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
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.
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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
