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When I first arrived in Singapore, meeting anyone who had bought property in this tiny city-state filled me with a sense of awe. Surely property prices were out of the normal person’s financial reach? How did any foreigner navigate the property buying laws and market cooling measures designed to protect Singaporean interests?
These successful expat property buyers seemed like demi-gods to me; mythological beings with more property buying power than the rest of us mere mortals.
A decade later and a little less fresh around the gills, I now know that foreigners can buy condominiums without securing PR (Permanent Resident) status first, and that while property prices are undisputedly high, buying a unit in a condominium development is not just the preserve of billionaires.
In fact, the ‘5Cs of Singapore’, Cash, Car, Credit Card, Condominium and Country Club membership, are entirely reasonable aspirations to hold.
That said, buying property in Singapore is not as simple as purchasing a car or getting a credit card. The market is favored towards Singaporean buyers and as a foreign buyer there are legalities to navigate and additional taxes to pay.
In this article, I will demystify everything you need to know about purchasing a condo as a foreigner, and take you step-by-step through the process of getting your foot on the Singapore property ladder.
- The Market
- Singapore Residential Property
- Eligible Types of Foreigner Buyers
- Is It Possible to Buy a Condo in Singapore from Abroad?
- Condo Developers
- Average Condo Price
- Before Buying
- Buying or Renting
- What to Consider When Buying a Condo in Singapore
- How to Find a Condo
- Financing a Purchase
- Buying Procedure
- Taxes & Fees
- After Buying
- Now, on to You
Singapore’s property market is heavily regulated through government measures designed to protect the interests of the everyday Singaporean. These measures are put in place to stop foreign investors flooding the market and putting prices well beyond the reach of the local buyer. These measures mean that foreigners are limited in what they can buy as well as adding an additional layer of tax to the process.
Couple these restrictions with already high pricing and you’ll understand that buying property in Singapore is not for the faint-hearted. Chances are, if you are looking to buy, you are in it for the long game, not simply because you fancy something nice to live in during your expat journey.
According to the CBRE report of 2019 and the Global Property Guide, Singapore ranks as the second most expensive property market worldwide, with the price per square metre for residential property falling between US $14,000 and US $18,000.
For such a small island these are big numbers. The context being that the island is a limited landmass of 721 square kilometers and a growing population contained within it; 5.85 million people and increasing at a rate of just under 1% a year.
Population growth in a restricted area naturally leads to greater demand for housing and price rises as this demand starts to outstrip supply. This environment appeals to investors and speculators who believe they can buy and re-sell prime property quickly.
If left unrestricted, this type of property market increases beyond the means of the average resident. Demand then falls as do bank loans and interest rates and a property crash can occur.
The Singapore Government is quick to ensure that, while some element of property cycle is inevitable, especially in line with the Asian Financial Crisis of 1997 and the Global Financial Crisis of 2007, the overall market doesn’t completely run away from local Singaporeans as a result of foreign investment.
It does this by putting legal and financial measures in place to ensure that locals have preferential means of holding a stake in their own country.
However, don’t let this completely put you off. As a foreigner there are still many opportunities to buy a condo in Singapore, it is just about knowing and understanding the terrain.
Singapore Residential Property
Singapore’s residential property can be most simply split as public vs. private housing.
Public housing is provided by the Housing & Development Board (HDB) and comprises large blocks of flats on estates dotted around the island. These are recognizable by their bright colour schemes and numbers painted on each block, but the real difference is in the quality of property and facilities compared to the exclusive gyms and pools of private condos.
HDBs come in many sizes, from 1-bedroom flats through to executive condominiums.
Private housing is split into landed property and condominiums. Landed property refers to houses, known as bungalows in Singapore, built on land privately owned by individuals. Also included in this bracket are cluster houses, a small group of houses on one land plot with shared facilities. These are also known as ‘strata landed homes’.
Private condominiums are those built by property developers and then sold off as individual units to private owners and investors.
