Singapore’s stable political climate and reputation as a global business hub has resulted in a resilient real estate market despite the on-going pandemic and economic uncertainties. Not only are locals buying up properties, foreigners too are looking at Singapore as a very attractive place for property investments. In 2019, before the COVID-19 pandemic hit the world, foreign homebuyers made up almost 20% of all private home sales in Singapore.
According to the Singapore Land Authority (SLA), a foreign person means anyone who is not any of the following:
Singapore citizen
Singapore company
Singapore limited liability partnership
Singapore society
Type of Properties
As per the Residential Property Act, foreigners are allowed to buy the following real estate without any restrictions:
Condominium unit;
Flat unit;
Strata landed house in an approved condominium development;
A leasehold estate in a landed residential property for a term not exceeding 7 years, including any further term which may be granted by way of an option for renewal;
A landed property on Sentosa;
Shophouse (for commercial use);
Industrial and commercial properties;
Hotel (registered under the provisions of the Hotels Act); and
Executive condominium unit, HDB flat and HDB shophouse (depending on HDB eligibility guidelines)
Below are several types of properties that a foreigner must seek approval from the SLA if they are keen to invest:
Vacant residential land;
Terrace house;
Semi-detached house;
Bungalow/detached house;
Strata landed house which is not within an approved condominium development under the Planning Act (eg. townhouse or cluster house);
Shophouse (for non-commercial use);
Association premises;
Place of worship; and
Worker’s dormitory/serviced apartments/boarding house (not registered under the provisions of the Hotels Act).
Fees
Buyer's Stamp Duty
Buying a property in Singapore is subject to several taxes and that applies to foreign buyers as well. The first tax is Buyer’s Stamp Duty (BSD). BSD is calculated at 1% of the first $180,000 of the purchase price, 2% for the next $180,000, 3% for the next $640,000 and 4% for the remaining of the purchase price.
Additional Buyer's Stamp Duty
Foreigners are required to pay an Additional Buyer's Stamp Duty (ABSD) of 20% regardless of the the number of residential properties purchased. That means if he is purchasing a 2 million dollar property, the ABSD payable will be $400,000.
However, under the respective Free Trade Agreements (FTAs), nationals of the United States of America, nationals and Permanent Residents of Iceland, Liechtenstein, Norway and Switzerland will be accorded the same Stamp Duty treatment as Singapore Citizens. That means they do not have to pay ABSD for the first property purchase. They will have to pay 12% for the second property and 15% for the third and subsequent properties.
Seller's Stamp Duty
Seller’s Stamp Duty (SSD) is payable on all residential properties and residential lands that are acquired on or after 20 Feb 2010. If you sell the property within the first year of buying, the SSD is 12%. If you sell within the second year, the SSD is 8% and if you sell within the third year, the SSD is 4%. There is no SSD payable if you sell from the fourth year onward.
Loans and Mortgages
Foreigners can apply for mortgages in Singapore and you can get financing of up to 80% for the first property purchase and 60% for the second property onwards.
There are two types of loans that you can opt for when taking a home loan: Fixed Interest Rates or Floating Interest Rates. A fixed interest rate is usually priced at a premium as the rate will remain unchanged over a specific period, whether SIBOR is up or down. Floating interest rate changes according to the rise and fall of SIBOR.
However, you will need to take note of the Loan-to-Value (LTV) ratio. In a bid to prevent speculation on the property market, the Singapore Government introduced LTV to limit the maximum amount property buyers can borrow. The LTV ratio is typically 75% for a first home loan and depending on age and the tenure of the loan, it can be as low as 55%.
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