Can Foreigners Buy Property in Singapore?

Navigating Singapore’s real estate market as a foreign buyer

Singapore is one of the most prosperous and developed countries in the world, with a thriving economy, stable political system, and high standard of living. As a result, many people from around the globe are interested in investing in Singapore’s real estate market, either for personal or commercial purposes. However, before making any purchase, it is crucial to understand the legal and practical considerations that apply to foreign buyers. In this article, we will provide a comprehensive guide to buying property in Singapore as a foreigner, covering the following topics such as property types, loans, taxes and more.

Overview of Singapore’s Property Market

Singapore’s real estate market is known for its high prices, limited supply, and government intervention. The property sector is a key pillar of the economy, accounting for a significant share of GDP, employment, and investment. The demand for housing and commercial space is driven by various factors, such as population growth, urbanization, tourism, and business activities. However, the government regulates the market through various measures, such as land sales, zoning, financing, taxation, and immigration. The aim is to ensure affordability, stability, and sustainability, while avoiding speculative bubbles, social inequality, and environmental degradation.

Types of Properties Available to Foreigners

Foreigners are generally allowed to buy most types of properties in Singapore, subject to certain restrictions and conditions. The main categories of properties that a foreigner can purchase without approval are as follows:

  • Private condominium or apartment unit
  • Strata landed house in an approved condominium development
  • A leasehold estate in a landed residential property for a term not exceeding 7 years, including any further term which may be granted by way of an option for renewal
  • Commercial-use shophouse
  • Industrial and commercial properties; Hotel (registered under the provisions of the Hotels Act);
  • HDB shophouse

Properties which a foreigner requires to seek approval to purchase include:

  • Vacant residential land
  • Terrace house
  • Semi-detached house
  • Bungalow/detached house
  • Strata landed house which is not within an approved condominium development under the Planning Act (eg. townhouse or cluster house)
  • Shophouse (for non-commercial use)
  • Association premises
  • Place of worship
  • Worker’s dormitory/serviced apartments/boarding house (not registered under the provisions of the Hotels Act)

Financing Options for Foreign Buyers

In short, foreigners can apply for a property loan in Singapore to purchase a property.

Foreign buyers must have excellent credit regardless of the finance institution offering the loan in order to be approved. While offshore foreigners must be able to provide evidence of their income and net worth, onshore foreigners must have a solid credit score because a poor score could result in needless delays. Hence, it is crucial that you prepare the most recent certified authentic copy of your proof of income and assessment notice. For self-employed persons, proof of earning and net worth statement must be submitted. A copy of the passport, an ID card, and the option to purchase or sales and purchased agreement for the property should also be prepared.

The Loan-to-Value (LTV) Ratio and In-Principal Approval are additional elements to take into account when applying for a loan.

In-Principal Approval

The bank offers the In-Principal Approval (IPA), which specifies the maximum loan amount and loan term. It is advisable for buyers to have a IPA done before committing into a purchase.

Loan-to-Value (LTV) Ratio

The amount of mortgage loan you are eligible to apply for is determined by the Loan-to-Value (LTV) Ratio, which is based on the market value or purchase price of the property. It is possible to obtain a loan up to 75% of the cost of the property if there is no current mortgage debt. But if a foreigner already has a mortgage loan, the amount drops to 45% for two loans and 35% for three or more loans.

Taxation of Foreign Property Buyers

Foreigners who buy property in Singapore are subject to various taxes, such as:

  • Buyer’s Stamp Duty (BSD), which is a tax on the purchase price or market value of the property, whichever is higher, and varies from 1% to 6% depending on the type of property and the purchase price.
  • Additional Buyer’s Stamp Duty (ABSD), which is an extra tax on top of the BSD, ranging from 5% to 35% depending on the buyer’s residency status, number of properties owned, and type of property.
  • Property Tax, which is an annual tax on the market value of the property, ranging from 0% to 32% depending on the property’s use and ownership.
  • Goods and Services Tax (GST), which is a consumption tax on the transaction value of the property, payable by the seller, unless exempted or zero-rated.

Foreign buyers should be aware of the tax implications of their purchase, and seek professional advice on how to minimize their tax liabilities.

Are you a foreigner planning to invest in Singapore’s property market?

Are you a foreigner looking at an investment property in Singapore for the first time? Consider purchasing a new launch condominium for these four reasons.

Firstly, new launches offer an upgraded living experience with modern features that older condos may lack. These avant-garde features range from smart home technology to concierge services, all contributing to a higher resale potential and rentability in the long run.

Secondly, new launches have lower maintenance costs. Wear and tear increase the cost of property maintenance, but developers are liable to correct any defects within the first year of purchase. Older condos may incur high maintenance costs and provide fewer returns, making it more worthwhile to invest in a new launch condo.

Thirdly, early bird discounts are often available for new launch condos. These discounts can come in the form of a direct price reduction or the absorption of stamp duties, making it a financially attractive option for investors.

Finally, purchasing a new condo provides a wider range of unit choices. You can choose a unit that best suits your needs and future tenants, making it easier to rent out your property when the time comes.

Popular Locations Where Expats Live in Singapore

Singapore is a melting pot of cultures and a thriving hub for business, making it an ideal place for expats to live and work. However, with so many different neighborhoods and areas to choose from, here are a few popular locations to where you can kick start your search.

  • Orchard Road – one of the most famous shopping districts in Singapore, lined with luxury boutiques and high-end shopping malls. As an expat, living in Orchard Road puts you right in the heart of the action, with easy access to some of the best shopping and dining experiences in the city. The area is also well-connected by public transport, with the Orchard MRT station just a stone’s throw away.
  • River Valley – a popular residential area for expats due to its central location and proximity to the Central Business District (CBD). The area is also known for its lively nightlife, with plenty of bars and restaurants to choose from. While River Valley is a bustling area, it also has a quieter side with several parks and green spaces to explore.
  • Holland Village – a charming neighborhood that has become a favorite among expats due to its laid-back vibe and excellent dining options. The area is known for its diverse range of restaurants, serving up everything from local cuisine to international favorites. Holland Village is also home to a bustling street market, where you can pick up fresh produce and local delicacies.
  • Sentosa Cove – Sentosa is a popular tourist destination, but it’s also a great place to call home as an expat. Sentosa is known for its beautiful beaches, theme parks, and golf courses, making it a perfect place to live if you enjoy an active lifestyle.
  • East Coast – popular among expats due to its laid-back vibe and proximity to the beach. The area is known for its local cultural lifestyle and food. East Coast Park is also a popular destination for outdoor activities, with cycling and jogging trails, as well as barbecue pits and picnic areas.

In conclusion, while there are certain restrictions and requirements for foreign buyers who wish to purchase property in Singapore, it is still possible for them to do so with the help of a qualified property consultant and investment expert. By following the steps outlined in this article and seeking guidance from a reputable consultant, foreign buyers can navigate the process of purchasing property in Singapore with greater ease and confidence.

If you are a foreign buyer who is interested in investing in Singapore property, we invite you to contact us for more information. As experienced property consultants and investment experts, we can help you understand the process and provide you with the guidance and support you need to make informed decisions about your investment.

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