For the purposes of this article we are going to look at the process for foreigners buying these private condominiums. This is because these are the only properties readily available to foreign buyers.
If you are interested in the other types of property, then you will most likely be looking at renting, in which case I suggest you read my other article ‘Renting in Singapore’.
Eligible Types of Foreigner Buyers
Singapore has different regulations for each type of foreigner. Let’s take a look.
In other words, you can have lived and worked in Singapore for 30+ years, pay your taxes and contribute to the community in multiple ways, but unless you have taken PR status, you will still legally be considered a foreigner.
In order to protect local Singaporean’s property purchasing interests, the Singapore Government created the Residential Property Act (RPA) which took effect in 1973 and was further amended in 2005 to place restrictions on what property foreigners can buy, as follows:
- An apartment or private condominium unit
- A strata landed house in an approved condominium development. This approval needs to be sought from the SLA (Singapore Land Authority) before purchase and is heavily reliant on your economic contribution to Singapore.
- A leasehold estate in a landed residential property for a maximum of seven years, again only on receipt of prior approval and again heavily linked to your economic contribution.
- A landed property in Sentosa Cove
Foreigners can only purchase an Executive Condominium in an HDB Block on the re-sale market, and only after the Singaporean owner has held it for ten or more years.
While you may initially be excited to see that you can buy landed property in Sentosa Cove, don’t get excited for too long. Sentosa Cove is Singapore’s billionaire playground. Officially billed as “one of the world’s most prestigious integrated oceanfront marina residential communities”, it is aggressively marketed to foreign buyers, hence there being no restrictions on foreigners being able to purchase here.
Unless you put yourself in the category of David & Victoria Beckham, who reputedly purchased here in 2015 or you have a spare SGD $78 million to buy this current Sentosa listing on Property Guru, you should move swiftly on.
So, to reiterate, for the purposes of this article we are only looking at buying private condominium units, the one type of property which foreigners can buy with no restrictions.
Buying with PR Status
If you are a foreigner who has taken PR status then you are looking at a different set of regulations. The most appealing being that you can now have access, although still not completely unrestricted, to HDB flats and executive condominiums.
You are also able to buy landed property with approval from the Singapore Land Authority.
Buying with a Singaporean Spouse
If you are married to a Singaporean citizen then the landscape changes, as you are able to buy into HDB flats; but the landscape also changes for your spouse and not in a beneficial way.
Singaporeans marrying foreigners have to follow the rules of the Non-Citizen Spouse Scheme, which narrows their options. For example, they are now only eligible for a 2-bedroom build-to-order flat in a non-mature estate, and they have to demonstrate that you, their spouse, meet various visa requirements.
Is It Possible to Buy a Condo in Singapore from Abroad?
Whether you live in Singapore or not at the point of buying is a moot point. All foreigners, regardless of where they live, can buy private condominiums in Singapore.
Condominiums are buildings, or a group of buildings, with multiple residential units and shared common areas and facilities.
In 2018, there were just over 210,000 condos and private apartments in Singapore, according to Statista’s 2018 figures. Within this, there are those condos that have been around for many years, like Lutheran Towers on Farrer Road which was completed in 1974, and brand new builds which are popping up all the time. CBRE’s Real Estate Market Outlook 2020, shows that there were a record 52 new condo launches in 2019.
There are many condo developers operating in Singapore with good reputations for striking design and good build quality. Some of the most well-known include:
Other residential developers include: City Developments Limited (CDL), GuocoLand, Mitsubishi Estate Asia, Bukit Sembawang Estates Limited, Oxley Holdings, MCL Land Limited, Frasers Property, and EL Development.
Average Condo Price
While overall property market fluctuations occur in line with the greater economic picture, prices have risen exponentially since condos were first introduced to the Singapore market back in the early 1970s. Taking a look at historical data on EdgeProp, Pandan Valley, one of the oldest condos in town, saw a low of SGD $180 per square foot (psf) for a 6,114 sq ft unit in 2004, fast forward to 2019 and a mere 1,647 sq ft apartment was rocking a value of SGD $1,488 psf.
