foreigner buying property in singapore

2024 Guide for Foreigners Buying Property in Singapore

Singapore remains an attractive destination for foreign real estate investors, despite a recent hike in the Additional Buyer’s Stamp Duty (ABSD) rate from 30% to 60%.

Experts like Hutton Asia’s Mr. Lim suggest that while the higher tax may initially deter foreign buyers, the city-state’s appeal as a comfortable and safe environment might encourage some to consider permanent residency earlier than planned.

While foreigners can buy a house in Singapore, certain restrictions and regulations are in place. This guide provides a concise overview of eligibility, property types, and the purchasing process for those interested in Singapore’s real estate market.

Eligibility Criteria for Foreigners

Let’s first define who qualifies as a non-Singaporean or foreigner, before diving into specifics. According to the Singapore Land Authority, a person is regarded as a foreigner if they are neither:

  • a Singapore citizen,
  • a Singapore company,
  • a Singapore limited liability partnership nor
  • a Singapore society.

Note that Singapore Permanent Residents (PRs) also fall under the category of non-Singaporeans (or foreigners) when buying a property in Singapore.

Specific Restrictions on Types of Properties

Effective from 19 July 2005, the Singapore government amended the Residential Property Act (RPA), enabling foreigners to purchase apartments or condominiums without prior approval. Nonetheless, there are still restrictions for foreign individuals on owning private residential properties in Singapore.

Foreigners aiming to purchase private landed properties must seek approval from the relevant authorities first. Moreover, when buying private residential properties, foreigners encounter higher taxes and more limitations than purchasing non-residential properties, such as commercial real estate.

Here is a simple breakdown:

  • HDB Flats: Foreigners alone cannot purchase Housing Development Board (HDB) flats, which are public housing in Singapore. These are reserved for Singapore citizens and Permanent Residents (PRs) under specific conditions.
  • Landed Properties: Foreigners are generally prohibited from buying landed properties, including terraced houses, semi-detached houses, bungalows, and plots of land, without obtaining prior approval from the Singapore Land Authority’s Land Dealings Approval Unit (LDAU).
  • Condominiums and Apartments: Foreigners can purchase condominiums and apartments in non-landed residential developments without prior approval. This is part of the relaxation under the Residential Property Act since 19 July 2005.

How to Acquire SLA Approval

The criteria for obtaining approval to purchase restricted property types in Singapore for foreigners are assessed individually. According to the Singapore Land Authority, Key factors include:

  • The applicant must have been a permanent resident (PR) of Singapore for at least five years.
  • The applicant must have made an exceptional economic contribution to Singapore, evaluated based on factors such as employment income taxable in Singapore.

Assessment Criteria

The assessment criteria are as follows:
Landed on Singapore’s main island Landed property at Sentosa Cove

Approval is based on individual merits. However, the main requirements are:

1. Must have minimum SPR status

2. Must make a sufficient economic contribution to Singapore in terms of the following:

  • Professional, academic and/or tech qualifications
  • Expertise and/or professional experience needed in Singapore
  • Investments made in the types of industry and/or service sectors needed in Singapore

 

1. SPRs are eligible. Foreigners must get the Singapore Land Authority (SLA) LDAU’s approval.

2. Only for owner-occupied

3. All other rules are much like those of other landed properties located on the mainland

 

(source: Pinnacle Estate Agency)

 

Types of Properties Available to Foreigners

Foreigners can buy freehold properties, such as condominiums and executive condominiums, without prior approval. However, this does not extend to landed freehold properties, which require approval from the Singapore Land Authority.

Difference between what Singapore PRs and Non-Singapore PRs can buy

Property type What Singapore PRs can buy What Non-Singapore PRs can buy
Resale HDB flats Yes (with another SPR or SC) No
Resale Executive Condominiums (ECs) Yes (that have reached their 5-year MOP) No
Private ECs Yes Yes
Private condos Yes Yes
Strata-landed houses Yes No
Landed properties in Sentosa Cove Yes Yes
Private landed properties Yes (with special permission from the Singapore Land Authority) Yes (with special permission from the Singapore Land Authority)

 

Types of Property Requiring Approval (Restricted Property)

  • Vacant residential land
  • Terrace house
  • Semi-detached house
  • Bungalow/detached house
  • Strata landed house not in an approved condo development (e.g., townhouse, cluster house)
  • Landed residential property at Sentosa Cove
  • Shophouse (for non-commercial use)
  • Association premises
  • Place of worship
  • Worker’s dormitory/serviced apartments/boarding house (not under Hotels Act)
  • Commercial & Residential properties (with a note to click for FAQs)

