Deborah Law talks about purchasing property here as a foreigner.
Since the 70s, the Singapore government has imposed restrictions on foreigners purchasing private residential property. The idea is to keep property affordable for Singaporeans, so that they can acquire a stake in their own country, while at the same time also allowing foreign talent, which makes an economic contribution to Singapore, to purchase property for personal occupation.
What kind of property is subject to restrictions?
Restrictions apply to the following:
• Vacant residential land
• Landed property, including detached, semi-detached and terraced housing
(including linked houses or townhouses)
• Landed property in strata developments that are not approved condominium developments under the
Planning Act. Cluster housing such as Binjai Crest and The Teneriffe fall into this category.
Townhouses, semi-detached houses and bungalows can be found, albeit rarely, in condominium projects such as Casabella and Duchess Crest; foreigners do not require special approval to purchase these.
Foreigners can purchase both freehold and leasehold properties. Although you are free to purchase apartments and condominiums without special permission, you do need permission to purchase all the units in a particular condominium or apartment block.
The maximum area of vacant residential land that foreigners can purchase is 15,000 square feet. Anything bigger than this constitutes a “good class bungalow”, and these are subject to conservation.
Who is regarded as a foreign person?
Anybody who is not a Singapore citizen, a Singapore company, a Singapore limited liability partnership or a Singapore society is defined as a foreign person.
Who gives permission for a foreigner to purchase property that is restricted?
Permission to purchase must be sought from the Land Dealings Approval Unit under the Singapore Land Authority (SLA). Application forms can be found online at https://www.sla.gov.sg/htm/ser/ser0307.htm#d. A non-refundable application fee of $520 is levied, and applications are processed within approximately 30 working days.
The main criteria they look for are:
• that you are a PR (permanent resident); and
• the economic contribution you make to Singapore, which includes your academic, technical and
professional qualifications, and any investments you have made in the type of industry or
services required by Singapore.
How do I make an offer on a property?
If you do not yet have a specific property in mind, you should first apply for Approval in Principle (AIP). This expires after six months, after which you can make a fresh application, if necessary. Some sellers will not accept your Option to Purchase (OTP) a landed property unless you already have an AIP; and if they do accept your offer, they may insist on its being subject to another offer coming in, in order to protect themselves from the possibility that the application may be refused.
You, too, should protect your interests by inserting a clause that the offer is subject to government approval. Without this clause, the OTP and the Sales and Purchase Agreement are invalid under the Residential Properties Act and the LDAU cannot process the application. If the application is not approved, you can appeal to the Minister within three months of receiving the letter of non-approval.
Are there any other restrictions to be aware of?
You may not sell the property within the first three years. You may use it only to accommodate yourself and the members of your family.
Furthermore, should you have to move overseas and want to rent out the property in your absence, you must seek permission to do so. Renting out your property without permission is a breach of the law for which you can be fined up to $5,000 and imprisoned for up to five years.
If you are looking to build on vacant land or rebuild on the site of an existing house, carry out reconstruction or do additions and alterations, you must let the authorities know at the time of your application. Go to www.ura.gov.sg to find a list of works that do not need BCA (Building & Construction Authority) or URA (Urban Redevelopment Authority) approval.
On new-builds or reconstructed properties, the minimum three-year requirement before you can sell the property starts from the completion of the property, either when the Temporary Occupation Permit (TOP) or Certificate of Statutory Completion (CSC) is obtained, whichever is earlier, and this must be within 36 months of the approval being granted.
If you already own a restricted residential property and wish to sell it and purchase another one, you need to apply again for approval. You must sell the existing residence before legal completion of the purchase of the new property, or if it’s still under construction, within three months of the date of issue or the TOP or CSC, whichever is earlier, or within three months of the date the seller delivers vacant possession of the property to you.
Can a property be bequeathed to a foreigner?
A restricted property can be bequeathed to a foreigner, but on the death of the bequeather permission must be sought by the foreign inheritor to acquire it. If this is not granted, then the representative of the estate of the deceased will have to sell the foreign beneficiary’s share within 10 years of the date of the death of the deceased person.
For more information, contact Deborah Law, Executive Director of Expat Realtor, at +65 9171 3392 or +65 6255 1027. www.expatrealtor.net