Occasionally a condo price falls outside of what would be expected in a strong market. This is due to developer overconfidence. For example, Sky Habitat in Bishan, well away from the CBD, was launched in 2012 with an asking price of up to SGD $1,893 psf, the most expensive condo launch Singapore had ever seen at the time. It was a tough sell and in 2014 it was relaunched with prices dropped to SGD $1,590 psf. However, it is worth noting that it did then jump back to SGD $1,907 psf in 2018 so all was not lost.
Location can also cause prices to vary significantly. Those condos closer to Orchard Road or the CBD will have significantly higher prices psf than those in outer areas. Though be aware on which pricing you are making a comparison with and look at the price per square foot, not overall price.
For example, a 2-bedroom unit at The Sail in Marina Bay is currently on with PropertyGuru for $1,590,000, whereas a 2-bedroom unit at Pandan Valley, further out of town along the Clementi Road will set you back somewhat more at SGD $1,780,000.
But the size of the apartment at The Sail is just 861 sq ft giving a price of SGD $1,846.69 psf while the Pandan Valley unit is considerably larger at 1,173 sq ft bringing the price psf down to SGD $1,517.48.
In addition to location and size of property, the price also fluctuates with proximity to the MRT (Mass Rapid Transit, Singapore’s rail system) and other community and condo facilities and management services. Obviously, the more luxurious and well connected, the higher the price.
It is hard to give an average cost for a condo in Singapore with so many variables, but I was able to find this chart on SingSaver which rounds up prices for different size units in private condos in Singapore as a starting point. Though note that there are no prices psf or actual size and location of units, so it is perhaps not the most useful tool.
Buying is a big commitment and time-consuming journey, so before you embark on it, you might wish to consider a few factors.
Buying or Renting
As a foreigner you can buy a condo in Singapore but you are restricted to buying units in private developments and you will pay more than a local. So, a key question to ask yourself is, am I really looking to buy? This is also a question you should ask yourself early on in your expat foray into Singapore.
Many a time I have had a conversation with a friend who has bemoaned the fact that their initial 2-year posting to Singapore has led to 12 years, and they wish had purchased way back when they first landed.
It doesn’t take long to work out that if you are spending say SGD $8,000 a month on rent for a 3-bedroom apartment in NassimVille, after ten years you have spent just shy of a million Singapore dollars with nothing to show for it. That could have brought you a beautiful 3-bedroom apartment in Parc Canberra which you could then sit on for the next ten years as a nice little property investment and retirement fund.
While the purchasing costs might seem outrageous on first glance, over time the amount you spend on rent is going to feel even more outrageous. You can ship your household items from your home and place it there without having to move it again when you need to find a new place to rent.
The other advantages of buying are that you are then in control of your own finances and won’t have a landlord hiking up your rent every two years because they got greedy.
The flipside? You may not have the money upfront to just drop into a new place. Or perhaps you want to ‘try before you buy’; there is merit in living in different parts of town before committing to a certain condo or area. And of course, renting gives you the ultimate flexibility should you need to leave Singapore ahead of your expected time.
What to Consider When Buying a Condo in Singapore
There are many factors you should consider when buying a condo in Singapore, including:
Singapore may not be a large island but there is still a big difference between the residential areas.
Property agents and websites refer to districts. There are 28 of these, though no-one beyond the property industry really uses these district numbers any more, and many property portals filter based on more common terms such as CBD (Central Business District).
Looking at all the individual districts is another article in itself, so for now I am going to just look at the key areas and some example condos in each. Please note some of these listings may not show if they have been sold after this article is published, but it will still give you a good idea.
