Known for its reputation as a safe haven asset, Singapore’s property market has been coveted as a go-to location for many foreigners to park their wealth in.
Just by looking at the recent pandemic, we can note that the Singapore dollar continued to stay strong even though neighbouring countries’ currencies, as well as other Asian currencies like Japan, weakened.
Sales caveats lodged with the Urban Redevelopment Authority (as of Feb 2023) showed that foreign buyers made up 22.4% of total sales for condominiums in 2022.
Chinese buyers alone are snapping up the biggest share of Singapore’s condo market, taking up the top spot for luxury condos above $5 million.
Read Also: Complete Guide To Opening A Bank Account In Singapore For Foreigners
ABSD Impact And Covid-19
The Additional Buyer’s Stamp Duty (ABSD) for foreign buyers is at a rate of 30% of the purchase price or market value of the residential property. ABSD a tax that is computed based on the valuation or the selling price of the property, whichever is higher.
ABSD tweaks over the years:
- In Jan 2013, it was at a rate of 15% of the purchase price or market value of the residential property, whichever is higher
- The ABSD rate was increased to 20% in July 2018
- In Dec 2021, the rate was increased by 10%, to 30%
Even though the ABSD has doubled from 20 years ago, foreign buyers still seem to shrug off the impact.
They accounted for 25.5% of all condominiums sold in 2013, and in 2022, they accounted for 22.4% of all condominiums.
The only obvious dip in transactions was seen in 2020 and 2021 where the percentage of foreign buyers of condominiums fell below 20% for the first time since 2002. That’s due to the Covid-19 travel curbs and restrictions.
Who Are The Top Foreign Buyers Of Our Properties?
The top five foreign buyers of non-landed private homes consist of Malaysians, Indonesians, Americans, Chinese Nationals, and Indian Nationals.
| Country | No. of units | % of units bought by foreigners |
| China | 1,344 | 30.7% |
| Malaysia | 833 | 19.0% |
| India | 470 | 10.7% |
| USA | 302 | 6.9% |
| Indonesia | 265 | 6.0% |
What Properties Can Foreigners Buy And Cannot Buy?
Foreigners are not able to purchase subsidised housing under the Housing Development Board (HDB).
But they can own private apartments or condominium units as much as they can afford. There is no limit to the number of private apartments and condos that a foreigner can buy.
They can also buy executive condominiums (EC) after they are privatised 10 years after the building is completed.
Government approval is needed for foreigners to own landed residential properties like terrace houses and bungalows. The foreigner needs to have an adequate economic contribution to Singapore, and apply through the Singapore Land Authority (SLA).
Some strata-landed properties within a condo development are however off limits and may be exclusive to citizens, such as the villas at Normanton Park.
There are no restrictions for foreigners who want to buy commercial properties – including shop houses, shopping malls, offices, hotels, warehouses, and factories.
In a nutshell here are the properties foreigners can buy in Singapore:
- An executive condo that is more than 10 years old
- Most condos
- Some strata-landed houses in an approved condo development
- Leasehold estate in 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
- Landed houses in Sentosa
- Commercial properties
What Taxes Do I Need To Pay When Buying A Property In Singapore?
Anyone buying a property in Singapore must pay a Buyer’s Stamp Duty (BSD), regardless of whether you are a Singapore Citizen, Singapore Permanent Resident, or Foreigner. It is based on the purchase price or market value of the property, whichever is higher, as indicated in the sale and purchase agreement.
| Higher purchase price or market value of the property | Residential property | |
| Rates on or before 14 Feb 2023 | Rates on or after 15 Feb 2023 | |
| First $180,000 | 1% | 1% |
| Next $180,000 | 2% | 2% |
| Next $640,000 | 3% | 3% |
| Next $500,000 |
4% |
4% |
| Next $1,500,000 | 5% | |
| Amount exceeding $3,000,000 | 6% | |
If you are buying a $1 million residential property for example, the calculation for BSD will be as such:
1% x $180,000 = $1,800
2% x $180,000 = $3,600
3% x $640,000 = $19,200
TOTAL BSD for $1 million residential property will be: $24,600
On top of BSD, foreigners must pay ABSD, which is different for Permanent Residents and non-SPRs.
| Additional Buyer’s Stamp Duty (ABSD) | Rates on/or after 16 Dec 2021 |
| SPRs buying 1st residential property | 5% |
| SPRs buying 2nd residential property | 25% |
| SPRs buying 3rd and subsequent residential property | 30% |
| Foreigners buying residential property | 30% |
| Entities buying residential property | 35% |
TOTAL Property amount + BSD + ABSD for $1 million residential property for a first-timer foreigner will be: $1,000,000 + $24,600 + $50,000 = $1,074,600
There may also be mortgage duty, legal, and other administration fees.