Types of Property That Can Be Purchased Without Approval (Non-Restricted Property)

Foreigners have the green light to invest in several property types, including:

  • Condominiums and Executive Condominiums (ECs): High-rise or cluster housing units within a development that offers shared facilities.
  • Strata Landed Properties: Landed homes within gated communities that provide shared facilities, available without prior approval if part of approved condominium developments.
  • Leasehold Estate in Landed Properties (< 7 years): Detached houses, semi-detached houses, and terraced houses, which require approval from the authorities.
  • Commercial and Industrial Properties: These include offices, retail spaces, and warehouses, which are generally available to foreigners without the need for approval.
    • Shophouse (for commercial use)
    • Industrial and commercial properties
    • Hotel (registered under Hotels Act)
    • HDB shophouse (advising to check HDB eligibility at hdb.gov.sg)

Limitations and Conditions for Purchasing Different Types of Properties

  • Additional Buyer’s Stamp Duty (ABSD): Foreigners are subject to higher ABSD rates compared to Singapore citizens and Permanent Residents (PRs), which significantly increases the cost of purchasing residential property.
  • Restricted Zones: Certain areas may be off-limits or require additional scrutiny before sale to foreigners to preserve the local cultural and historical heritage.
  • Restrictions on HDB Flats: Foreigners are not eligible to purchase Housing Development Board (HDB) flats, which are reserved for Singapore Citizens and Permanent Residents. However, they may rent HDB flats under certain conditions.
  • Executive Condominiums: Foreigners are eligible to purchase EC units in the open market only after the EC project has reached its 10th year from the date of its initial occupation. Before this period, the purchase of ECs is restricted to Singapore Citizens and Permanent Residents.

Legal and Financial Considerations

Regarding purchasing property in Singapore, foreigners are subject to specific legal and financial requirements. Understanding these considerations is crucial for a smooth transaction.

property tax

Foreigner Tax on Buying Property

Foreigners buying any residential property in Singapore must pay an Additional Buyer’s Stamp Duty (ABSD) on top of the standard Buyer’s Stamp Duty (BSD). As of April 27, 2023, the ABSD for foreigners has been doubled from 30% to 60%. This increase is part of the government’s efforts to promote a sustainable property market and prioritize housing for owner-occupation, as stated by the Ministry of Finance (MOF), the Ministry of National Development (MND) and the Monetary Authority of Singapore (MAS) in a joint statement.

Here is the current Additional Buyer’s Stamp Duty Rates in Singapore (2024)

Profile of Buyer ABSD Rates on or after 27 Apr 2023
Singapore Citizens (SC) buying their first residential property Not applicable
SC buying their second residential property 20%
SC buying the third and subsequent residential property 30%
Singapore Permanent Residents (SPR) buying their first residential property 5%
SPR buying a second residential property 30%
SPR buying third and subsequent residential property 35%
Foreigners (FR) buying any residential property 60%
Entities buying any residential property 65%
Housing Developers buying any residential property 35% (Plus Additional 5% (non-remittable))

(source: IRAS)

Legal Process for Foreign Buyers

Foreign buyers must obtain approval from the Singapore Land Authority before purchasing certain types of property, such as landed residential properties. This approval process is in place to ensure that foreign investment aligns with the nation’s housing policies.

Financial Requirements

In addition to the ABSD, foreign buyers are subject to the following financial requirements:

  • Buyer’s Stamp Duty (BSD): This tax is applicable to all property purchases in Singapore. The BSD rates are based on the purchase price or market value of the property, whichever is higher.
  • Associated Costs: Foreign buyers should also account for other costs associated with purchasing property in Singapore, such as legal fees, agent fees, and mortgage-related expenses.

The BSD rates are as follows:

On or after 15 Feb 2023
Purchase price or market value of the property BSD rates for residential properties BSD rates for non-residential properties
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% 5%

(source: IRAS)

Steps to Buying Property as a Foreigner in Singapore

Buying property in Singapore as a foreigner involves a series of steps to ensure a successful transaction. Here’s a step-by-step guide to help you navigate the process:

Research and Property Search

Start by researching the Singapore property market to understand the types of properties available and their respective regulations for foreign buyers. Utilize online property portals, engage with real estate agents, or attend property exhibitions to find suitable properties.

