The Singapore property market is vibrant and its stability attracts buyers ranging from citizens to Permanent Residents (PRs) looking to invest in either their homes or a long-term future in Singapore.
When Buying property in Singapore for PR, you stand to benefit from some perks but on the other hand, there are some restrictions when it comes to the purchase of property in Singapore.
In this guide on Buying property in Singapore for PR, we’ll have an extensive rundown of the major things you need to know, the prerequisites of PRs owning a property, the key considerations, and processes involved in Buying property in Singapore for PR, with a focus on condominiums (condos), which are a popular choice among PRs.
Buying property in Singapore for PR #1
Understanding Your Eligibility as a PR
There is a list of eligibility criteria that is essential for you to familiarize yourself with as a PR in Singapore to invest in the property market. Here’s a breakdown of the main categories in this Buying property in Singapore for PR guide:
HDB Flats
When Buying property in Singapore for PR, PRs can buy resale HDB flats but not BTO flats directly from HDB.
One of the essential conditions that you have to meet is to have a family nucleus that you form with at least one Singapore citizen or permanent resident.
If you are an HDB buyer, who has a non-citizen spouse then the spouse must hold a valid Visit Pass or Work Pass.
Private Condominiums
There is no restriction for PRs to purchase private condominiums whether newly launched or re-sale units in the market.
When Buying property in Singapore for PR, PRs can buy a condo individually or jointly with other persons.
Landed Properties
When Buying Property In Singapore For PR, there are restraints when purchasing landed property types like detached, semi-detached, and terrace houses.
To buy a landed property, you require the approval of the Land Dealings Approval Unit (LDAU) which falls under the Singapore Land Authority (SLA).
It is within the discretion of the government and may be given conditionally. These conditions could be the person’s contribution to the economy of the country and/or outstanding individual achievements.
Given the restrictions on HDB flats and landed properties, private condominiums remain the most accessible and popular option for PRs looking to buy a property in Singapore.
Buying property in Singapore for PR #2
Financing Your Condo Purchase as a PR
Financing your property acquisition is another important factor for anyone, who is out to acquire a property. As a PR, you can access various financing options, but you should also be aware of the conditions and limitations of financing methods in Buying property in Singapore for PR guide.
1. Bank Loans
PRs can secure bank loans to purchase the condos, which depends on credit assessments and loan-to-value (LTV) limits.
The maximum LTV you can qualify for your first housing loan is 75% if the loan tenure is up to 30 years or 55% if the loan tenure is more than 30 years.
In your subsequent housing loans, the maximum LTV allowed is lesser and varies between 45 % and 25% depending on the term of your loan and age.
2. CPF Savings
With your CPF OA savings, PRs can use it to pay for the down payment and the monthly mortgage installments.
The amount of CPF savings that one could utilize varies and depends on the remaining lease term of the house, the age of the saver, and the withdrawal limits.
3. Additional Buyer’s Stamp Duty (ABSD)
ABSD is another tax that is imposed on PRs upon the purchase of a condo in combination with the standard BSD.
When buying Property In Singapore For PR, mandatory ABSD rates apply to PRs who acquire the first residential property at 5% and PRs who acquire the second and the subsequent residential properties at 15%.
One needs to evaluate financial capability, determine the capacity to afford the loans, and compare different deals. Seeking advice from a financial advisor or mortgage broker can help you make informed decisions and optimize your financing strategy.
Buying property in Singapore for PR #3
Selecting the Right Condo as a PR
There is a wide range of condos available in the market, which makes it crucial to know the perfect unit one needs. Here are some key factors to consider in Buying property in Singapore for PR guide:
1. Location
Consider the condo for its accessibility to your workplace, schools, facilities, and transportation. Examine general information about the district’s character, development plans, and potential for capital gain.
2. Price and Value
Evaluate the transaction cost per square foot (psf) for the condo and similarly to other units in the neighborhood. Seek affordable; but quality condos capable of providing good yield when rented out, with the potential for resale gain.
3. Facilities and Amenities
Assess the facilities and amenities of the condo including swimming pools, gyms, and function rooms, among other security installations. Consider how these facilities align with your lifestyle needs and preferences.
4. Unit Size and Layout
When selecting the unit size and the general arrangement of the apartment, it is important to choose one that meets your current and future needs. Account for changing circumstances such as changes in the family size, work arrangement, or need for additional storage.
