Since the 70’s the Singapore Government has imposed restrictions on foreigners purchasing private residential property. The idea is for Singaporeans to retain a stake in their country by keeping property prices affordable whilst also attracting foreign talent that make an economic contribution to Singapore to purchase properties for their own occupation. What classifies restricted properties?

Vacant residential land, landed property which include detached, semi-detached, terraced (including linked houses or townhouses) and landed property in strata developments which are not approved condominium developments under the Planning Act(usually these are cluster housing such as Binjai Crest and The Teneriffe) . However please note that some townhouses, semi-d’s and bungalows can be found, albeit rarely, in condominium projects eg: Casabella and Duchess Crest, and therefore foreigners to do not require approval. Foreigners can purchase Freehold or Leasehold. While foreigners are free to purchase apartments and condominiums they do however need permission to purchase all the units in a condominium or apartment block.

The maximum area of vacant residential land that foreigners can purchase is 15000sqft of land after which this constitutes a Good Class Bungalow and these are conserved.

Anybody who is not a Singapore Citizen, Singapore Company, Singapore limited liability partnership or Singapore Society constitutes a Foreign Person.

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 http://www.sla.gov.sg/htm/ser/ser0307.htm#d. Applications take approximately 30 working days and there is a non-refundable application fee of $520. The main criteria they look for is that you are PR and also the amount of economic contribution you make to Singapore, which includes your academic, technical and professional qualifications, and any investments in the type of industry or services required by Singapore.

If you do not yet have a specific property in mind I would encourage you to apply for Approval in Principle (AIP) first which expires after 6 months and a fresh application is needed after that. If you put an Option to Purchase on a landed property without AIP some sellers are not keen and if they do accept your offer it could well be subject to another offer coming in, hence protecting the seller from the possibility that your application is refused. On the other side of the coin you need to protect your interests by inserting a clause that the offer is subject to government approval. Without this clause the Option to Purchase (OTP) and 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 3 months of receiving the letter of non-approval. Other restrictions include that you must own the property for 3 years before selling and that you must use it solely for you and your family members own residence and not for any other purpose. Should you have to move overseas then permission must be sought to rent it while you are away. Renting without permission is in breach of the law and a fine of no more than $5,000 and imprisonment of not more than 5 years can be imposed.

If you are looking to build on vacant land or rebuild an existing home, carry out reconstruction, or do additions and alterations (A&A) you must let the authorities know at the time of application. You can find a list of works that do not need BCA (Building & Construction Authority) or URA (Urban Redevelopment Authority) approval on www.ura.gov.sg website.

On new builds or reconstructed properties, the minimum 3 years 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 then approval must be obtained again. You must sell the existing residence before legal completion of the purchase of the new property, or if it’s still under construction, within 3 months from the date of issue or the TOP or CSC, whichever is earlier, or within 3 months of the date the seller delivers vacant possession of the property to you.

A restricted property can be bequeathed to a foreigner but on the death or the bequeather permission must be sought by the foreigner to acquire the estate and interest in the property, if this is not approved 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 any further information or clarification you may contact Deborah Law , Director of Expat Realtor on 91713392.

In Singapore you have the choice of non-landed (condominiums and apartments) and landed properties. For more information on landed properties and the restrictions that apply to foreigners purchasing them please refer to the article in the April issue of EL.

First step is to make sure your finances are in order, speak to a qualified financial advisor and get an idea of your budget and also basic approval for a mortgage. Be aware of all the hidden costs. Often banks will absorb the lawyer’s fees for the conveyance which are about $3000. For peace of mind get yourself a good real estate agent who is competent and reputable. To save confusion use one agent as they all access the same property data, this prevents time wasting. Get a clear and concise idea of your wants and needs, the size of the unit, location, price. The seller pays the agent’s commission that is standardized at 2% although this can vary.

Freehold (FH) properties are ultimately the favourite are yours for an indeterminate length of time and therefore better for resale value. Leasehold (LH) property is bought/leased for a given period. Common residential LH are 99 or 999 years and are cheaper and therefore produce a higher yield as there is no difference in rents between LH and FH. To compensate for a leasehold make sure you get the location right. Districts 9/10/11 are the prime areas and give the highest rents (ask your agent for approximate rental prices), as near to an MRT station as possible and with good amenities. LH have been known to rise faster in a boom but fall equally as fast in a falling market. So if you intend to hold onto your LH property for a while make sure you sell in an upward market. Do watch for how many years are left on the lease as it is difficult to get a mortgage and you cannot use your CPF savings on a lease under 60 years, which also means the purchase pool shrinks and you get lower valuations.

