For foreigners who wish to buy residential properties, either for own stay or investment, there are a number of Singapore property rules to take note of. The purchase of residential properties is governed by the Residential Property Act (RPA) which specify, among other things, what type of properties a foreigner can or cannot buy. But first of all, what is a Foreign Person?
Under the Residential Property Act (RPA), a foreign person means any person who is not any of the following:
- Singapore Citizen
- Singapore Company
- Singapore Limited Liability Partnership
- Singapore Society
Note: Under the RPA, a Singapore Permanent Resident (SPR) is considered a foreign person.
Singapore Property Rules – Restricted Properties Foreigners Can’t Buy
Under the Residential Property Act, a foreign person is not allowed to acquire or purchase restricted properties unless he obtains prior approval from the Minister of Law (more of this below). These restricted properties include the following:
- 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 (e.g., townhouse or cluster house)
- Shophouse (for non-commercial use)
Singapore Property Rules – Properties Foreigners Can Buy
Under the Residential Property Act (RPA), the following are some of the properties a foreigner can buy without approval.
- Condominium unit
- Flat unit
- Strata landed house in an approved condominium development
- A leasehold estate in a 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
- Executive condominium unit (foreigners – EC after 10 years; Singapore Permanent Residents – EC after 5 years)
Purchase of HDB Flats by Singapore Permanent Residents (SPR)
As mentioned earlier, under Singapore property rules, Singapore permanent residents (SPR) are considered foreigners. However, they are slightly luckier than foreigners. Beside the above-mentioned properties they can buy, they are also allowed to purchase HDB flats. However, certain conditions will apply, as highlighted below.
New Built-To-Order (BTO) HDB Flat
If the SPR is married to a Singapore citizen or about to be married to one, he/she can buy a BTO flat together with his/her spouse under the HDB’s Public Scheme, Non-Citizen Spouse Scheme or Fiancé/Fiancée Scheme. However, the SPR must be at least 21 years-old. A SPR family (meaning a family unit that does not include a Singapore Citizen) is not eligible to purchase a new BTO flat.
HDB Resale Flat
If a SPR and his/her Singapore Citizen spouse buy a HDB resale flat, they must dispose of their private property, if any, within 6 months of purchasing it. For a SPR family (meaning no Singapore Citizen) to buy a HDB resale flat, they must be permanent residents for at least 3 years before they are eligible under the Public Scheme or Fiancé/Fiancée Scheme. They cannot buy resale flats individually.
For more information about the various eligibility schemes and conditions, please refer to the HDB website. More can also be found in the article “Is Investing In HDB Flats A Good Option?”.
Conditions for Foreigners Buying Restricted Properties In Singapore
A foreigner who wants to buy a restricted property has to submit an application to the Controller of Residential Property through the Land Dealings Approval Unit (LDAU).
Each applicant is assessed on a case-by-case basis. The considerations include, but not limited to, the following factors:
- A permanent resident of Singapore for at least five years
- Make exceptional economic contribution to Singapore. This is assessed by taking into consideration factors such as the applicant’s employment income assessable for tax in Singapore
- Possess professional or other qualifications or experience which are of value or benefit to Singapore
Approval Conditions To Own Restricted Properties
Even after approval has been granted to the foreign person, stringent conditions have to be met with regards to property ownership. These include the following:
- Cannot sell within 5-years – the property cannot be disposed of within 5 years. This is calculated from the date of purchase of the property.
- Land Size – the land area of the property should not exceed 15,000 sq ft or 1393.5 sqm.
- Cannot rent out – the property is solely for own occupation and not for other purposes, such as rental.
- Grant of Written Permission – if a foreign owner wishes to rebuilt or reconstruct the property, a Grant of Permission must be obtained within 6 months after the date of the letter conveying the Minister’s decision.
Conditions for Foreigners Buying Properties in Sentosa Cove
Under the Singapore property rules since August 2004, foreigners are allowed to buy land parcels and completed bungalows in Sentosa Cove. Although approval is still needed from the Land Dealings Approval Unit (LDAU), the conditions are less stringent. Applications will be subjected to express approval within 2 days, instead of 6 weeks.
However, there are still ownership conditions for such property acquisitions in Sentosa Cove:
- Own occupation – the landed property must be for own occupation. But there is no Minimum Occupation Period (MOP).
