Singapore is considered one of the most restricted cities for foreigners to buy property. The reasons can be attributed to a lack of space and high demand due to the country’s political stability, good governance, no corruption, efficiency, and ease of doing business. This makes Singapore a popular destination for foreign investments, despite the complexity and high cost of property acquisition. Furthermore, investing in the property market in Singapore is considered safe, especially if you’re considering living there in the long term.
In this article, we will discuss the cost of owning a property in Singapore, the financing process, and related stamp duties.
But first things first. As we previously mentioned, foreigners in Singapore are only allowed to own landed properties.
So, what is a landed property?
What is Considered a Landed Property?
A landed property is a type of property where the owner holds the title to both the building and the land the structure is built. This differs from apartments or condominiums, where ownership is limited to the space of the unit. In Singapore, common types of landed residential properties include:
- Semi-detached houses: Two houses sharing a common wall, each with its own land title.
- Terrace houses: Part of a row of at least three houses, each with its own land title and shared walls with neighbors.
- Bungalows: Fully detached houses with their land titles.
Can Foreigners Buy Landed Properties in Singapore?
For foreigners, buying landed residential property in Singapore requires approval from the Land Dealings Approval Unit (LDAU) under the Residential Property Act (RPA). These properties are considered restricted, which means they are reserved for Singapore Citizens. Restricted properties include vacant residential land, semi-detached houses, bungalows, terrace houses, shophouses, and strata landed houses not part of an approved condominium development, such as townhouses or cluster houses.
Why You Should Invest In A Landed Property?
If you’re considering investing in the property market in Singapore, we recommend that you buy landed property despite the complexities. There are many perks of owning landed property in Singapore, that is, if you can afford one.
Landed properties are spacious and offer more privacy, making them perfect for families, more so if you have kids. This way, your future generations can inherit the property. As landed properties have more space than apartments or condominiums, everyone has room to breathe and doesn’t have the feeling of being cramped. The large land area is also ideal for pets, particularly dog lovers, as they have plenty of room for pets to roam and play.
While landed homes typically lack amenities like gyms or pools found in furnished apartments or condominiums, they offer other perks, and you don’t have to pay monthly maintenance fees. Overall, landed properties offer a better living experience compared to condominiums.
How Much Does It Cost?
Whether you’re purchasing a landed property or condominium, properties in Singapore are on the expensive side.
Here’s a quick breakdown of private property costs and payments in Singapore:
Property Prices:
- Terrace House: SGD 1.8 million to SGD 6.8 million
- Semi-Detached House: SGD 3.2 million to SGD 13.3 million
- Bungalow: SGD 3.8 million to SGD 22.5 million
- Good Class Bungalow (GCB): SGD 9.9 million to SGD 110 million
Financing properties in Singapore?
For private properties, buyers can only take bank loans, unlike HDB flats, where HDB loans are an option. HDB flats are public housing apartments in Singapore. They are built and managed by the Housing and Development Board (HDB). This means the downpayment is higher, 25% of the property price.
Out of this, at least 5% must be paid in cash, while the remaining 20% can come from CPF savings or cash. The Central Provident Fund (CPF) is Singapore’s social security system.
Additionally, there’s an option fee to consider, which is 5% of the property price. This is an extra cost on top of the downpayment.
Foreigners in Singapore can apply for a bank loan to finance up to 75% of a property’s purchase price. Mortgage interest rates vary based on market conditions, and borrowers can choose between a floating or fixed rate home loan. Banks in Singapore are strict about repayment, and in cases of default, they may repossess the property. To avoid financial strain, it is recommended to have at least 12 months’ worth of savings as a safety net.
Stamp Duty
Foreigners purchasing landed properties in Singapore are required to pay both Buyer’s Stamp Duty (BSD) and Additional Buyer’s Stamp Duty (ABSD). These taxes apply to property transactions in Singapore. BSD is calculated based on the higher amount between the property’s purchase price and its market value.
For ABSD, non-permanent residents are subject to a 60% tax, while permanent residents (PR) of Singapore must pay 5%, also based on the higher of the purchase price or market value.
If you’re a foreigner or a permanent resident married to a Singaporean and do not own any residential property, you are exempt from paying the Additional Buyer’s Stamp Duty (ABSD) when purchasing private property.
If you don’t know how to calculate the BSD or ABSD for a new home, you can do that easily with the buyer stamp duty calculator. It helps to quickly determine the duties payable, making the process simple and hassle-free.