We’ve heard it all before, location, location, location, but it really is the most important consideration. Even if you plan to occupy the property and don’t mind living in a noisy commercial area or in a quiet but isolated spot, bear in mind how others will view it when u wish to resell one day. You might not care a hoot about feng-shui but an auspicious number 8 on your door would attract more interest and demand and possibly a higher resale price than a number 4! Likewise a strange shaped plot or a plot facing a t-junction (obstructing good flow into your life) is considered bad feng-shui. If you are looking to rebuild check on the height restrictions for that area and have a look at the street block plans on the master plan. You can find these on the URA website. Pay attention to the fittings and fixtures, state of repair, any signs of water damage or leakage, cracks etc. Unlike overseas properties the purchase is not subject to a structural engineer inspecting it. If asked Sellers are legally obliged to advise you if they know of any structural issues or leakage problems etc. Look at the shape and size of the rooms, are they going to be difficult to furnish. Can your king size bed fit in the master-bedroom?

If purchasing a strata titled property under construction payments are done progressively, this is covered in a separate article.

Once you find a property you would like to purchase ask your agent to make some checks, confirm seller is the correct owner and therefore the correct name on the option cheque, correct square footage, if buying a strata condo how many shares are buying? What are the common areas? Are the monthly maintenance fees well managed by a good committee? Does it have funds set aside in a “Sinking fund” for renovations such as repainting, upgrading of the facilities, gym, pool, tennis courts, lifts etc? Does it have any upgrading plans coming up in the near future and are you going to be responsible for the costs? For resale the condo needs to be well maintained and most owners don’t mind and even expect to have to put some extra in at times but if you have a bunch of owners who are not willing to do anything this will inhibit your resale value. Are there any recent changes in the MCST rules and regulations that you need to know about? Larger condos tend to have cheaper monthly maintenance fees than smaller ones.

Get at least 3 bank valuations before putting in an offer as they can vary especially on landed property which are more heterogenous and have fewer sales data. The bank does an on-site valuation only after you’ve paid the Option Fee. In Singapore it is not unusual to pay above the bank valuation but bear in mind that the higher above the bank valuation you go, the longer it is going to take to recoup your money.

Check the inventory for fixtures and fittings, clarify with the sell what he will be leaving, sometimes those beautiful antique wooden doors can be swopped for ordinary doors, likewise quality light fittings, antique fans, water features etc. If you wish you can request in the OTP for a final viewing before completion to check through the furniture and fittings.

Once the price is negotiated and agreed upon the buyer can ask his agent or lawyer to drawer up an Offer to Purchase which clarifies his price, terms and conditions, this is optional. The seller will grant an Option (by signing an Option to Purchase (OTP) form drawn up by his lawyer or property agent) to the buyer to purchase the property at the agreed price. In exchange the buyer pays the seller an option fee of 1%. The seller’s offer is for a stated fixed period during which the seller cannot sell his flat or give any offers to other buyers. This option period of 14 days (inclusive of weekends and public holidays) allows the buyer time to think over the intended purchase and confirm finances. The buyer then signs the OTP and passes it via his lawyer along with the Option Exercise Fee of 4% to 9% to the seller’s lawyer. If the buyer decides against purchasing the property he does not have to return the OTP or pay any further money to the seller and the buyer just lets the OTP lapse on the date of expiry. The Option fee is forfeited by the buyer to the seller. Stamp Duty of approximately is paid by the buyer upon signing of the OTP which then becomes known as the Sales and Purchase (S&P) agreement.

During the 8-10 weeks of completion the buyer’s lawyer lodges a caveat and co-ordinates with the financial institutions if necessary. He will complete various legal requisitions such as checking the property taxes have been paid, any future road or MRT proposals any outstanding fines with the ministry of environment eg: Denghi violations, Ministry of Health, PUB etc. Depending on the specific needs of either seller or buyer the completion date can be slightly flexible. Is the property sold with vacant possession or with tenancy? If sold with tenancy a copy of the Tenancy Agreement and Inventory List is required. Any security deposit held by seller (usually 1 – 3 months of the rental price ) is transferred to the buyer (the new landlord) upon completion. Most TA’s include the clause “sold subject to Tenancy”. The rent is paid to the new landlord upon completion. The tenants however might be willing to move out earlier, and may seek some sort of negotiable monetary compensation. On completion date the keys are handed over by the seller’s lawyer and all monies outstanding are settled by the buyer’s lawyer who is the stakeholder. All maintenance fees, property taxes etc take effect from the date of completion.

Latest update:

Singapore’s government announced a new round of cooling measures yesterday aimed at keeping the property market stable and sustainable. The latest measures – the fourth round in 16 months – are as follows:

• The holding period for the imposition of a Seller’s Stamp Duty (SSD) has been increased from three to four years.
• For residential properties bought on or after January 14, 2011, SSD rates have been raised to 16 per cent for those sold in the first year of purchase, 12 per cent for those sold in the second year, 8 per cent if sold in the third year, and 4 per cent if sold in the fourth year.
• The Loan-to-Value (LTV) limit has been lowered to 50 per cent on housing loans granted by financial institutions regulated by the Monetary Authority of Singapore (MAS) for property purchasers who are not individuals
• The LTV limit on housing loans granted by financial institutions regulated by MAS has been lowered from 70 to 60 per cent for property purchaser who are individuals with one or more outstanding housing loans at the time of the new home purchase.
• For any further information please contact Deborah Law, Executive Director of Expat Realtor.net at 91713392 or 62551027, or property@expatrealtor.net