Questions from Buyers
“Is it a good time to buy?”
The strong sales market that was fuelled by low interest rates and high equity levels required the government to step in with regular “cooling measures”, which has turned the market into a buyers’ market. Buyers are able to take more of a wait-and-see approach.
The current market is less of an investors’ market and more of an owner-occupiers’ market. Buying is a good option if you can afford it. Investing a monthly rental amount into your own property rather than someone else makes good sense and especially if you are looking at it long term. As an expatriate, how long you reside here usually depends on your employment contract. If you do buy property and have to sell it at short notice, you run the risk of having to offload it at an unfavourable price. If you have the financial holding power to keep the property and sell it at a later time when prices are high, Singapore offers great returns on your investment and is a popular country for property investors for this and other reasons.
“Are there any restrictions I need to know about?”
There are no restrictions against expats purchasing condominiums. However, to buy a landed property (a house with a garden or yard), you must be a Singapore Citizen or alternatively hold Permanent Residence status and receive special approval from the Land Development Authority, with strict conditions attached. Landed properties include bungalows, semi-detached houses, terrace houses and cluster housing. For more information, see sla.gov.sg.
“What kind of deposit do I need to pay, and what are some of the costs I need to keep in mind?”
It’s recommended that you put down at least 30 percent of the purchase price to safeguard yourself against market downturns and possible increases in interest rates. The banks will also look at your Total Debt Servicing Ratio (TDSR) to determine how much you may borrow; a foreigner can usually borrow up to 80 percent of a local bank’s valuation of a property depending on their TDSR.
Allow for additional expenses including maintenance of the property, insurance and taxes. If you live in your property, the progressive tax rate starts from four percent of the annual value of the rental. If you rent it out, the progressive rate starts at 10 percent. Recent government regulations have led to foreigners being charged an Additional Buyers’ Stamp Duty of 15 percent on their first purchase, but for some nationals and PRS this can be waived, so be sure to speak to an expert about the regulations before you commit.
Associated Costs
• Solicitors’ fees
• Mortgage solicitors’ fees
• Transfer fee and stamp duties
• Government department fees
• Transfer and mortgage registration fee
“I’ve found my dream home! What happens next?”
Once you’ve found a property that interests you, confirm its value through a bank and check the Inland Revenue Authority’s website (iras.gov.sg) for the last transaction price of a similar property. Once you and the seller have agreed on a price, you will need to pay a one percent nonrefundable deposit to secure it. You are usually allowed a two-week option period to pay a further four percent, then a further eight to 12 weeks to pay the balance. You should have a lawyer on hand to advise you during this time.