We Have Moved

Hi Guys,

This is just a note that I have moved to a new blog site:
www.newlaunchsafari.com

Hope to get your supports as per before.

Cheers

Must Know Guide For Foreigners Prior To Purchasing Singapore Properties

 This is simple guide which I came up to facilitate foreign buyers who are keen to purchase residential properties in Singapore to understand more about our real estates background, rules and regulations.

Background:

In the year 1973, the Singapore Government has imposed restrictions on foreign ownership of all private residential property in Singapore. Such ownership is governed by the Residential Property Act.

The Act aims to give Singaporeans a stake in the country by being able to buy and possess their own residential property at an affordable price and also encourage foreign talent by allowing permanent residents and foreign companies who make an economic contribution to Singapore to purchase such properties for their own occupation.

The Residential Property Act (RPA) is then amended on 19 July 2005 to allow foreigners to purchase apartments in non-condominium developments of less than 6 levels without the need to obtain prior approval.

For restricted property such as vacant land, landed properties such as bungalows, semi-detached and terrace houses, prior approval is still needed if foreigners wish to buy. Landed properties is a special class of residential property that Singaporeans aspire to own, and should remain restricted. Foreigners need to apply for approval from Singapore Land Authority before buying.

If you are a foreigner (or expatriate) and you wish to purchase a restricted residential property, you need to download the application form at http://www.sla.gov.sg/htm/ser/ser0307.htm#d You can submit the form together with the relevant supporting documents such as your entry and re-entry permits and qualifications to:

Land Dealings (Approval) Unit
No. 8 Shenton Way,
#27-02 Temasek Tower,
Singapore 068811

What are the restricted residential properties?

Foreign persons (including natural persons, foreign companies and societies) are restricted from purchasing:

• Vacant land
• Landed residential property, such as bungalows, terrace houses, semi-detached houses (With the exception of within Sentosa)
• Strata landed residential property

Other restricted properties

• A HDB Shophouse
• A HDB flat purchased directly from HDB
• A resale HDB flat
• Executive Condominium (Prior to the first 10 years of it's TOP)

Stamp Duties:

Buyer Stamp Duty & Additional Buyer Stamp Duty:

Foreign buyers looking to purchase residential properties within Singapore will have to note that they will be liable to pay Additional Buyer Stamp Duty on top of the typical Buyer Stamp Duty liable for any Singapore property purchase. 

The only exceptions are for foreign buyers who are Nationals and/or Permanent Residents of the following countries who fall within the scope of the respective FTAs (Free Trade Agreement) will be accorded with the same treatment as Singapore Citizens.  

Nationals and Permanent Residents of:-

• Iceland
• Liechtenstein
• Norway
• Switzerland

Nationals of:-

• United States of America

Such buyers are required to submit an application for remission so as to enjoy the same treatment as SCs.  While ABSD payment can be withheld pending approval of remission, BSD cannot be withheld.

 Foreign buyers purchasing residential properties in Singapore will be levied upon a 15% Additional Buyer Stamp Duty on their purchase.

Illustration of Computation of BSD and ABSD

Assume a purchase of a property at a fair market price of $2 million by a foreign buyer and the ABSD rate of 15%* applies.

Seller Stamp Duty:

Seller Stamp Duty (SSD) is imposed by the Singapore Government on sellers who buy (or acquire) residential properties and sell (or disposed of) them within four year of acquisition, as follows :

• Holding period of 1 year : 16% of price or market value, whichever is higher
• Holding period of 2 years : 12% of price or market value, whichever is higher
• Holding period of 3 years : 8% of price or market value, whichever is higher
• Holding period of 4 years : 4% of price or market value, whichever is higher

Example 1

Mr M purchased his residential property on 22 February 2011 and sold it on 25 January 2012 for $1,500,000.

• Holding period : Less than 1 year (Sale of the property after 22 February 2015 will not be subjected to SSD)

16% of consideration or value, whichever is higher	$1,500,000 x 16%	$240,000
SSD payable	$240,000

Example 2

Mr P purchased his residential property on 23 February 2011 and sold it on 25 May 2012 for $1,500,000.

• Holding period : More than 1 year and up to 2 years (Sale of the property after 23 February 2015 will not be subjected to SSD)

12% of consideration or value, whichever is higher	$1,500,000 x 12%	$180,000
SSD payable	$180,000

Example 3

Mr Q purchased his residential property on 24 February 2011 and sold it on 10 June 2013 for $1,500,000.

• Holding period : More than 2 years and up to 3 years (Sale of the property after 24 February 2015 will not be subjected to SSD)

8% of consideration or value, whichever is higher	$1,500,000 x 8%	$120,000
SSD payable	$120,000

Example 4

Mr T purchased his residential property on 25 February 2011 and sold it on 5 June 2014 for $1,500,000.