Engage a Real Estate Agent

Consider hiring a reputable real estate agent who has experience working with foreign buyers. They can provide valuable insights, assist with property viewings, and help negotiate the best deal.

“Always ask about their experience and what the agent does to separate himself/herself from other agents,” advised Louis Adler, principal, and co-founder of REAL New York, in an interview with Forbes.

Conduct Due Diligence

Once you’ve identified a property, conduct thorough due diligence. Due diligence is a crucial step in the property buying process, especially for foreign buyers. It involves verifying all aspects of the property and the transaction to ensure a smooth and risk-free purchase. 

This includes verifying the property’s ownership, understanding the lease terms (if applicable), and checking for legal encumbrances.

  • Verify Ownership and Title: Check the property’s title deed to confirm the seller’s ownership and ensure no disputes or encumbrances on the property.
  • Understand Lease Terms (if applicable): If the property is leasehold, understand the lease terms, including the remaining lease period and any restrictions or conditions imposed by the lease.
  • Review Property Documents: Request and review all relevant property documents, such as the building plan, Certificate of Statutory Completion (CSC), and any renovation permits.
  • Check for Outstanding Payments: Ensure there are no outstanding payments or liabilities associated with the property, such as unpaid property taxes, maintenance fees, or utility bills.
  • Inspect the Property: Conduct a thorough inspection to assess its condition, identify any defects or issues, and evaluate the need for repairs or renovations.
  • Research the Location: Investigate the property’s location, including its proximity to amenities, transportation, schools, and potential developments in the area that may affect its value.
  • Understand the Regulatory Environment: Familiarize yourself with Singapore’s property regulations, including any restrictions on foreign ownership, stamp duty rates, and other legal requirements.
  • Engage Professionals: Consider hiring property lawyers, surveyors, and valuers to assist with the due diligence process and provide expert advice.
  • Review the Sales and Purchase Agreement: Carefully review the terms and conditions of the Sales and Purchase Agreement (SPA) to ensure they align with your understanding and expectations.
  • Plan for Contingencies: Be prepared for any unexpected issues that may arise during the due diligence process and have a contingency plan in place.

secure financing loan

Secure Financing (if needed)

If you require financing, approach banks or financial institutions in Singapore to understand the available loan options and eligibility criteria for foreigners. Obtain an in-principle approval (IPA) for your loan to gauge your budget and strengthen your position as a serious buyer.

Here are a few tips:

  • Understand Loan-to-Value (LTV) Limits: The Monetary Authority of Singapore imposes LTV limits on housing loans granted by financial institutions. These limits can affect how much you can borrow, which is typically lower for foreigners to mitigate risks. For your initial loan, you qualify for a Loan-to-Value (LTV) ratio of 75%, allowing you to borrow up to 75% of the property’s purchase price or market value, whichever is lower, provided you have no outstanding housing loans. To cool the market, the Singapore government has reduced the maximum LTV ratio for bank loans from 80% to 75%. If you already have a housing loan, you can borrow up to 45% of the lower of the property’s market value or purchase price. The more housing loans you have, the smaller the proportion of the home loan you can secure.
  • Shop Around for Mortgage Offers: Different banks and financial institutions offer various mortgage packages with distinct interest rates and terms. Compare these to find the best fit for your financial situation and property type.
  • Prepare a Strong Financial Profile: Lenders will assess your income, employment stability, credit history, and existing debts. Ensure your financial health is in good shape to improve your eligibility. This may include clearing outstanding debts and maintaining a strong credit score.
  • Consider Additional Costs: Beyond the purchase price, account for additional costs such as the Buyer’s Stamp Duty (BSD) and Additional Buyer’s Stamp Duty (ABSD), legal fees, and property taxes. These can affect your total financing needs.
  • Plan for Long-Term Affordability: Consider your long-term financial stability and how changes in interest rates, employment status, or personal circumstances could affect your ability to service the loan.

Make an Offer and Negotiate

Submit a Letter of Intent (LOI) to the seller, indicating your interest and proposed purchase price. The LOI may also include a goodwill deposit to show your commitment. Negotiate the terms of the sale, including the price, payment schedule, and any other conditions.

Sign the Option to Purchase (OTP)

Upon agreement, the seller will grant you an Option to Purchase (OTP), which is a legally binding document outlining the terms of the sale. Pay the option fee (usually 1% of the purchase price) to secure the OTP, typically giving you 14 days to exercise the option by signing the Sales and Purchase Agreement (SPA).

