the real estate agent and/or the lawyer, to make sure that everything is done correctly.
When the seller accepts your bid, your lawyer will help you to transfer the title from the seller.
Finally, the lawyer will finalize all the documents needed and register the property in your name.
Singapore Property Prices
Property prices have increased significantly over the past years and the government saw no other solution than to tighten lending and increase the buyer’s stamp duties in 2018.
According to Numbeo, the average price per square meter in the city center is around SGD 22,730 (USD 16,840). The average price per square meter in the outskirts, on the other hand, is SGD 11,343 (USD 8,400).
When looking at new condos for sale in Singapore, prices can start from everything between SGD 500,000 – 1,5 million.
Singapore Property Taxes
Singapore has the lowest income and corporate taxes in the world. Unfortunately, this doesn’t apply to property taxes as the government has continuously increased the buyer’s stamp duties over the past years.
It’s understandable, as they do their utmost to avoid speculation and to cool down the market.
Let’s have a look at the different taxes you need to pay when buying real estate.
Buyer’s Stamp Duty (BSD)
You need to pay the following stamp duty Buyer’s Stamp Duty that’s calculated based on the purchase price or the market value of the property.
- First SGD 180,000: 1%
- Next SGD 180,000: 2%
- Next SGD 640,000: 3%
- Remaining Amount: 4%
- First SGD 180,000: 1%
- Next SGD 180,000: 2%
- Next SGD 640,000: 3%
- Remaining Amount: 3%
How to calculate the Buyer’s Stamp Duty
Let’s say that you buy a residential property for SGD 500,000, then the calculation will be as follows:
Stamp duty = (SGD 180,000 * 1%) + (SGD 180,000 * 2%) + (SGD 140,000 * 3%
= SGD 9,600
However, it doesn’t stop here.
To reduce the influx of foreigners, the government has introduced an additional stamp duty called ABSD (Additional Buyer’s Stamp Duty) that’s applicable to foreigners.
Additional Buyer’s Stamp Duty (ABSD)
The Additional Buyer’s Stamp Duty is set to a hefty 20% as of 2018. Hence, the total stamp duty would be as follows, with a purchase price of SGD 500,000:
SGD 9,600 (original Stamp duty, see above) + SGD 500,000 * 20% = SGD 109,600
Seller’s Stamp Duty (SSD)
You’re not only subject to stamp duty when buying property, but also when selling, depending on the holding period.
Property bought after the 11th of March 2017 are taxed as follows with the Seller’s Stamp Duty:
- Holding period up to 1 year: 12%
- 1-2 years: 8%
- 2-3 years: 4%
- More than 3 years: No SSD
Annual Property Tax
Some people get confused about the concept of the annual property tax and how it’s calculated.
Simply put, the annual property tax is calculated by multiplying the (appraised) annual rental value of your unit with a property tax rate. The rate increases progressively.
Keep in mind that it doesn’t matter if you rent out your unit or use it for self-dwelling, you always need to pay the tax. However, the rates are significantly lower if you live in the unit.
The property tax rates are currently as follows.
In case your property is occupied by a tenant:
- First SGD 30,000 = 10%
- Next SGD 15,000 = 12%
- Next SGD 15,000 = 14%
- Next SGD 15,000 = 16%
- Next SGD 15,000 = 18%
You need to pay a rate of 20 % in case the annual value exceeds SGD 90,000.
If your property is self-occupied:
- First SGD 8,000 = 0%
- Next SGD 47,000 = 4%
- Next SGD 5000 = 6%
- Next SGD 10,000 = 6%
- Next SGD 15,000 = 8%
- Next SGD 15,000 = 10%
- Next SGD 15,000 = 12%
- Next SGD 15,000 = 14%
You need to pay a rate of 16% in case the annual value exceeds SGD 130,000 in total.
Capital Gains Tax
In general, you don’t need to pay any capital gains tax on the profit you make when selling your property.
However, that’s not the case if you merely invest in Singaporean properties with a profit-seeking incentive.