• Holding period : More than 3 years and up to 4 years (Sale of the property after 25 February 2015 will not be subjected to SSD)

4% of consideration or value, whichever is higher	$1,500,000 x 4%	$60,000
SSD payable	$60,000

 
Points to Ponder When Purchasing Resale or Building Under Construction Projects:

Anti-speculation measures Some experts believe that the slew of measures to cool the red-hot property market has caused buyers to favour new homes rather than the resale market. The revised sellers' stamp duty of up to 16 per cent, introduced in January last year, penalise home buyers who re-sell their property within four years. This gives an edge to new home sales. Buyers of new launches know that by the time the apartment is physically completed in about three to four years, they are likely to be subject to less stamp duty or none at all if they sell it. On the other hand, if they buy a resale home for investment, there may be some concerns with securing a tenant in the current uncertain global economic climate. Hence, this trend towards new sales remains intact even as the resale market languishes with tepid volumes. Financing Investors may also prefer new homes as they can enjoy a progressive payment plan in which the purchase price of the home is paid in installments based on the completion rate of the project, experts add. Buyers can, thus, spread out their payments, rather than service a housing loan of up to 80 per cent of the purchase price of a resale unit right from the start. However do note that local bank financing for foreign buyers typically falls in the range of 60-70% and require the buyers to fulfill a set of prerequisites set by the individual banks.        Size and affordability Buying from the resale market has its advantage. Older, completed projects offer units that are typically larger in size than new launches. This is due to the trend of developers pushing out smaller apartments to maintain the affordability of homes on an absolute basis even as prices in terms of per square foot have climbed steadily. Buyers keen on acquiring larger and more affordable living spaces should, therefore, look towards well-managed resale projects. Prices However, having said that, having a larger size would means having a higher overall price tag compared to new launches though the PSF(Per Square Foot) will generally be lower. Resale home prices are generally lower PSF compared to new homes.  Buyers looking at resale homes may find bargains - units priced below valuation - if they spend time doing their research.   Instant yields Buying a resale unit may be a good bet if it is located in a tested market, like the Central Business District. As the buyer can lease out his unit immediately he can start earning back his capital investment right away. If the purchased resale unit is already tenanted, there is certainty in the yield. In comparison, an uncompleted home sale can provide only the projected yield.   The allure of new homes New homes have many advantages such as having a unit decked out in the latest brand-name fixtures and fittings. The bumper supply of state land has also led to a plethora of new launches with developers offering creative product offerings such as themed-condos and throwing in various sweeteners like stamp duty absorption and furniture.

Enquiry or need advice?
If you require any advice or have any enquries about Singapore property purchase, please feel free to email me at propsafari@gmail.com or whatsapp me at +6594558898.

About Myself:
Ivan Koh
Associate Senior Marketing Director @ Huttons Asia Pte Ltd specializing in New Launch project sales
To find out more about the latest condo launches, do visit my website:
www.propsafari.com

Impacts on New EC Measures 9 Dec 2013

The Government will implement three measures for Executive Condominium (EC) developments to bring the terms for ECs closer to that for public housing, and help support a stable and sustainable EC market. This follows a review by MND on the EC Housing Scheme, taking into account feedback from the Our Singapore Conversation on Housing. 

I. Reduce EC Cancellation Fees

2   First, we will reduce the cancellation fees for ECs from 20% to 5% of the purchase price. This will relieve the financial burden of buyers who have to cancel their EC bookings after signing the Sale & Purchase Agreement. The new cancellation fee will be applied to EC land sales which are launched on or after 9 Dec 2013, including those where the tenders have not closed.

3   The cancellation fee for ECs is currently set at 20% of the purchase price, similar to those for private housing. However, unlike buyers of private housing, buyers of EC units cannot sub-sell their units if they cannot complete their purchase, and have to pay the cancellation fee. This has especially imposed significant financial burden on young couples who subsequently are not able to proceed with their marriage and hence the EC purchase.

4   We will therefore align the cancellation fees for EC units with that for HDB Build-to-Order (BTO) flats, and reduce them from 20% to 5% of the purchase price.

Implications:  

Developers will then be open to more risk of cancellation cases. 20% based on a 1 Mil property is $200K vs 5% which is $50K.

 II. Resale Levy for Second-Timer Applicants

5   Second, we will now require second-timer applicants who buy EC units directly from property developers to pay a resale levy, similar to second-timer applicants who buy BTO flats. The new requirement will be applied to EC land sales which are launched on or after 9 Dec 2013, including those where the tenders have not closed.

6   Currently, second-timer applicants who buy EC units directly from property developers benefit from the lower EC prices arising from the initial eligibility and ownership restrictions imposed on EC purchases. However, they do not need to pay a resale levy. The alignment of treatment with second-timer applicants who buy BTO flats will ensure greater parity. 

Implications: 

Firstly, existing EC projects will probably move off the shelf faster as they are still not being impact by Resale Levy for 2nd timers. Borderline 2nd timers who might be waiting for 2014 projects might make up their mind to go for current projects to escape Resale Levy. 

Secondly, 2nd timers might seriously consider BTOs as versus ECs in the future as main perk of no Resale Levy has been abolished.

