How Can a Foreigner Buy a Condo in Singapore?
Known for its political stability, transparency, good governance, ease and efficiency of doing business, Singapore is a popular country for foreign investments. Hence, foreigners do wonder how can they buy property in Singapore.
The short answer is yes, foreigners can buy property in Singapore. But if you’re wanting to buy a house, that might be a good option if you are staying for more than three years. With the money invested in an appreciating asset, you would save more than, as they say in Singapore, coffee money in the long run.
But as a non-Singaporean, where do you get started and what are the rules for foreigners buying property in Singapore? Here’s a quick guide on what to look out for when you buy property in Singapore as a foreigner.
When are You Considered a “Foreigner”?
As states in the Singapore Land Authority, a foreigner is any person who is not a Singapore citizen, part of a Singapore limited liability partnership, Singapore company, nor a Singapore society.
The Difference Between Restricted and Non-Restricted Property
We’ve already touched upon the question, “can foreigners buy property in Singapore?” but “can foreigners buy HDB flats?”
To know the answer to this question, it’s best to decide first if you’re buying a residential or non-residential property. The residential property in Singapore can be restricted or non-restricted. Typically, foreigners encounter more taxes and restrictions for residential property ownership.
There are restrictions when purchasing a landed or restricted property in the heart of Singapore. As such, you are required to write to the Land Dealings Approval Unit when thinking about buying the following:
- Residential Land
- Terrace House
- Semi-Detached House
- Strata Land
Strata landed house which is not inside the range of an approved condominium development under the Planning Act (e.g. cluster house or townhouse)
Other properties like serviced apartments/worker’s dormitory/ boarding house that is not registered under the provisions of the Hotels Act are also part of the restricted property.
Under the Residential Property Act, a foreigner can purchase both private housing and public properties. However, you cannot own and buy restricted or landed properties, except for properties in Sentosa.
According to the Singapore Land Authority, each foreign applicant stands a better chance if they can present proof that they have made an “exceptional economic contribution to Singapore.”
To explain this further, applicants, in general, will be appraised on a case-by-case basis, taking into account, including but not limited to, whether the foreign applicant has made an exceptional economic contribution to Singapore and whether the foreign applicant has been a permanent resident of Singapore for at least 5 years. The economic contribution is assessed through the consideration of the foreign applicant’s assessable tax and employment income in Singapore.
Keep in mind Sentosa Cove is an exception, as it is intended for foreigners to buy landed properties in the area. Numerous foreigners get approval to own a landed property in Sentosa Cove in just 48 hours.
Non-Restricted properties, which include most commercial property types can be owned by a foreigner as simply as a Singapore citizen. If you plan to own a piece of Singapore, as a foreigner, the following do not need approval for purchase under the Residential Property Act.
- Condominium Unit
- Flat Unit
- Strata Landed House in an Approved Condominium Development
- Leasehold Estate
- Executive Condo after Privatisation
While there may be restrictions when buying property in Singapore, there are also some property types that foreigners are eligible to purchase. These include:
A Non-Singapore Permanent Resident (SPR) Buying Alone
You can only purchase a private executive condominium (EC) that is more than ten years old.
A Non-Singapore Permanent Resident Buying with an SPR
- A resale executive condominium unit that is more than 5 years old
- A privatised executive condo unit that is more than ten years old
Jointly Buying as a Non-SPR Couple
A privatised executive condo that is more than ten years old.
A Singapore Permanent Resident Buying Alone
Besides new HDB flats, Singapore Permanent Residents cannot purchase HDB flat or resale flats alone, and can only purchase resale ECs that have reached their five-year Minimum Occupation Period (MOP).
Singapore Permanent Resident Buying with Another SPR
- A resale HDB flat-three years after acquiring your Permanent Residency
- A resale executive condo that is more than 5 years old
- A privatised executive condo is more than ten years old
Stamp Duties for Foreigners in Singapore
For all sellers, regardless of whether you’re a Permanent Resident, Singapore Citizen, or a Foreigner in Singapore, the following Seller Stamp Duties (SSD) apply.
The idea of the SSD is to prevent speculators from flipping and purchasing the house in a short timeframe. To overcome this hurdle and make a profit with a purchase, you need the value of the property to go up by more than 4 per cent p.a.
- If you sell within one year, you pay 12 per cent of the market value or actual price, whichever is higher.
- If you sell within two years but more than one year, you pay 8 per cent of the market value or actual price, whichever is higher.
- If you sell within three years but more than two years, you pay 4 per cent of the market value or actual price, whichever is higher.
For foreigners buying property in Singapore, you’ll also need to pay additional stamp duties on your residential property purchase. These include:
Buyer Stamp Duty (BSD)
The Buyer’s Stamp Duty (BSD) is a tax levied on all purchasers regardless of nationality who bought any property and it is dependent on the market value or purchase price of the property (the ‘Base’). Generally, the costlier the property market value or purchase price, the higher the BSD Rate.
All property buyers can pay their BSD in the following manner of calculation. This is updated to reflect the 2018 policy change.
- 1 % on the first SGD 180,000
- 2% on the next SGD 180,000
- 3% on the next SGD 640,000
- 4% on remaining amount
A faster way to calculate BSD is to use the following formula.
