Can foreigners buy Property in Singapore? Step-by-Step Guide
Singapore has established itself as one of the most popular destination for property investment since early 90’s. Majority of the people who have invested in Singapore property from the earlier days have seen a considerable returns on their investment. There are many reasons to invest in Singapore property more notably;
- Political Stability
- Strong Currency (safeguard against currency depreciation, safe haven to park funds)
- Room for Potential Upside given that the prices are still relatively low compared to some of the established countries (Hong Kong, UK etc)
- Stable Rental Yield/Return given the market is quite stable with low vacancy rates
One of the most common question ask among investors who are keen to invest in Singapore property is, Can foreigners buy property in Singapore? Foreigners are allowed to purchase Singapore property however with some restrictions.
There are 2 different classifications of Property Investment in Singapore – Residential Property and Commercial Property. Let us take a look at some of the restrictions for foreigners;
Singapore residential property includes: HDB, Executive Condominium, Private Apartment and Condominium, and Landed house. HDB is subsidized housing meant for Singaporean and Singapore PR only. It is classed under Public Housing and it is mainly meant for personal stay and not for investment/speculative purposes. There are terms and conditions that Singaporean and Singapore PR need to meet before they are allowed to purchase HDB. Foreigners are not allowed to own/buy HDB.
The next class of residential property is Executive Condominium which is a combination of Public Housing and Private Condominium meant for Singaporean, Singapore PR with restrictions (household income ceiling cannot be above S$14,000). However, Executive Condominiums will be treated as Private Condominiums after 10 years from the time/year the building is completed which foreigners will then be allowed to purchase.
There is no restrictions for foreigners to own Private Apartments and Private Condominiums in Singapore and there is no restrictions on the number of private apartments/condominiums foreigners can own either. Private Condominiums and Apartments form the majority of Private Housing in Singapore. Based on the historical trend of private property prices – it has one of the highest potential returns on investment. In fact, in the year 2017 alone, we have seen more than 20 sites that have successfully been collectively sold to Developers.
Foreigners who have intention to purchase Landed House in Singapore must seek government approval. The ownership is restricted to those who make adequate economic contribution to Singapore. You can apply online at http://www.sla.gov.sg/ldau/
Singapore Commercial Property includes but not limited to shop house, office, hotel, warehouse, factory, shopping mall, and many more. There is no restrictions for foreigners who wish to purchase Singapore commercial property.
Leasehold VS Freehold
There are 2 types of property tenure in Singapore: 99 years leasehold or freehold. HDB and Executive Condominiums are all 99 years leasehold. Private Apartments and Condominiums tenure are mainly 99 years, 999 years or freehold. For leasehold property, the land belongs to the state which lease the property for a fee. At the end of the tenure, the land will be returned back to the government (renewal/top-up subjected to approval and development charge will be incurred). Whereas for freehold, it is held in fee simple or for life. Foreigners are allowed to own Private Apartments and Condominiums of any nature and tenure.
Singapore Property Tax
There are few taxes payable upon purchasing property In Singapore. Buyer stamp duty tax, seller stamp duty tax, yearly property tax, rental income tax, and goods and service tax.
Buyer stamp duty composed of the normal stamp duty (3% – S$5400) for property above S$360,000 and the additional buyer stamp duty of 15% which equals to 18% – S$5400. Under the respective Free Trade Agreement, if you are holding citizenship or permanent residents of Iceland, Liechtenstein, Norway, Switzerland, and United States of America you are exempted from additional buyer stamp duty for your first property.
Seller stamp duty is payable if you sell your property within 3 years from the day you purchased. The rate is 12% on the first year and gradually decrease each year. *Seller stamp duty was only recently revised. It is used to be if you sell your property within 4 years from the day you purchase and the rate is 16% for the first year.
Yearly property tax of residential property depends on the utilization of the property whether is for own use or it meant to be rented out. If is for own use, the tax rate is range from 0 – 12% of the annual value. If the residential property is rented out, the tax rate is range from 10 – 20% of the annual value. Yearly property tax rate for commercial property is at 10% of the annual value.
Annual value is estimated gross annual rent of the property if it were to be rented out , excluding furniture, furnishings and maintenance fees. It is determined based on estimated market rentals of similar or comparable properties.
Rental income tax rates payable is the net rental income after deducting all the expenses such as interest on the mortgage, agent commission on securing first tenant, maintenance fee, property tax, and many more other claimable expenses. The net rental income tax rate is 20% for foreigners, the rate will increase to 22% starting from Year of assessment 2017.
Goods and service tax in Singapore is 7% and it is payable for individual who purchase Singapore commercial property if the seller is GST registered individual/company.
Many local and foreign investors have already made staggering amount of profit by investing property in Singapore and yet there are also many who have regretted because they did not buy and missed the profit. So the question now is not whether Can foreigners buy property in Singapore? Rather it is whether this is the right time to invest? 2018 will be a good year for Singapore Property Market as we are seeing a reverse trend of the property prices. Property Prices are edging up and with the supply dwindling, property analysts are forecasting a 3-8% increase in the property prices in 2018.
One thing that we know for sure is that Singapore Economy and Singapore property market will continue to grow along with the better infrastructures (new MRTs, Highways, Regional Centres), political stability, easy of doing business, low unemployment rate, migration policies and jobs creation.
Feel free to contact us if you wish to purchase property in Singapore. Please like our facebook page@Investintproperty.com to keep yourself updated on future property articles and news.
Step-by-Step Guide to buy property in Singapore (applicable to both local and foreign investors)
- If you need a loan for your property investment, get your loan assessment done first. So that you know your finance better. This is to protect yourself and at the same time this will ensure that the buying process will be smooth sailing. Your property agent should be able to help you link up with the mortgage specialist.
- Once you have a detailed financial plan, discuss your property type, location, and any other specific requirements you have with your property agent.
- After you have shortlisted the projects/developments that you prefer, arrange to view the showflat for assurance and confirmation.
- If everything is good, proceed with the booking of the unit – typically 5% of the purchase price for building under construction and 1% for TOP Projects.
- At the same time, you can engage a law firm to advise and to safeguard your interests as a buyer.
Hope you enjoy reading – “Can foreigners buy Property in Singapore”. You might also be interested to read more about the Top 5 Best Selling Singapore Condos in 2017.
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Disclaimer: This article is meant for research and educational purposes only. All information, especially property ownership laws, are subjected to changes and no responsibility shall be held on the accuracy. All sorts of property investments can be risky and investors are expected to perform their own due diligence before committing into any purchase.