Foreigners Buying Property In Singapore – 5 Complete Steps To Note

In this article, we will list down everything you need to know about foreigners buying property in Singapore.

You will learn about the eligibility conditions, regulations, duties, and much more for foreigners buying property in Singapore.

The property market in Singapore is partitioned and in favor of Singaporean citizens.

This is because the government needs to restrict the market to ensure property prices do not spiral out of control.

In the early ’70s, the Singapore government started regulating the property market in a bid to keep housing affordable, by imposing restrictions on foreigners buying property in Singapore.

These rules and regulations for foreigners buying property in Singapore were imposed due to the limited supply of housing.

As international businesses started flourishing in Singapore, regulations were put in place to keep real estate affordable for Singaporeans and give them a stake in their own country.

That being said, can foreigners own property in Singapore? 

Yes, you can. But there are certain conditions to be met. Under the Residential Property Act, landed properties are considered restricted properties. Foreigners buying property in Singapore are free to buy non-restricted properties while being subjected to the Additional Buyer’s Stamp Duty (ABSD) which is an additional 60% of the market value of the property.

Foreigners buying restricted property in Singapore will need to seek approval from the Land Dealings Approval Unit (LDAU) before purchasing.

With the exception of landed properties within Sentosa Cove that have no such restrictions and are available for sale to foreigners.

For foreigners buying property in Singapore, you are encouraged to apply for an In-Principle Approval (IPA) before entering a contract to purchase.

This is to prevent the forfeiture of monies in the event that approval is not granted for the property of your choice. 

Despite the restrictions in place, foreigners buying property in Singapore need not worry as there are ample opportunities to purchase a property in the Singapore real estate market.

However, finding a property, especially in an unfamiliar country is still challenging nonetheless.

You would be considered a foreigner if you are not a Singaporean Citizen, Singapore Permanent Resident, or any business entity registered in Singapore.

Businesses from offshore will be labeled the foreigner status if they don’t reside or are registered in Singapore.

Under the Residential Property Act, any individual who is not one of the following is classified as a “foreign being or foreign person” in Singapore:

• Citizen of Singapore
• A company from Singapore
• Limited Liability Partnership in Singapore

The Residential Property Act, chapter 274, also lists some definitions of foreign companies, foreign limited liability partnerships, and foreign societies.

According to the Singapore land authority, here are the types of Citizenship in Singapore recognized by law.

If you don’t fall under these categories, you would be considered a foreigner for Foreigners Buying Property In Singapore.

Citizenship by birth

If you are born in Singapore with at least one Singaporean parent and both parents are lawfully married, then you are a Singaporean citizen by birth.

Citizenship by descent

A Singaporean citizen by descent is a person who is born outside Singapore on or after May 15, 2004, and at least one parent is a Singaporean citizen.

Citizenship by registration

If an individual is a Permanent Resident in Singapore for at least two years and is employed full-time or married to a Singaporean citizen, he or she can request to be registered as a Singaporean citizen.

Singapore Company

According to ACRA, a company that is registered in Singapore under the Company Act Chapter 50 is considered a Singapore company.

Singapore Limited Liability Partnership

A Singapore Limited Liability Partnership (LLP) is a company structure in which two or more partners form a partnership organization to protect co-partners from liabilities arising from willful wrongdoing or gross negligence.

For foreigners buying property in Singapore, what are your options?

Start your search by identifying the type of property you intend to buy – Are you looking to buy a residential property or non-residential property?

Under Singapore’s regulations, residential properties are broken down into restricted or non-restricted categories.

Foreigners buying property in Singapore have to abide by the regulations and taxes imposed set on residential properties.

Non-residential properties, on the other hand, have much fewer restrictions and could be purchased by foreigners with the same leniency as Singaporeans.

For example, the Additional Buyers Stamp Duty is not imposed on foreigners buying a warehouse or office space to conduct their business proceedings.