Some foreign nationals can avoid ABSD charges due to their country’s trade agreements with Singapore. These include people from Iceland, Liechtenstein, Norway, Switzerland, and United States.
Read Also: How Much Buyer’s Stamp Duty (BSD) And ABSD Singaporeans, PRs And Foreigners Need To Pay – And When
Can I Buy And Sell My Property Quickly To Make A Quick Buck?
If you are planning on flipping the local market properties for quick profits, you need to take into consideration the Seller Stamp Duty (SSD) which will take out a chunk of your sales proceeds.
Sellers who wish to dispose of their properties within three years will have to pay SSD based on the following rates:
| SSD holding period | SSD rate on/or after March 2017 |
| Up to 1 year | 12% |
| > than 1 year and up to 2 years | 8% |
| > than 2 years and up to 3 years | 4% |
| > than 3 years | No SSD payable |
Can You Apply For Mortgages As A Foreigner?
Foreigners can apply for mortgages in Singapore. There are limits to the Loan-to-Value (LTV) ratio of your mortgage, as well as mandated minimum cash downpayments.
The LTV ratio is typically 75% for a first home loan (but depending on your age and the tenure of your loan, it can be as low as 55%). The cash downpayment required is typically 5% (but, similarly, it can be as much as 10%).
The LTV is lower and downpayment amount is higher on second and subsequent home loans.
Currently, banks are offering fixed interest rates of 3.65% to 4.5% for private property home loans. The rates are inclusive of lock-in periods from 1 year to up to 5 years.
If you take up a loan of $750,000 with an interest rate of 4%, the rates and interest rates are as follows:
Loan amount: $1,000,000
Interest rate: 4%
Loan tenure: 10 years
Loan amount: $1,000,000
Interest rate: 4%
Loan tenure: 15 years
Loan amount: $1,000,000
Interest rate: 4%
Loan tenure: 20 years
Loan amount: $1,000,000
Interest rate: 4%
Loan tenure: 25 years
As you can see the principal amount you pay for each month shrinks as you have a longer loan tenure. It is wise to pay more upfront if you have the means to do so.
Compared with renting a three-bedroom condo, which can be in the $6,000 range to $15,000 range depending on location, the amount you pay is the same per month.
Renting may be a better option if you only plan to stay temporarily in Singapore but if you want to invest, then it would be better to make a property purchase.
Can Foreigners Buy Property With Singapore Citizen/PR Spouse?
As of 2019, one in four citizen marriages involve a foreign spouse.
Foreigners with Singapore Citizen or Singapore Permanent Resident spouses are allowed to purchase selected public and private housing in Singapore.
You can apply for the Non-Citizen Spouse Scheme which permits you to apply for two-room flexi BTOs or resale flats.
You are also eligible to buy resale EC units after their five year minimum occupation period (MOP) instead of the 10 year wait.
The ABSD rates will be at 30%, for Foreigner and Singapore Citizen couples.
The Residential Property Act: Who Is Considered A Foreign Person And The Types Of Property That Requires Approval
According to the SLA, a foreign person means any person who is not of the following:
- Singapore Citizen
- Singapore Company
- Singapore Limited Liability Partnership or
- Singapore Society
A foreign person who wishes to purchase a landed property is required to seek approval under the Residential Property Act (RPA), with online submission.
Types of property to seek approval to purchase under the RPA:
- 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; and
- Worker’s dormitory/serviced apartments/boarding house (not registered under the provisions of the Hotels Act).
You can buy vacant land to build your house if approval is granted. You will be required to complete the construction of the dwelling house on the property within three years from the date of the letter conveying the decision.
Each applicant is assessed on a case-by-case basis, taking into consideration, including but not limited to, the following factors:
- You should be a Permanent Resident of Singapore for at least five years; and
- You must make exceptional economic contribution to Singapore. This is assessed taking into consideration factors such as your employment income assessable for tax in Singapore.
The general processing time for applications is one month from the date of receipt of all relevant documents for the applications.
The processing time includes verifying the information with other agencies, checking if the applicant or his spouse owns restricted property, as well as the assessment of the application by the Residential Property Advisory Committee before the final recommendation is sent to the Minister for consideration.
Can I Apply For The RPA Even Though I Do Not Have A Property In Mind?
Yes, you may apply for an approval in principle. In fact, you are encouraged to do so before entering into any contract to purchase a restricted property so as to avoid any forfeiture of monies paid in the event you are not granted approval to acquire the property.
If approval is granted, you have to submit the details of the property you intend to purchase within one year from the date of the letter of approval. Otherwise, the approval will lapse and you will have to make a fresh application. There is no extension of validity for the approval in principle granted.
Read Also: Complete Guide To Supplementary Retirement Scheme (SRS) Account For Foreigners In Singapore
The post Does It Makes Sense For A Foreigner To Buy A Property In Singapore? appeared first on DollarsAndSense.sg.
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