CBD / Marina Bay
This is the king of areas in Singapore; the district with the most luxurious and exclusive properties and city access. You have a waterfront, high end shops, good transport, international dental clinics, and are right in the thriving hub of the City and the beating heart of the culture with Chinatown and Little India in close proximity. The downside being that leisure options are mainly limited to tourist attractions, and you are in the thick of Singapore’s only area of traffic congestion.
Notable condos in this area include:
The Sail at Marina Bay, where a 3-bedroom, 1,184 sq ft apartment will set you back SGD $2,960,000 or SGD $2,500 psf.
Concourse Skyline where a cool SGD $3,000,000 will buy you a 3-bedroom,1,355 sq ft apartment. That’s SGD $2,214 psf.
If you really want to hobnob with the high and mighty, then consider The Wallich Residence, where James Dyson apparently spent over SGD $75,000,000 for the Penthouse.
Orchard & Central
Shops, shops, more shops, and some very exclusive apartments too. The wider Orchard area is extremely sought after, not least because it also extends to include those prestigious roads around the Botanic Gardens such as Cluny Road, where incidentally you can also hobnob with James Dyson, as he subsequently spent a further SGD $45,000,000 on a very swish bungalow in the area. The downside to this area being that your wallet might not thank you for the daily shopping hit.
Notable condos in this area include:
Orchard Scotts, well known and loved by expats who use the serviced apartments in this block, and presumably love them so much they end up buying them too. A 3-bedroom, 2,175 sq ft unit can cost up to SGD $3,500,000 or SGD $1,609 psf.
Goodwood Grand, a little further out from the main Orchard area in Balmoral, where you can pick up a smaller 2-bedroom, 775 sq ft unit for SGD $2,150,000. At SGD $2,774 psf you will want to love this small unit a lot.
Gramercy Park, famed for its two curvilinear towers that shoot out of the ground. This award-winning condo development has award-winning pricing too. A 3-bedroom, 2,142 sq ft unit will set you back SGD $6,450,000 or SGD $3,011 psf.
The East Coast is for those looking for a more laid-back, chill vibe. With its expanse of running & cycling tracks running along the beachfront and cool sea breeze, there is definitely a different feel to life here. Its proximity to both Changi airport and the CBD simply increases its appeal for those expats looking for the ultimate life-work balance.
Notable condos include:
The Line @ Tanjong Rhu, where a 3-bedroom, 1,152 sq ft unit currently costs SGD $2,580,000 or SGD $2,239 psf.
Costa del Sol, an older condo with a fantastic underpass straight onto the East Coast Parkway and beach. A 3-bedroom, 1,237 sq ft apartment here feels more affordable at SGD $1,650,000 or SGD $1,333 psf.
I’ve already touched on Sentosa as the billionaire’s playground of Singapore, and it is often quoted as the only area where you can purchase landed property as a foreigner ,but it also has some stunning condos available to buy. If you want sea views and a touch of the glamourous lifestyle, this could be the area for you, but be prepared to dip into your wallet in a big way.
Notable condos include:
The Coast at Sentosa Cove: panoramic sea views in this stunning 3-bedroom, 2,024 sq ft apartment costs SGD $3,500,000 or SGD $1,729 psf.
Seven Palms, Sentosa Cove: if The Coast isn’t good enough for you then how about shelling out SGD $9,500,000 for a highly exclusive 3-bedroom, 2,723 sq ft unit in the Seven Palms development. That’s SGD $3,488 psf!
Woodlands has many merits as an area; it has huge historical significance as one of the major battlegrounds of WWII; it is the main link point to Malaysia, with the causeway bridge into Johor Bahru, and it is the beloved neighbourhood of many an American family seeking the proximity to Singapore American School. Prices drop significantly in this part of town, as it is the furthest point possible from the CBD.
Notable condos include:
Woodgrove Condo: Right beside Singapore American School, a 3-bedroom, 1,184 sq ft apartment comes in at a very low SGD $850,000 and SGD $717 psf.
Rosewood: An older style condo in the heart of Woodlands, again just a 6-digit price for a 3-bedroom, 1,173 sq ft unit at SGD $890,000 or SGD $758 psf.