The residential properties listed below are non-restricted for foreigners buying property in Singapore:

• Condominium unit
• Strata landed houses in a condominium vicinity
• Leased property in landed residential housing for a length of not more than seven years, plus any additional term as a result of renewal
• Shophouse (for commercial use only)
• Industrial and Commercial properties
• HDB Shophouse
• HDB flat
• Executive condominium units after privatization
• Properties in Sentosa Cove

The residential properties listed below are restricted to foreigners buying property in Singapore. They can only be purchased with approval from the Singapore Government:

• Vacant residential land
• Terrace house
• Semi-detached home
• Detached house or Bungalow
• Strata owned house that is not part of a condominium development that has been permitted under the Planning Act (e.g. townhouse or cluster house)
• Shophouse (for non-commercial use)
• Association Premises
• Places of worship
• Worker’s Dormitory, serviced flats, and boarding houses

*Note that Sentosa Cove is an exception. Most foreigners get approval to own a Sentosa Cove landed property in just 48 hours.

Including the usual taxes, there is an additional levy in the form of the Additional Buyers Stamp Duty (ABSD) for foreigners buying property in Singapore.

This is an additional tax of 60% of the property price. Which needs to be paid within 14 days after the sale agreement.

However, there are exceptions for United States Citizens, Nationals, and Permanent Residents from Switzerland, Liechtenstein, Norway, and Iceland.

You can simply pay the same percentage rate of taxes as a Singaporean citizen if you are from one of these countries.

Note that besides the ABSD, foreigners pay the same taxes – Buyers Stamp Duty (BSD) and regular property taxes – as Singaporeans.

There are no investment income or inheritance taxes on both Singapore citizens and Foreigners Buying Property In Singapore.

However, there is a Seller Stamp Duty (SSD) to regulate the resale of housing.

This tax is only applicable if you sell your property within three years of the purchase of the property.

These taxes apply to foreigners and locals alike if they sell the property within three years. 

• The SSD is 12% of the property price if you sell within the first year after purchase.
• The SSD is 8% of the property price if you sell after a year and within the second year after purchase.
• The SSD is 4% of the property price if you sell after the second year and within the third year after purchase.
• There is no SSD  starting from the fourth year onward.

For foreigners buying property in Singapore, you have to first check the taxes to be paid in order to buy your desired property.

You must calculate beforehand the taxes applicable for the purchase, to ensure that you have sufficient cash on hand to afford the property.

After confirming your budget, you can proceed to look out for properties available for sale in the market that fall under your affordability.

There are many factors to be considered before purchasing and for foreigners buying property in Singapore, you have to be vigilant as you are not familiar with the area.

Zoom in to your desired unit from the options made available to you and proceed to arrange physical or virtual viewings.

It is highly advised, for foreigners buying property in Singapore to hire a professional property agent.

Someone who will professionally execute the above tasks and recommend properties based on your requirements.

They will also assist in processing all the paperwork and other legal requirements to ensure the deal goes through without any issues.

Most real estate agents charge from 1% to 3% of the total price of the property as commission fees.

However, there is no commission payable to the buyer if the property purchase is a Building under Construction (BUC) or a New Project launch. 

For Foreigners Buying Property In Singapore after selecting a property, you have to check how much initial cash outlay is required from you and what’s the max loan amount obtainable.

Most banks offer mortgage loans for foreigners buying property in Singapore.

Getting an In-Principle Approval (IPA) based on your credit profile is an extremely important step when looking to purchase a property in Singapore with a loan. 

It’s also worth noting that there are limits on the loan-to-value (LTV) ratio of your mortgage, as well as mandated minimum cash down payments.

The loan-to-value ratio is typically 75% for a first home loan (depending on your age and the tenure of the loan, it can be as low as 55%).

The cash down payment required is typically 5% (but, similarly, it can be as much as 10%).

For Foreigners Buying Property In Singapore Be ready to fork out the required ABSD, legal fees, stamp duties, and any other taxes that may be required.

The property is handed over to you, and you can either occupy the property or begin leasing it out.

Investing in Singapore’s property market offers several advantages for Foreigners Buying Property In Singapore:

Stable Market

Singapore has a stable and well-regulated real estate market and therefore it is ideal for foreigners who are interested in long-term investment.

Strong Rental Demand

Due to the increasing number of expatriates and the business growth in Singapore, there is always a high demand for rental units.

Diverse Property Options

Whether for investment or living, the Singapore property market is rich in variety with options for luxury condos, commercial spaces, and more.

Strategic Location

Singapore is situated in the Southeast Asia region which makes it a major business, financial, and commercial hub which increases the value of the properties.

Potential Capital Appreciation

The property market in Singapore has demonstrated a capability to perform well and even though past performance is not an indicator of future returns, it has exhibited signs of capital appreciation.