III. Revision of Mortgage Loan Terms

7   Third, the Monetary Authority of Singapore (MAS) will cap the Mortgage Servicing Ratio (MSR) for housing loans granted by financial institutions for EC units bought directly from property developers at 30% of a borrower’s gross monthly income. This is in line with earlier measures introduced by the HDB and MAS to encourage financial prudence among buyers of public housing. It discourages EC buyers from over-stretching their finances and supports an affordable and sustainable EC market.

8   The 30% MSR cap will apply to EC purchases where the Option to Purchase is granted on or after 10 Dec 2013.

Implications: 

Firstly, as EC income cap is still set at $12K per month, it means that buyers will be limited to using 30% of their income for servicing monthly mortgage. That will drastically bring down the quantum of loan that a buyer can get to purchase EC. In the long run if the income cap is still not lifted higher and escalating land prices, we could be seeing compact or even mickey mouse size EC units being built in order for the developers to bring down the quantum of their project.

Secondly, as more local buyers hit the wall against the MSR cap, they might consider buying another low quantum small private condo for investment purposes. This is because private condo are not subjected to MSR and when the buyers have cleared their existing HDB loan, they still can get up to potential 80% loan after being subjected to TDSR. In short, buyers can get a much higher loan quantum for a private condo as compared to EC if they don't have any existing housing loan.

Existing ECs:
Sea Horizons @ Pasir Ris
Skypark Residences @ Sembawang
Waterwoods @ Punggol

Upcoming ECs for 2014!
New EC @ Yuan Ching (Jurong)

Summary of New HDB Measures 27 Aug 2013

1. Adjustment of MSR for HDB Loans - Mortgage Service Ratio (MSR) for HDB loan is now 30 per cent of their gross monthly income down from 35 per cent.

Implications - In short, it means HDB loan borrower will have a lesser permissible percentage of their income capped usable to service their monthly mortgage loan. Ultimately, this brings down the loan quantum offered by HDB. With a lower loan quantum eligible, buyers can either fork out more cash/CPF when doing purchase or look for cheaper housing alternatives within their means.

2. Adjustment of max loan repayment for HDB housing - The maximum repayment period for HDB housing loans will also be lowered from 30 to 25 years, and from 35 to 30 years for bank loans taken to buy HDB flats, including DBSS.

Implications - Obviously with a lower loan repayment tenure, it means that borrower will not be able to spread out loan repayment further to bring down monthly installments and with MSR cap, it may also bring down the loan quantum permissible by HDB or financial institutions. With a lower loan quantum eligible, buyers can either fork out more cash/CPF when doing purchase or look for cheaper housing alternatives within their means.

3. Launch of New three-generation flat(3Gen Flats), features four bedrooms and three bathrooms, with a floor area of 115 sq m. First project will be launched in Yishun in the upcoming September BTO exercise.

To be eligible for 3Gen flats, applicants must form a multi-generation family comprising a married or courting couple and their parents. To prevent abuse of the scheme, subletting of rooms will not be allowed during the five-year minimum occupation period. After fulfilling the minimum occupation period, the flats can only be resold in the open market to other eligible multi-generation families.

Personal 2 cents worth -  Personally feels that the traditional multi-generation (Jumbo) flats are still more attractive because of their much larger floor area and non restriction of non multi-generation resale purchasers.

4. Multi-Generation Priority Scheme allows the older set of parents to buy to a three-room flat.

5. Special Housing Grant (SHG) income limit will now be $6,500, a sharp increase from the previous $2,500. (Limited to BTO or sale of balance flats)

6. BTO's Step Up Grant of $15,000 to the sellers' of two-room homes when they upgrade to three-room flats.

7. Singles who earn up to $3,250 a month, instead of the current income cap of $1,125, can now also get the SHG when they apply for two-room flats on their own.

8. New 3-year waiting period for permanent residents to buy resale flats after receiving their PR status applies to resale applications received on or after 5.30pm on Tuesday.

Implications - New PRs will now either have to seek rental alternatives or seek private residential options. Potentially, HDB resale market might be affected, pushing away a group of new PR buyers to the rental or private market.

Summary Of New MAS Debt Servicing Framework for Property Loans 28 June 2013

Summary Of Bank guide line on new application

1. Approval will have to take in all liabilities, even credit cards. Documentation will have to be provided to proof the liability amount

2. Approval based on 3.5% calculation of monthly instalment instead of the current 2.8%

3. 60% of your monthly income max should be used for monthly instalment. Nothing more than that.

4. To recognise only 70% of bonuses and rental incomes

5. Borrowers can only be the owners of the house

6. Guarantors must be borrowers

7. To use income weighted age of borrowers. No longer based on youngest borrowers

Example:
Husband aged 40 earns $5,000 monthly. Wife aged 30 earns $3,000 monthly.

In order to calculate income weighted aged, apply the following:

Income weighted Age = (40 x 5000) + (30 x 3000)
                                        5000 + 3000
                               =   36.25 (Round to next whole digit) = 37

Max Loan Period = 65 - 37 =28 years

Click this link for the full press release from MAS.