5. Developer’s Track Record
Research the developer’s reputation, financial stability, and track record of delivering quality projects on time. Beware of developers with terrible construction records, effective design, and after-sales services.
Hiring a competent property agent will provide you with rich advice on the market and help you locate homes that fit your requirements and negotiate the best deal.
Buying property in Singapore for PR #4
Legal Considerations for PRs Buying Condos
When Buying property in Singapore for PR, there are several legal aspects you should be aware of to ensure a smooth and compliant transaction.
Option to Purchase (OTP)
Once you have identified your preferred condo, there is usually an Option to Purchase (OTP), then you pay the option fee which is typically 1-5% of the purchase price. OTP is a legal document that grants you the option to buy the property within a certain period, typically between fourteen to twenty-one days.
Sale and Purchase Agreement (S&P)
If you go ahead with the purchase, you and the seller will enter into a Sale and Purchase Agreement (S&P), detailing the terms of the sale. Consult with the conveyancing lawyer to review the S&P, conduct due diligence, and handle the legal documentation.
Additional Buyer’s Stamp Duty (ABSD)
PRs are exposed to ABSD when purchasing a condo, as noted earlier. The ABSD is paid within 14 days after signing the S&PA and non-payment of the amount computed for the ABSD within the said period shall be subject to interest and penalty.
Taxes and Fees
Besides ABSD, other related taxes and charges include BSD, legal costs, and the costs related to mortgages. All these costs should be incorporated into your cost and cash flow estimates.
Foreign Ownership Restrictions
While PRs can freely buy condos in Singapore, there are some restrictions on foreign ownership in certain developments.
Buildings with not more than six stories or those in the specified category of landed housing may have a cap on the number of units that can be owned by non-Singaporeans.
By understanding and fulfilling these legal requirements, you can ensure a compliant and successful condo purchase as a PR in Singapore.
Case Studies – Buying property in Singapore for PR
Joanna’s First Condo
Joanna is a 35-year-old PR working in the finance sector, and she has purchased her first property which is a condominium in Singapore for her use. Her share of funds was estimated at $1.5 million and she wanted a 2-bedroom flat that was centrally located.
Upon consulting a property agent, Joanna narrowed down a few condos in River Valley and the Orchard area. She bought a 1,100 sq ft resale unit in a generally well-maintained condo for $1.8 million ($1,636 psf). Joanna, being a first-time PR buyer, had to pay 5% ABSD, while taking a bank loan of 75% Loan-To-Value.
CPF OA savings were also spent to pay for the down payment and stamp duties as well as other expenses. By carefully planning her finances and choosing a property that met her long-term needs, Joanna successfully bought her first condo as a PR.
Sarah’s Resale Condo Journey
Sarah is a 28-year-old PR working in Singapore for the last three years and wanted to upgrade from renting to owning her condo. Her available capital was S$900,000 and she preferred a location close to an MRT station.
Sarah engaged a property agent specializing in resale condos and viewed several units in the Queenstown and Redhill areas.
She then bought a convenient 2 bedrooms of 800 sq ft in a 10-year condo at $930,000 ($1,188 psf). As a first-time PR buyer, Sarah paid 5% ABSD and secured a bank loan with an LTV of 75%.
She also used her CPF OA savings to cover part of the down payment and mortgage installments. By going for a resale condo, Sarah got a property that was well-situated and within her financial capacity.
Conclusion
Buying a condo in Singapore for PR can be a rewarding and achievable goal, whether for own-stay or investment purposes.
Understanding eligibility criteria and financing options as well as legalities allows you to plan effectively and also be in a better position when it comes to purchasing your property.
It is important to evaluate one’s financial standing, select the most appropriate condo based on one’s requirements and affordability, and seek the assistance of competent accomplices like property agents, as well as lawyers when entering into a condo deal.
While PRs face restrictions and additional costs compared to Singapore citizens, the long-term benefits of owning a property in Singapore, such as capital appreciation, rental income, and a sense of belonging, can make it a worthwhile investment.
As you embark on Buying property in Singapore for PR, familiarize yourself with the market and legislation changes, as well as financing methods and always consult with the appropriate professionals if necessary.
Following the steps above in the guide for Buying property in Singapore for PR, you can successfully buy your dream condo in Singapore and build a strong foundation for your future in this vibrant and dynamic city-state.