While there are significant benefits to buying property in Singapore as a foreigner, there are also challenges and considerations to keep in mind for Foreigners Buying Property In Singapore:

Legal Restrictions

Some of these restrictions include properties such as HDB flats and properties in restricted zones that are inaccessible to foreigners. These are some of the limitations that one needs to grasp before going for any purchase.

Taxes and Duties

Apart from ABSD, there are other taxes and duties that the foreign buyers may be required to pay including the GST and property taxes. The above costs should form part of your investment plan.

Market Volatility

It is important to note that any property market including Singapore’s property market is not immune to the fluctuations that come with the change in the economic cycle or market trend.

These investors should therefore take their ability to bear risk and time horizon into consideration.

Financing Constraints

Foreigners may experience difficulties in accessing credit facilities for the purchase of properties since most of the banks currently provide lower financing ratios and conditions such as higher cash equity requirements.

Residency Status

The laws of Singapore also dictate how residents of this country acquire properties and how they are taxed.

Foreign investors who are not residents of Singapore may have different tax requirements compared to Singapore permanent residents or citizens.

To navigate the process of buying property in Singapore successfully for Foreigners Buying Property In Singapore, consider the following tips:

• Work with Professionals

Hire the services of professional property agents, attorneys, and financial consultants who focus on foreign investment. They can give useful information and advice that are specific to your situation.

• Understand Regulations

Get yourself acquainted with the Singapore property laws, rules and regulations, and the tax system. It is crucial to know any new alteration that may impact foreign property ownership.

• Research Market Trends

There is a need to carry out a market analysis to determine the possible investment opportunities and the possible risks and returns associated with various forms of properties in different areas.

• Budget Wisely

Determine the amount of money you are willing and able to spend for the purchase of the property and other costs such as taxes, fees, repairs, and contingencies. Do not overstretch your financial means to avoid exposing yourself to financial risks.

• Long-Term Investment Strategy

First of all, try to understand what you want to get from your investment and how long is your investment horizon. It is common for property investment in Singapore to be long-term, hence it is important to factor this into your portfolio and expect changes in the market.

Foreigners Buying Property In Singapore are concerned with the laws and possibilities for foreigners.

The Singapore property market has various types of properties for foreign investors, either for residential use or for business.

Now let’s take a look at the main points of Singapore property purchasing for foreigners.

Purchasing of residential properties such as condominiums and strata landed houses is open to foreigners in Singapore.

However, there are certain restrictions and considerations to keep in mind:

Type of Property

Foreigners are in most cases not allowed to purchase public housing like the HDB flats for sale unless they are permanent residents or if they fall under special schemes like the Non-Citizen Spouse Scheme.

Additional Buyer’s Stamp Duty (ABSD)

Foreigners are required to pay ABSD which is an extra amount over and above the purchase price of the property.

The ABSD rates differ according to the conditions such as citizenship and the number of properties owned.

Loan Eligibility

Singapore banks may be reluctant to provide financing to foreign buyers compared to Singaporean buyers since they have lower loan-to-value ratios, meaning they may require a higher down payment.

Nevertheless, the purchase of residential property in Singapore can still be considered a profitable investment for foreigners, particularly in the selected areas with high rental activity.

There is also the availability of commercial spaces in Singapore for foreign investors for instance in retail space, office space, and industrial space. Here are some key points to note

• Types of Commercial Properties

Foreigners are allowed to invest in different categories of commercial real estate such as shops in malls, office, and industrial buildings.

• Tax Implications

Like residential properties, commercial properties also come under taxation policies like property tax and Goods and Services Tax (GST). The following are some of the taxes that foreign investors should know when investing in commercial real estate.

• Rental Yields and Market Trends

Singapore commercial properties can present good rental returns depending on various factors, especially in sectors with high demand.

Foreign investors can be able to make appropriate decisions by conducting a comprehensive market analysis and understanding the tenants’ needs.

That said, there are legal requirements as well as taxation laws that apply to foreigners intending to invest in the Singapore property market,

Nonetheless, the market offers a wide variety of investment opportunities across the residential and commercial segments.

Through seeking assistance from property experts, being knowledgeable on legal measures, and performing proper research and diligence foreign investors can be able to invest in the Singapore property market and benefit from its expansion.