Let’s say you’re a foreigner in Singapore and you’ve been working here for a couple of years now. For accommodation, you’ve been renting a place.
You envisage working here for the foreseeable future, so now you’re asking yourself if you should continue renting or is buying a place of your own a more pragmatic move.
After all, rent doesn’t come cheap and, at the end of the day, the place is still not yours. You’ve also been saving up, and in your mind, real estate is a fairly good and stable investment as compared to more volatile financial instruments like stocks and mutual funds.
So, exactly what type of residential property can you buy as a foreigner? Can you buy an HDB flat like most of your Singaporean friends are doing, or is that off limits to you? In this article, we’ll try to answer the common questions foreigners ask about property ownership in Singapore.
But before that, let’s define foreigner. As far as Singapore real estate is concerned, anyone who doesn’t hold a pink IC (i.e. a Singaporean) is a foreigner. The blue IC (i.e. a Singapore permanent resident) doesn’t count. This is when we’re talking about individuals.
As for non-individuals, the entity is deemed as foreign if it’s not a Singapore company, a Singapore limited liability partnership or a Singapore association.
1. Can a foreigner buy an HDB flat?
Yes and no.
First of all, let’s clarify that HDB also includes ECs (executive condominiums) because the Housing Development Board (HDB) develops those too.
Close to 8 in 10 Singaporean residents live in HDBs
Next, let’s say you’re a Singapore Permanent Resident (SPR). If you want to buy an HDB on your own, the only type that is available to you is a resale EC that has reached its 5-year Minimum Occupation Period (MOP).
If you are an SPR aiming to buy other types of HDB property, you have to co-buy with a Singaporean, another SPR, or a non-SPR. This comes under the spouse, fiancé/fiancée or siblings schemes. The rules differ according to which of the three it is. In other words, an SPR cannot buy an HDB flat as an individual buyer.
Wait a minute. What is a privatised EC? Because ECs, as we said, are developed by the HDB, they are essentially public housing. But when ECs cross the 10-year mark, they become privatised.
Okay, so what if you are a non-SPR? If you are a non-SPR, you can only buy a privatised EC that is over 10 years old.
2. Can a foreigner buy a condo?
Most definitely, yes.
Whether they are freehold or leasehold, condos are private properties that do not entitle its buyers to government subsidies and grants that HDB offers, and hence, condos are available to both Singaporeans and foreigners.
However, condos are way more expensive than public housing, though they come with such luxuries as swimming pools, gyms, tennis courts and the like.
Swimming pools and other lifestyle facilities are a common sight in Singapore condos
3. What else can (and cannot) a foreigner buy?
In Singapore, we have the Residential Property Act that separates properties into two categories: restricted and non-restricted.
For restricted properties, foreigners must first seek the approval of the Land Dealings Approval Unit (LDAU) to own one.
A unit under the Singapore Land Authority (SLA), the LDAU grants its approval on a case-by-case basis depending on whether the applicant has been an SPR for at least 5 years, has made exceptional economic contributions in Singapore, and how much his taxable income is.
Below are the types of residential property foreigners cannot buy on the main island of Singapore without first seeking approval from the LDAU:
- Vacant residential land
- Terrace/semi-d/bungalow house
- Strata landed house which is not within an approved condominium development under the Planning Act (e.g. townhouse or cluster house)
- Shophouse (for non-commercial use)
- Landed property on Sentosa Cove
Coveted beachfront homes in Sentosa Cove
Having discussed the types of restricted property, here is the list of unrestricted residential properties which approval from the LDAU is not compulsory:
- HDB flats
- Condominiums
- Strata landed houses within an approved condominium development
- Leasehold estate in a landed residential property for a term not exceeding 7 years, which includes any further term that may be granted by way of an option for renewal
For non-residential properties, foreigners are free to purchase commercial properties like offices, mall shop lots, shophouses for commercial use, HDB shophouses, and even hotels.
However, HDB flats/shophouses and ECs are subject to the Housing Development Act, which we discussed in detail in Question 1 above.
4. Do foreigners pay more when buying a property?
Yes.
Foreigners pay like everyone else for the properties they intend to buy. But, foreigners pay more in terms of taxes.
