Singapore is Asia’s financial heart, a city that boasts a sweeping array of exclusive global firms, and a land full of great opportunities. Consequently, many foreigners find it hard to fight the urge of wanting to settle and own a piece of property in the city. Many people find it important to buy properties as a means to start earning some rental income and also become more financially independent in the future. On the other hand, owning property in Singapore as a foreigner is not easy like most people think. You must adhere to strict rules, laws, and regulations, and also seek approval from the government first before you can purchase any Singapore property.
Here’s a quick guide on what foreigners need to know before deciding to invest in Singapore real estate:
Buying property in Singapore
While the process of purchasing properties for permanent residents and citizens is rather straightforward, foreigners have to shoulder an additional set of laws and requirements. Even though the place is frequently regarded as “business-friendly” city, foreigners still can’t directly purchase landed property in the country.
Buying of Landed Properties
Landed properties consist of slop houses, houses cluster houses, bungalows, and terrace houses which are either detached or semi-detached, unlike a condo or apartment. Because of their supersize, spacious space, and a heightened level of privacy, these houses demand a lot of maintenance from the occupant. A Singaporean local can purchase these buildings without any restrictions. But for a foreigner, he or she must first seek authorization from the government to ensure they meet all the requirements needed to own such property.
An application is only approved if you meet the following:
- You must have stayed in the country for a period not less than 5 years and boasts a permanent residency status
- You must be a potential investor or entrepreneur with a substantial contribution to the country’s economy
Buying of Condos
Foreigners who don’t qualify to buy a landed property have the option to purchase a condo. Condos or apartments are easier to buy since they don’t involve any strict regulations and requirements from the government.
Property Tax for Foreigners
Foreigners must shoulder a different tax structure when about to purchase a piece of property in the country. The rates are provided below:
- a) Property tax paid when a tenant occupies the building
10% for the first S$30,000
12% for the next S$15,000
14% for the next $$15,000
16% for the next S$15,000
- b) Rates charged for foreigners residing in the building after purchase
0% for the first S$8,000
4% for the next S$47,000
6% for the next S$5,000
6% for the next S$10,000
8% for the next S$15,000
Different Means of purchasing property in Singapore
The financial aspect will always be a top priority when finding a property to buy anywhere around the world, besides Singapore. On the other hand, some of the fees you should give careful consideration before investing in any Singapore property include:
- Option fee, a small sum given to a seller to hold a unit of choice before entering into a sales and purchase agreement. The fee charged is usually 1%-5% of the buying price
- Stamp Duties
- Deposit upon exercise of the option
- Purchase price
Different Means to Finance a Property Purchase in Singapore
If you belong to the group of people who can’t pay the purchase price of a property in full, looking for other means of finance can come in handy. Some of the frequently sought-after options for funding for property purchases in the country are cash, bank loan, and CPF savings.
Cash – For you to be able to fund your property purchases from your CPF savings, you must first expend a certain percentage of cash towards a specific property. Thus, 20% of the property purchase must be cut in order to get a bank loan and be able to obtain funds from CPF savings.
CPF Savings – CPF Savings are only used on special occasions, and purchasing of property fits perfectly into this category. Funds from CPF Ordinary Account can also be used to service stamp duties, purchase price, legal fees, and to make monthly repayments of bank loans. It’s also important to know any cash withdrawn from CPF savings account must be returned, including the accrued interest.
There’s no doubt more and more foreigners are looking for opportunities to become part of Singapore’s booming real estate business. Purchasing a property in the country is such a big and exciting step, but for foreigners, finding premises to buy can be a challenge. There are strict rules, laws, and regulations to contend with before you can get a green light from the government to own Singapore property. All the same, after having met all the requirements, you’ll find that purchasing your dream home in Singapore can be rather straightforward than you actually think. Simply follow this guide every time to lower your odds and make an informed decision before you even consider investing in any Singapore property.