- For houses below SGD 1 million, use “higher of market value or purchase price” multiplied by 3% – SGD 5, 400.
- For houses above SGD 1 million, use “higher of market value or purchase price” multiplied by 4% – SGD 15, 400
In addition to the BSD, Permanent Residents (PRs) need to pay stepped up rates of five to ten per cent of the higher market value or purchase price while foreigners need to pay a flat 20 per cent of the higher market value or purchase price.
Additional Buyer Stamp Duty (include rates for SPR and Non-SPR)
As a foreigner buying property in Singapore, you also have to pay an added stamp duty in the form of the Additional Buyer’s Stamp Duty (ABSD). This is an added tax of 25% of your property price. This is payable within 2 weeks of accomplishing the Sale and Purchase Agreement of any property. The ABSD is only applicable to the following property buyers:
- A Singapore citizen who already has ownership of a residential property and pleases to obtain another;
- A Permanent Resident (PR); or
- A foreigner.
Essentially, the Additional Buyer’s Stamp Duty (ABSD) impacts everyone except Singapore Citizens who are purchasing their first property. Foreigners are required to pay the ABSD when purchasing private property in Singapore. Singapore Permanent Residents purchasing their first residential property will have to pay an ABSD rate of 5 per cent and 15 per cent for their second and subsequent residential property. Meanwhile, foreigners are required to pay an ABSD of 20 per cent regardless of the number of residential properties bought.
Yet, if you do not own any residential property and you are a foreigner or Permanent Resident married to a Singaporean Citizen, the ABSD will not be chargeable. As a married couple, it can also be refunded if you are shifting residential properties. However, the first ABSD-paid property must be sold within six months after the Temporary Occupation Permit; or date of purchase of the second property (if completed), whichever is earlier.
Nationals of the United States of America, Liechtenstein, Switzerland, Iceland, and Norway will be granted similar tax treatment as Singapore Citizens because of the Free Trade Agreements signed with the European Free Trade Association and the United States of America.
The agreement makes it that listed nationalities will not be charged ABSD on their first residential purchase. The ABSD will be charged on their second, third, and subsequent purchases at 12 and 15 percent respectively. Except for the Sentosa Cove waterfront Bungalows, the Remission for ABSD only applies to Non-landed Private Housing.
Can Foreigners Apply for Home Loans in Singapore?
Yes, foreigners can apply for home loans in Singapore. In fact, Singapore is a country that permits capital to flow significantly freely, so you should not have an issue securing a Singapore dollar-denominated loan here. The three big local banks – UOB, DBS, and OCBC command a huge proportion of the market. Loans often come in the form of a floating or fixed format.
The floating rate home loans are typically pegged to SIBOR rates, with various banks stacking on a spread on top of the SIBOR rates along with different lock-in periods. Some other loan provides include HSBC, Maybank, CIMB, Bank of China, Hong Leong Finance, RHB, Singapura Finance, Alliance, ICBC, SBI, Standard Chartered, ANZ, and Citibank.
Regardless of the institution that offers the loan, each foreign applicant must possess an excellent credit standing to be granted a loan. Onshore foreigners must have a good credit score as a bad score may result in unnecessary delays, whereas offshore foreigners must be able to present their net worth and proof of income.
Therefore, preparation of the latest certified true copy of your notice of assessment and proof of income is of the essence. For self-employed individuals, a net worth statement and proof of earnings must be provided. Additionally, an identification card, passport copy, and the property’s Sales and Purchased Agreement or Option to Purchase should be prepared as well.
Other factors to think about when applying for a loan is the Loan-to-Value (LTV) Ratio and the In-Principal Approval.
The In-Principal Approval is provided by the bank and states the tenure of the loan and the maximum amount. Foreign applicants can enjoy a tenure of up to 35 years for freehold properties and 75 years for leasehold properties.
The LTV Ratio is the amount of mortgage loan foreigners can apply for and is dependent on the market value of the property. Without an existing mortgage loan, it is likely to take up a home loan of about 75% of the property’s purchase price. However, if the applicant has an existing mortgage loan(s) the amount reduces to 45% for two existing loans and 35% for three or more existing loans.
Can Foreigners Apply for Mortgages?
Yes, foreigners can apply for mortgages. It should be noted that there are limits on the mandated minimum cash down payment and on the Loan-to-Value (LTV) Ratio.
The LTV Ratio is typically 75% for a first home loan but depending on the tenure of your loan and your age, it can be as low as 55%. The cash downpayment needed is usually 5% but, similarly, it can be as much as 10%. It is no surprise that the LTV is lower and downpayment higher on second and subsequent mortgage loans.
While not required, it is probably advisable to have a real-estate agent on your side to negotiate and assess the price, as well as to navigate the fees, taxes, and paperwork. Typically, buyers’ or real-estate agents will charge a fee of about one per cent.
Regardless of whether you are a seasoned investor who is already knowledgeable on how to buy property in Singapore or a new landlord, good judgement and business acumen is necessary for assessing a property prior to its purchase. However, the mind-boggling amount of information on the internet may be dismaying, especially if you’re a foreigner planning your first property purchase in the Lion City.
We hope this guide has helped you with your decisions and plans of purchase. But with the guidance of a real estate professional who has in-depth knowledge and a wealth of experience in the local property market, you can make a sound decision today.
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