A huge area which can be broken into many different parts but for the purposes of this article, can be treated as one which is to the west of the exclusive neighbourhoods of the CBD, Orchard Road, and Bukit Timah. The leafy green suburbs of the western areas offer some real gems with space and nature on your doorstep.
Notable condos include:
Guilin View: A high-rise block with sensational views over Bukit Timah nature reserve. A 3-bedroom, 1,280 sq ft unit here can reach SGD $1,170,000 or SGD $914 psf.
Parc Riviera: Down on the West Coast road and with easy access to the Tuas crossing to Malaysia, a 3-bedroom, 904 sq ft condo unit here will cost SGD $1,268,000 or SGD $1,402 psf.
This is a very potted overview and I could go on, but you should get the picture that each area of Singapore has something to offer depending on what you are looking for and price differentials to reflect it.
Do MRT stations have an effect on Singapore property prices? Absolutely. The MRT carries approximately 3.5 million passengers and is a mainstay of Singapore’s transport. Real estate agents keep a close eye on property launches in proximity to MRT stations.
When the addition of the Downtown line was announced in 2007, property prices near to the designated stations rose by as much as 80%. Buying near an MRT station will always be a good investment idea.
New / Old Condo
While CBRE’s Real Estate Market Outlook 2020 shows that new condo sales dominated the private residential property market with 9,912 private units sold in 2019, a 12.7% year-on-year increase, it is not necessarily true to say that new is best. It all depends on what you are looking for.
Old condos in Singapore are renowned for having more space; developers back in the 1970s and 80s didn’t have to worry for space, and buildings were made with larger balconies and rooms to allow for more natural airflow.
Frequently older properties are actually among the more expensive. Prices reflect the varying degrees of space and privacy that an individual property delivers, regardless of age.
The Arcadia is one of the most sought-after condos by expats, simply because it has huge, stunning balconies and the biggest rooms of any other condos I know. Pricing is suitably steep as a result, with a 3-bedroom unit costing up to SGD $3,650,000, despite the fact it was completed in 1979 and is considered far away from Orchard or the CBD, but at 3,174 sq ft in size, it actually makes it just SGD $982 psf.
A similar picture is seen with amenities, whereby they aren’t necessarily the driving factor in price. In fact, most developers assume that if you are buying a condo, you are driving a swish car and don’t need amenities in close proximity. You only have to look at Sentosa to see that condos command the highest apartment prices in Singapore, yet there isn’t even a decent supermarket within easy reach.
Another factor that is considered important in Singapore is the direction in which an apartment faces. Never underestimate the unrelenting glare of the afternoon sun.
South-east facing units are considered the most desirable because they get the morning sun without the afternoon exposure.
Another consideration is light. Many people will choose a double facing apartment, one with windows on two sides because you get double the light, which can help even the smallest of apartments feel larger.
How to Find a Condo
You now have a pretty good idea of what you are looking for and where, so how do you find the condo of your dreams?
There are several excellent online portals that I would recommend as a good starting point:
Property Guru: probably Singapore’s number one property portal. It has a slick interface, good filters, and a useful “find an agent” option.
99.co: a relative newcomer to the property portal market but with a strong line up of properties and some great additional content features.
Oh My Home (OMH): it bills itself as a homeowners listing site, but from what I can see there are plenty of agents listing properties on there as well, giving a good overall selection.
Mogul: another portal, another set of slick images, and more beautiful properties to choose from.
Craigs List: although the layout leaves a lot to be desired, and perhaps if you are looking to spend a hefty sum of money you might want something a little slicker, it does at least throw up options in the resale market, and many agents will be using Craigslist as an additional place for their listings.
Generally, most agents will be listing properties across all the possible platforms, so its unlikely to be the case that you will find your dream property on one and not the other. So I would suggest you pick the portal which you find works best for you.
