Singapore’s one of the most expensive cities in the world to live in, but there’s plenty going for it━low taxes, year-round summer, and it’s a super safe country to bring up your kids in. If you’re a foreigner who’s thinking of moving to Singapore and buying a place, there’s a bunch of stuff you need to know ahead of making that purchase.
For starters, public housing, AKA HDB flats, are out of grasp; you have to be Singaporean or a Permanent Resident to own one. So you’d probably be looking at buying a condominium unit, or condo for short. Here’s all you, as a foreigner, need to know before buying a condo in Singapore.
Can foreigners buy property in Singapore?
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The short answer is yes, foreigners can buy property in Singapore. However, as mentioned above, you’ll only be able to purchase a private, non-landed home, AKA condo, for the most part. Otherwise, you’ll need an approval from the Singapore Land Authority (SLA) to buy a landed home, a privilege that’s rarely granted.
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In short, as a foreigner, your buy options are limited to only new launch and resale condos. However, buying a new launch condo would likely entail a waiting period of up to 5 years after it’s been launched.
If you can’t play the waiting game, resale condos are a better option, since they’re likely to be already ready, or almost. Plus, you’ll be able to see the unit IRL, including the size, layout, view and surroundings before you make up your mind. That way, you’ll know exactly what you’re getting.
60% ABSD on property price
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In addition to the standard buyer’s stamp duty, out-of-towners will need to fork out a chunk of money for the additional buyer’s stamp duty (ABSD). At point of writing, this is 60% of the condo purchase price, and must be paid within 14 days of you signing the Agreement for Sale and Purchase.
For example, if your condo costs $1m, be prepared to hand over $600,000 in ABSD on top of the standard levy that’s taxed, based on a tiered structure. This alone increases the all-in cost that you, as a foreign buyer, need to bear. This is before considering other expenses such as conveyance and legal fees, ongoing tax, mortgage documentation costs, and monthly maintenance bills.
Generally speaking, foreigners are not qualified for ABSD remission and refunds. However, if you’re from countries listed on the Free Trade Agreement, such as the USA and Switzerland, you may be able to dodge the ABSD bullet on your first home purchase.
Restrictive financing options with high cash downpayment
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Like locals, foreign buyers can also get up to 75% Loan-To-Value (LTV) for their first mortgage. That is, if the loan tenure is 30 years or less, and your age plus the length of the loan do not exceed 65 years. In a nutshell, the LTV limit determines how much money you can borrow from the bank to fund your flat purchase.
But here’s the kicker: unlike local buyers, who can use their CPF to offset the remaining 25%, you are required to pay for the rest in cash. Now, add that to the double stamp duties and mountain of fees, and you’ll be looking at a pretty large upfront cost.
Given the hefty downpayment, banks will scrutinise your income and examine your credit assessment with a fine-tooth comb prior to approving your bank loan. Plus, your overall monthly debt obligations, including the new property, will also need to be less than 55% of your gross monthly income in order to gain mortgage approval.
Strict rental policy with additional costs
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If you’re buying a home as a smart investment opportunity in order to generate income, do take note of the strict rental policy and additional costs.
In Singapore, the minimum tenancy period for private condos is three consecutive months. Anything below that is illegal and will incur a fine. You’re also only able to rent your residence out to long-term pass holders, such as those on Employment or Dependent Passes. Subletting without consent is a violation, and so is overcrowding beyond approved occupancy.
Some MCSTs also impose their own set of rules which restrict corporate leases, the maximum number of units you can rent out, and minimum lease duration.
As a landlord who’s a foreigner, renting out your property entails shelling out a non-owner-occupied tax, on top of everything else you’ve paid. This amounts to 24% of the net rental income, is separate from other compliance fees, and means you pocket less money each month.
Seller’s Stamp Duty
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Of course, you might decide to sell your condo in time, but there are some rules you have to take note of.
For starters, you’ll be charged a seller’s stamp duty if you flip your flat before the 3-year holding period is up. The tax amount can be up to 12%, depending on how soon you resell your condo. Heads up: the 60% ABSD that you previously paid is non-refundable, so this is a separate tax that you’ll have to pay.
On top of that, you’re likely to attract a smaller pool of local buyers given the price you’ll be looking to sell your condo at. Unpredictable exchange rate movements can also affect your real returns if you repatriate funds in your own home currency. Add in the local conveyancing lawyers’ fees and real estate agent commission, and you might really want to give this some serious thought.
Step-by-step of buying a condo
If you’ve made it this far without bailing on your choice, congratulations. Then comes the process of buying the condo, which we will take you through below:
1. Pick a condo based on location & lifestyle
At some point, you might feel like you’re drowning in PropertyGuru tabs looking at pictures of homes, and want to call it quits. It’s important that you carry on.
Condos in Singapore are a dime a dozen, and you’d want to curate a list that covers all the bases. Decide on your budget, think about your lifestyle and long term goals, then pick a location and filter by size and price.
2. Engage a real estate agent
The property market in Singapore is a complicated ladder to climb. That’s why you should engage real estate agents who can hold your hand through the entire process.
They’re the best people to advise you on neighbourhoods, condo developments, and all the fees you’ll have to pay, as well as help you arrange for viewings and negotiate prices. If you can’t view the units in person, they can host virtual showings too.
Needless to say, you’ll want to look for a reliable and trustworthy agent who’ll work in your best interests, so we’d recommend asking around and having a vibe check before committing to anything.
3. Make an offer & pay option fee
Once you’ve found your dream home and agreed on a price with the seller, you’ll need to pay an option fee of 1%. The Option to Purchase (OTP), which is issued by the seller, is valid for 14 days while you complete the legal and financial checks.
4. Appoint a conveyancing lawyer
Apart from the real estate agent, you’ll want to get a conveyancing lawyer too. These professionals will be able to scrutinise contracts, conduct title searches, handle stamp duty payments, manage fund transfers, and register the property under your name━basically all the legal work that will ensure you actually receive ownership of the flat.
5. Exercise the option & pay balance deposit
When all that has been checked out, you’ll need to sign the Sales and Purchase Agreement, whereupon you have to pay the balance deposit of 4%. At this stage, you’re legally bound to the property, and you’ll face a loss of deposits, and potential legal issues as well.
6. Pay buyer’s stamp duty & ABSD
The outward movement of cash continues with the buyer’s stamp duty and ABSD. Both are required to be paid in full within 14 days of signing the Sales and Purchase Agreement. This deadline is 30 days long if you are signing the contract overseas.
If you have appointed a lawyer, all matters related to payment can go through them.
7. Complete condo purchase
Congratulations, you’ve secured your home. At this stage, if you’ve bought a resale condo, you’d be able to settle the balance payments, collect your keys, and move in stat.
However, those who have gone with new launch condos would have to wait for the building to be completed, and the Temporary Occupation Permit (TOP) to pass before you can collect the keys.
Things foreigners need to know before buying a condo in Singapore
Perhaps you’re buying a property as a long-hold investment piece. Or, maybe you’re securing a space for a long-term move to Singapore. Whatever the reason might be, ensure you have carefully read through this guide and equipped yourself with all the important information you’ll have to bear in mind before buying a condo in Singapore as a foreigner.
For more condo news:
- How much money do you need to afford a condo in Singapore?
- Condos in the East within 5-minute walking distance to MRT station
- Cheapest 3-bedroom condos in Singapore
Cover image adapted from: TheSmartLocal
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