Singapore is but only a tiny island, which makes it necessary for the government to enact laws to safeguard the interests of its citizens and prioritise its citizenry’s needs.
BSD and ABSD are the two main taxes that all property buyers (citizen and foreigner) will come across when buying properties in Singapore. And if you’re taking up a loan, there’s also the Mortgage Duty of 0.2% to 0.4% payable on the loan amount, subject to a maximum duty of $500.
- Buyer’s Stamp Duty (BSD)
- Additional Buyer’s Stamp Duty (ABSD)
BSD applies to all properties (residential, commercial, industrial) and everyone pays the same BSD according to the table below:
Note: Based on figures given after Budget 2018
ABSD applies to only residential properties and it is applicable to everyone, but at different percentages.
For ABSD, citizens and permanent residents of Iceland, Lichtenstein, Norway, Switzerland and the USA are not considered as foreigners, thanks to certain free trade agreements signed by their governments with Singapore. As such, the European Free Trade Association (EFTA) allows these nationals similar property ownership privileges as Singaporeans.
Here are the latest ABSD rates effective 16 December 2021:
SPRs are subject to the above rates regardless if they own the properties by themselves or co-buy with others.
Besides these taxes, property buyers have to take heed of the following fees too:
- Legal fees (from a few hundred up to a few thousand)
- Real estate agent’s commission
- Registration fees
- Maintenance fees
So, if you are a foreigner eyeing say a million-dollar condo, the sum that you pay in terms taxes and fees alone would set you back at least a cool $341,800! And we haven’t talked about housing loans and furnishing your new home yet. Maybe renting isn’t that bad an idea after all.
Gosh! So much to pay in taxes and fees alone?
5. Do foreigners pay more when selling a property?
No.
Let’s say you’re not sure if you’ll be putting down roots in Singapore. As someone who always think ahead, you ask yourself these questions. What if I want to sell my property? Am I subject to even more taxes and fees as a foreigner?
It doesn’t matter if you’re a Singaporean or a foreigner; you have to pay the Seller’s Stamp Duty (SSD) if you sell your property before the 3-year holding period. This rule is effective for residential properties purchased on or after 11 March 2017.
It is one of the many measures taken by the Singapore government to cool the property market, and to discourage property flipping i.e. making a quick profit from buying then quickly selling off the property.
The above SSD rates apply to private properties such as condos and landed houses.
If you own an HDB flat, your Minimum Occupation Period (MOP) is 5 years.
6. Can foreigners apply for a housing loan in Singapore?
Yes.
Just like Singaporeans, foreigners who wish to apply for bank loans need to have good credit standing. If you are based overseas but working for a Singapore company, you will need to be able to show proof of income and net worth. The same applies if you are self-employed.
Besides the above proofs, you have to standby copies of your passport, NRIC, and the property’s Option to Purchase (OTP)/Sales and Purchase Agreement (SPA).
As loan rates vary from bank to bank, it’s wise to talk to a few before you decide
You may refer to our article on the Total Debt Servicing Ratio (TDSR) to understand typical loan matters and jargons such as the Loan-to-Value (LTV) ratio, stress-test interest rate and more.
7. Do foreigners need a property agent to buy a property in Singapore?
Yes and no.
If you have been in Singapore long enough and feel confident to handle things on your own, then by all means, walk this property-buying journey on your own.
But buying a property, whether in Singapore or not, and whether you’re Singaporean or not, is not for the faint-hearted. There’s a lot to consider and take care of.
If you are a busy executive with little free time to spare, the agent will handle the nitty-gritty stuff of liaising with authorities, bankers and lawyers, just to name a few, on your behalf.
Besides that, a good property agent will have real-time information, such as up-and-coming launches and insider’s information, which he/she can share with you.
Relax… let a property agent take care of the small (but important) stuff for you
With all things considered, for many people, the property agent commission is well worth it. So, ponder upon whether you want to DIY or not.
And alas, if you find yourself stuck in a rut even after weighing all possible options, you may need a professional’s opinion. In this case, schedule a visit with us or book a free consultation with our trusted and renowned representatives.
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