Most new developments will have purpose-built show rooms that you can visit in person, which are advertised with huge billboards on the surrounding roads. Frequently the developer will also have agents standing around handing out flyers to entice you in.
Developers will also advertise upcoming new property so it is no surprise that if you open The Straits Times or the Business Times, Singapore’s two major newspapers, you are likely to see some property adverts.
However, what you won’t find offline are details of properties on the resale market, so if you’re looking for an older condo, then I suggest you get online.
All sellers have an agent who does the marketing and showing of the property, as well as sealing the deal and sorting the paperwork. Many agents work with specific developers and are the interface between the developer and the buyer.
Even when the developer advertises the property directly on their own website, such as Far East Organization, they will still have an agent dealing with the individual properties.
As a buyer, you don’t have to have an agent but it is highly recommended. They are there to help you find the best property, negotiate the best price, and take you through the paperwork and details of the deal.
Buyer’s agents typically charge around 1% of the agreed-upon purchase price.
A couple of important notes, though, before you rush off to find yourself an agent.
Finding an Agent
Word of mouth is always the best way to find an agent. There are some very good agents who understand a typical expat’s requirements. This is important. I know of friends who have wasted much time being shown around condos that are not even close to what they are looking for because the agent thought they would want the same as a local buyer.
Conflict of Interest
It is not unheard of for some agents to work for both sides as a buyer’s agent and a seller’s agent. They will tell you that they remain impartial and will show you a wide selection of property, but at the end of the day it is in their interest to steer you to one of their own properties. If they are a good salesperson they will do this without you even realising. I have a friend who spent a whole evening with an agent who was helping find her an older style condo. It was only at the end of the evening when the agent had given a long presentation on the benefits of a new build that my friend discovered the agent was actually the agent for a major property developer and was trying to push them into one of their upcoming launches.
One Agent Rule
There is an unwritten rule that you should work with only one agent. Singapore is a small island with a limited pool of both properties and agents. If you appoint two agents, both will end up showing you the same properties and both will find out about the other. By all means if your appointed agent is not working out, end the relationship and start again, but don’t run two agents concurrently.
Financing a Purchase
This is where the fun starts, or the pain; it all depends on the size of your wallet. Buying property is never going to be cheap in Singapore so you want to look at ways to make it more palatable.
Most property sales are subject to some level of negotiation depending on the current strength of the market and how good your agent is. A good agent will be able to guide you as to how many units have sold, at what prices, and therefore whether there is wiggle room or not on your own purchase.
Getting A Discount
Singapore is the land of the up-sell. Barely a day goes by when you don’t buy something, from as small as a toothbrush to as large as a car, where you aren’t offered an up-sell.
Property is no different. Developers may give discounts or reduce prices, but this will be in response to market pressure when there is unsold stock, especially if they know that another property is going to be launched on the market soon. Some developers also offer vouchers, early bird discounts, and even stamp duty reimbursements.
Looking on Property Guru, I could immediately find a discount on a the last unit available in The Avenir. I don’t suggest you go hunting for a discount as a way of starting your property search, but its good to know that you might be able to find one on some properties.
Getting a Loan
All property transactions in Singapore are subject to a maximum Loan to Value ratio (LTV). This is the amount you can finance a purchase through a loan, or mortgage.
As a foreigner, if you don’t already have an outstanding mortgage loan, you can borrow up to 75% of the purchase price. This will drop to 45% if you have another loan already, and down to 35% if you already hold two or more.
Many banks in Singapore will offer loans to foreigners and it is worth spending a good amount of time looking at the different options available to you. The three big local banks, DBS, UOB, and OCBC, are the biggest players in this market and probably the best place to start, but you could also look at the more local banks such as Maybank.
If you are hoping to secure a loan then you need to do the research ahead of finding your property and apply for an Approval-in-Principle (AIP) from your chosen bank.
The AIP will set out how much the bank will loan to you and what your monthly repayments will be. You can’t secure your property until you can demonstrate that you have this in place. The AIP is good for one month, after which you can renew as necessary.