Each case is determined on an individual basis, usually the following items will be taken into consideration:
- How often you make property transactions
- Why you buy/sell properties
- What financial resources you use to have the property, and for how long you keep the property
Can non-resident foreigners buy property in Singapore?
Yes, as explained above, you don’t need to be a resident to buy a property.
But the types of properties you can buy will be limited, usually, foreigners tend to buy condos and apartments.
Renting Out Property in Singapore
Even if Singapore properties provide lower rental yields compared to places like Bangkok and Ho Chi Minh City, you can still make decent money on rentals.
Many people talk about the great percentage yields from rentals in countries like Cambodia. But these countries aren’t politically stable, self-sustaining, nor do they have as high demand for property as Singapore.
The monthly rentals are high in Singapore and can range from everything between USD 2,000 – 10,000.
Before you rent out your property, you need to find a tenant. This can be done by contacting your real estate agent. As you’re a foreigner, it’s best to let them handle this at the start.
When you’ve found a tenant, you need to set up a tenancy agreement.
The tenancy agreement should include both your’s and the tenant’s personal and contact information, such as your dates of birth and residential addresses.
The agreement should also state general conditions regarding what appliances and utilities belong to the apartment, how long the lease period will be, and monthly rents.
I recommend that you ask the real estate agent to provide a standard contract for you to review, you can also search on the internet for samples.
After you’ve signed the tenancy agreement, you need to apply electronically and get permission from the IRAS (the Inland Revenue Authority of Singapore).
How high is the rental income tax?
The rental income tax is high and set to 22% for foreigners.
Property Websites in Singapore
Singapore is famous for being a tech-savvy nation, especially when comparing to its regional rival Hong Kong.
We’ve seen a number of new property websites popping up during the past decade. You can even find a number of websites focusing on property loans and that provide various services, expertise, and mortgage calculators.
When it comes to property news and listings, some of my personal favorite websites are:
Can a foreigner buy an apartment in Singapore?
Foreigners can own condominium units and private apartments, no matter the location or the price. Having said that, foreigners cannot buy subsidized housing (HBD apartments) governed by the Housing & Development Board in Singapore.
How much does an apartment cost in Singapore?
Singapore has one of the most expensive property markets in the world. Looking at some of the cheapest new condos in 2019, the square meter price was around S$1,300 to S$1,500 (US$13,993 to US$16,145).
As of 2019, private one-bedroom condo units cost between S$600,000 to S$700,000. Two-bedroom units cost around S$800,000 to S$900,000, while three-bedroom units can reach up to the million. Executive condominiums are slightly cheaper than private condominiums, while HBD costs only around 25% of a private condominium.
Who can buy landed property in Singapore?
You need to be a PR for at least 5 years and make ‘significant contributions’ that are primarily based on your income assessable for tax in Singapore.
What is the downpayment for a condo?
The down payment should be at least 20% according to the official regulations in Singapore.
What is an HDB apartment?
HDB apartments are subsidized housing and allocated to Singaporean citizens. Thus, foreigners cannot buy HDB apartments. As many as 80% of Singaporeans live in HDB apartments and the property prices significantly lower.
Prices have increased a lot in Singapore in the past decade, it’s not strange as Singapore is self-sustaining, developed, politically stable. It enjoys a great climate and is probably one of the best places to live in the world.
Taxes are high and the government continuously increases stamp duties to reduce the influx of foreigners. Prices are among the highest in the region and new condos can start from everything between SGD 500,000 – 1.5 million.
Even if the Government has introduced cooling measures, trying to reduce the demand on the market, banks such as J.P Morgan anticipate that prices will double by 2030.
Singapore favors its own citizens and has introduced foreign buying regulations since the early ’70s. This is not the case in Hong Kong, where many locals can barely afford own apartments and are forced to pay down payments of 40%.
6 Responses to “How to Buy Property in Singapore: A Complete Guide”
A professional property agent in Singapore will assist you and protect your interest throughout the purchase, secure the offer for you at the best possible price. With a much better knowledge of Singapore, the agent will be in a better position to recommend and advice on the choice of property. He will also ensure that all documents are in order and you are dealing with the rightful owner of the property.
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