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What you need to know about buying a home in Singapore

Tired of being beholden to a landlord and keen to put down some major roots here in the Lion City? Buying property in Singapore is a major commitment and definitely one which needs professional advice at every turn. (If renting is more your thing, check out our leasing guide and top tips from other expats here.)

Deborah Law from Expat Realtor has given us her professional tips, based on over 12 years of experience in the Singapore market, to help keen buyers negotiate their way through purchasing property in Singapore.
 

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Know the state of the market

The strong sales market, which 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, so 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.

There is talk of some tweaking of the cooling measures and that the market is “bottoming out”, however the arrival of a large number of new units on the market in the next two years and interest rates on their way up should have a dampening effect on prices for a while longer.

Buying is a good option if you can afford it

Investing a monthly rental amount into your own property rather than someone else’s makes good sense; 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.
 

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Eligibility based on citizenship / PR status

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. Check out the Singapore Land Authority for more information.

Budget

It’s recommended that at least 30 percent of the purchase price is out down to safeguard against market downturns and possible increases in interest rates. The banks will also look at the potential buyers 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 committing.

Be aware of associated costs

  • Solicitors’ fees Mortgage solicitors’ fees
  • Transfer fee and stamp duties
  • Government department fees
  • Transfer & mortgage registration fee

Confirm the property’s value

Once you’ve found a property that interests you, confirm its value through a bank and check the Inland Revenue Authority for the last transaction price of a similar property. When you’ve agreed a price with the seller, a one-percent non-refundable deposit is required to secure it. There is usually a two-week option period to pay a further four percent, then a further eight to 12 weeks to pay the balance. It’s recommended that a lawyer is on hand to advise you during this time.

Now go forth armed with the facts, and happy hunting! (And if renting is where it’s at for you, check out our top tips for renting property in Singapore here.)

This article first appeared in EL City Guide 2015/2016.

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