- Restricted to one property – foreigners are not allowed to own more than one residential property in Singapore.
- Selling Property – foreigners can resell their Sentosa Cove properties to other foreigners, who must likewise satisfy the same ownership conditions.
Property Stamp Duties Payable by Foreigners
Foreigners buying residential properties in Singapore must pay Buyer’s Stamp Duties (BSD) and Additional Buyer’s Stamp Duties (ABSD). These stamp duties are imposed to curb excessive property speculation to prevent property prices running ahead of economic fundamentals.
Stamp Duties are taxes on dutiable documents relating to any immovable properties in Singapore. Buyer’s Stamp Duties (BSD) are computed on the purchase price as stated in the document to be stamped or market value of the property, whichever is the higher amount.
However, the ABSD rate being charged differ between Singapore Citizens, Singapore Permanent Residents and Foreigners. (Note: Nationals or Permanent Residents from Switzerland, Norway, United States, Iceland and Liechtenstein are eligible for ABSD remission under the Free Trade Agreements (FTAs) and are accorded the same stamp duty treatment as Singapore Citizens).
ABSD are charged on top of BSD and these stamp duties are computed based on the following rates:
ABSD and BSD Rates
In addition to BSD and ABSD, Seller’s Stamp Duty (SSD) is payable when a property is sold within 3 years of its purchase. This is to prevent quick flipping of properties for speculation. SSD is calculated from the date when the buyer exercised the Option to Purchase or Sales and Purchase Agreement. It is based on the selling price or market value, whichever is higher.
SSD is payable according to the following rates:
Seller’s Stamp Duty (SSD)
For a more detailed explanation about these stamp duties, please refer to “How To Calculate Singapore Property Stamp Duties BSD, ABSD And SSD“?
Singapore Property Rules – Capital Gain And Inheritance Taxes
As explained above, anyone who sells his property within 3 years of its purchase, regardless of whether you are a Singaporean or foreigner, will have to pay seller’s stamp duty (SSD) of up to 12%. Considering that a property can easily cost above 1-million dollars nowadays, it’s an hefty amount to pay. Hence, be prepared to hold the property for at least 3 years.
However, the good news is – there is no capital gain or inheritance taxes in Singapore! If you are looking for properties with promising investment potential, you may wish to check out these three new properties with promising investment potential:
- Provence Residence, an executive condo near Canberra MRT station and Canberra Plaza
- Parc Greenwich, an executive condo at Fernvale Lane, next to the Seletar Springs Estate
- Bartley Vue, a 115-unit condo development 400m from the Bartley MRT station
- The Watergardens At Canberra, a low-rise condo development near the Canberra MRT station
- Canninghill Piers, an integrated development at Clarke Quay beside the Singapore River
- The Reef At King’s Dock, an exclusive waterfront development at Harbourfront opposite Sentosa island
- Midtown Modern, an integrated development to be built atop the Bugis MRT station
- One Bernam condo, a mixed-use development at Tanjong Pagar within the Central Business District
- The Atelier, a freehold condo development at Newton in Singapore’s prime District 9
- Kopar At Newton, an exclusive condo development opposite the Newton Food Centre
- Ki Residences At Brookvale, a 999-year development in the idyllic Sunset Way estate
- Parc Central Residences, the first executive condominium to be launched in Tampines in eight years
- One-North Eden, a mixed-use development in one-north, Singapore’s high-tech, research and innovation hub
- Pasir Ris 8, an integrated development beside the Pasir Ris MRT station, bus interchange and White Sands shopping mall
Should you require more information on Singapore property rules or property investment, please do not hesitate to contact us for an obligation-free consultation. We are the largest property agency in Singapore with a wide network of experienced and professional real estate agents to advise you on all property-related matters.
Meanwhile, check out the following resources:
- Buying A Property In Singapore: Factors to Consider
- How to Buy A New Launch Private Property
- A Complete Guide: Buying A Resale Private Property
- Singapore Property Rules For Foreigners
- How to Buy A HDB BTO Flat
- How to Buy A HDB Resale Flat – A Complete Guide
- Change in CPF Usage And Housing Loan Rules
- Home Loan In Singapore – Factors to Consider