Complete the Transaction

Finalize your financing arrangements and prepare the necessary funds for the remaining down payment and associated costs (e.g., stamp duties, legal fees). Engage a lawyer to handle the legal aspects of the transaction, including the conveyancing process and submission of documents to the relevant authorities. Upon completion, the property will be officially transferred to your name, and you can take possession of your new home.

Challenges and Tips for Foreign Buyers in Singapore’s Property Market

Buying property in Singapore as a foreigner comes with its own challenges. Understanding these challenges and navigating them can help you make informed investment decisions.

Challenges

  • Regulatory Hurdles: Foreigners face stricter regulations when purchasing property in Singapore, such as higher Additional Buyer’s Stamp Duty (ABSD) rates and restrictions on buying certain types of properties (e.g., landed properties).
  • Financing Issues: Obtaining financing as a foreigner can be more challenging, with stricter loan-to-value (LTV) ratios and potentially higher interest rates.
  • Market Complexity: Navigating the Singapore property market can be complex due to its dynamic nature, legal requirements, and various taxes and fees involved.
  • Cultural and Language Barriers: Foreign buyers may encounter challenges related to cultural differences and language barriers, which can impact communication and understanding of the local market.

Tips for Navigating the Market

  • Do Thorough Research: Invest time in researching the Singapore property market, understanding the regulations affecting foreign buyers, and identifying areas with potential for growth.
  • Engage Professional Help: Consider hiring a reputable real estate agent, lawyer, and financial advisor who has experience working with foreign buyers and can provide guidance throughout the buying process.
  • Understand Financing Options: Explore different financing options available to foreigners and compare interest rates and terms offered by various banks and financial institutions.
  • Consider the Long-Term Outlook: Look at the long-term potential of the property, considering factors like location, future developments, and rental yield, rather than just focusing on short-term gains.
  • Be Prepared for Additional Costs: Factor in additional costs such as stamp duties, legal fees, and property taxes into your budget to avoid any surprises.
  • Stay Informed about Changes in Regulations: Keep abreast of any changes in regulations that may affect foreign property buyers, as policies can change over time.
  • Network with Other Foreign Buyers: Connecting with other foreign buyers who have gone through the process can provide valuable insights and tips based on their experiences.

Insights from Real Estate Experts on Trends

Dora Chng, General Manager (Residential) at GuocoLand Singapore, highlights the importance of convenience, greenery, and flexibility in meeting the needs of modern homebuyers​ in a report by the Singapore Business Review.

  • Convenience: Homeowners are increasingly valuing convenience and proximity to amenities. Developments like Lentor Modern by GuocoLand, which is directly connected to Lentor MRT station, cater to this demand by providing easy access to schools and workplaces along the Thomson-East Coast Line​​.
  • Need for Green Spaces: Despite the convenience of city living, the lack of greenery and family-oriented facilities can be a deterrent. GuocoLand’s Midtown Modern addresses this by offering over 1 hectare of greenery within the development, along with amenities such as a 50-metre lap pool, a tennis court, and entertainment pavilions​​.
  • Flexible Units: Many buyers are looking for units that are flexible to meet their changing lifestyle needs, rather than just larger spaces. GuocoLand’s Lentor Modern features two to four-bedroom units with a versatile Flex Room that can be used in a variety of ways, such as a nursery, gym, playroom, or even a guest bedroom​​.

real estate trends

Given these trends, foreign buyers may find opportunities in properties that offer convenience, access to green spaces, and flexible living spaces. Developments that cater to these preferences are likely to be attractive to both local and foreign buyers, potentially offering good investment prospects.

Conclusion

Foreign investors face legal, financial, and regulatory considerations when buying property in Singapore, including eligibility, property types, and additional costs like stamp duties. 

Despite these challenges, the market offers attractive opportunities, especially in developments emphasizing convenience and green spaces.

Key Takeaways:

  • The Additional Buyer’s Stamp Duty (ABSD) for foreigners has increased to 60%, affecting demand but Singapore’s market remains appealing for its safety and competitive property prices.
  • Foreigners can buy condominiums without prior approval, yet need approval for landed properties, highlighting the importance of understanding Singapore’s property purchase regulations.
  • For landed properties, foreigners must have Singapore Permanent Resident status for at least five years and contribute significantly to the economy, indicating the selective criteria for such investments.

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