Agent sorted, finance sorted. Next step is a property lawyer.
If you are buying property in Singapore, you will require the services of a local lawyer to draw up the contracts, perform searches, and confirm details on the property and its ownership and any other due diligence that may be required.
A lawyer is especially recommended if you are buying a resale apartment so that you can run adequate checks on the seller and ensure you are not victim to any kind of scam.
Both your bank and your agent may be able to recommend a lawyer to you, but again I would ask around for recommendations from friends.
The buying process and timetable is full of technical terms, but is actually pretty straightforward.
First up, if you are buying off-plan from a developer, there is an initial process and timetable to follow compared to buying a condo that has already been launched or is being resold.
Expression of Interest
Having been to the show room and decided you like the new build enough to buy off-plan, then you can complete an Expression of Interest (EOI) form even though you don’t have a confirmed price. This is handed to the developer along with a blank cheque addressed to the developer’s project account.
The blank cheque will form the 5% booking fee on the property once the prices are unveiled. Submitting this EOI and cheque doesn’t form a legal obligation and will be returned if you don’t proceed with the purchase.
On the official day of the property launch, you visit the show flat and submit a ballot number. When this ballot number is called you can book the condo that you wish to purchase. It is entirely possible that at this point someone else has already snaffled the exact one you had set your sights on. So, make sure you have a backup condo in case.
Property Details Information
On booking your preferred unit, the developer will provide you with a set of Property Details Information (PDI) documents, which will include the floor plans, rules and regulations, and other necessary details. You must read, agree, and sign the terms on all of these documents.
At this point you are ready to jump back into the same process as for those who are buying a resale property or a condo unit in a previously-launched development.
Option to Purchase
On deciding to purchase the property you will submit a fee, generally 1% of the purchase price, in exchange for the Option to Purchase from the seller. This allows a 14-day window in which to confirm whether you are proceeding with the purchase. Within that window you will (hopefully) exercise that option and legally sign the document and forward it to the seller’s solicitor, along with the additional 4% of the purchase price.
For those of you buying off-plan, you have already covered this 5% fee and Option to Purchase when you made the Expression of Interest and wrote a blank cheque.
On receipt of the Option to Purchase you finalise the loan with your bank, who will furnish you with the Letter of Offer, a document outlining the terms under which you are receiving the loan.
At the point of agreeing to this Option to Purchase, check the property and its fixtures and fittings carefully and request any changes or negotiations. These cannot be done once the sale has been completed.
Offer to Purchase
Alternatively, you can skip the Option to Purchase and jump straight to the Offer to Purchase. Terms and conditions are drafted and your 20% down payment made straight away.
Sales & Purchase Agreement
This is the completion of sale document. If you have made an Option to Purchase, this is drawn up and delivered to you within the 14-day window, after which you have a further three weeks to sign and exercise the option. At this point you pay the remaining down payment of 15%, as you have already paid 5% as the exercise fee.
Your lawyer will then draw up the Sales & Purchase Agreement and will arrange documents transferring the title of the property and ensure that the property is registered properly.
Taxes & Fees
I have already touched on the Option to Purchase and Exercise Fee / down payments, but to bring it simply together for you it goes like this.
On buying a property you are legally required to pay at least 20% of the property price in the form of a deposit / down payment. This consists of the 5% Option Fee and 15% Exercise Fee. As a foreigner the full 20% has to be paid in cash.
Buyers Stamp Duty
Within 14 days of completing your sale you must pay Buyers Stamp Duty (BSD). This will be calculated on the purchase price as stated in the Sales & Purchase Agreement, or market value of the property, whichever is the higher amount.
In 2018 the BSD was raised from 3% to 4%. To calculate what you owe you can check on the IRAS (Inland Revenue Authority of Singapore) BSD online tool.
Additional Buyers Stamp Duty
There is an Additional Buyers Stamp Duty (ABSD) which foreigners pay at a different rate to locals. This is one of the cooling measures introduced back in 2011, which I referred to at the start of this article in relation to limiting foreign investment levels.
For foreigners the ABSD rate is 20%, compared to 5% for Singapore citizens or Permanent Residents purchasing their first property, or 15% for their second. There is a major caveat here, if you are a foreign national from Iceland, Liechtenstein, Norway, Switzerland, or the United States, then you pay the same rate as a local.
In addition to the IRAS fees, you will also be liable for legal fees incurred to draw up the sales documents, conveyancing fees, and any other services used. It is worth requesting a quote on these fees prior to commencing with the lawyer’s services.
There is also a Caveat Registration Fee, payable to the Singapore Land Authority (SLA) of SGD $64.65, which your lawyer will generally include in with the conveyancing fee.
On completing your purchase it’s time to consider what else you will need to set aside as budget for your new home.
Home insurance will protect you against unexpected costs incurred to the building or your contents through events such as flood, fire, or theft. There are a huge number of companies providing home insurance. I use NTUC Income but other local providers such as FWD are very good as well, and there are many comparison tools such as this one from MoneySmart to consider your options and pricing.
Condo AGM / Management
As soon as you own a condo unit, you are required to contribute maintenance fees that form the management committee’s budget for works and upkeep to communal areas and facilities. These fees range from SGD $500 through to SGD $1,000 per month.
Obviously on buying your property you will need to furnish it. As to guiding you on a budget for this, well that is an almost impossible feat. I furnished my rented home for next-to-nothing as I bought second-hand items off other expats leaving Singapore, but if I was furnishing my brand new condo, I would definitely feel more house-proud and want to go shopping. There are no shortages of furniture stores in Singapore, so set aside a good budget and enjoy the process.
The same applies to decorating. How swish do you want your new home to be? Decorators in Singapore are cheap in comparison to most countries. It is best to ask around for a recommended decorator as quality of works varies enormously.
It is also possible to secure a renovation loan in addition to your purchase loan. This is limited to 6 months of your income or SGD $30,000, with interest rates ranging from 3% to 5% per annum.
I recommend setting aside an annual budget for maintenance. It is amazing how even the most well-presented condo can throw up problems in the plumbing or electrics. Again, use a recommended contractor.
Renting out Your Condo
Rental yields in Singapore are surprisingly low, between 2% and 3%, so buyers tend to be in the Singapore property market for future resale rather than rental income.
As a foreigner if you receive rental income, don’t forget to factor in personal income tax. If you are working in Singapore and hold an employment pass, these will typically be lower than if you are a foreigner renting from outside of Singapore. You can check interest rates on the IRAS website.
Singapore does not have any capital gains or inheritance taxes, which is great news for sellers, however there is a Sellers Stamp Duty (SSD) which is another cooling measure which the Government introduced to prevent house-flipping. This is at 12% of the property price for sales within the first year after buying. It decreases to 8% on the second year, 4% on the third year, and no taxes from the fourth year and on.
Now, on to You
As I mentioned earlier on in the article, buying property in Singapore is not for the faint-hearted. Prices can be heady and taxes high, but don’t let that put you off. For many expats, owning a property in Singapore is a means of securing their future and having a stake in the city they find themselves now living.
There are some simple top tips to apply whether you are investing in Singapore or any other city.
Do your research. The more you understand the market and the developments, the more rational and logical your decision will be.
Do your legwork. On finding a property you like, check it out from all angles. Visit at different times of day. Walk the route to the MRT. Ask your friends about the area. Know what you are buying.
Don’t over-leverage. The basic rule-of-thumb is, never borrow more than you can afford in monthly repayments.
Don’t panic in a downturn. You may have to hold your breath for longer than you like but the market will bounce back in the next cycle.
Most of all, enjoy it. Buying a property can be a hugely rewarding process and in years to come you will be delighted when you can casually drop into conversation “well, the condo I own in Singapore”.