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Thanks to a stable market and a thriving economy, Singapore’s real estate market is one of the most competitive and dynamic in the world. It is also not the easiest market to enter, especially if you are a foreigner. Understanding the process and keeping in mind key considerations can help those considering buying private property in Singapore confidently navigate this lucrative market.
Before beginning the process, you need to select a location. This can be important for people buying their first private property in Singapore. Established districts like Orchard, Marina Bay and Sentosa Cove offer high-end luxury living, while emerging neighbourhoods such as Paya Lebar and Jurong Lake District promise growth potential and investment returns.
It is also important to factor in additional financial considerations like Buyer’s Stamp Duty (BSD) and Additional Buyer’s Stamp Duty (ABSD) for foreigners and/or second-time buyers, legal fees, and loan eligibility. These financial commitments should be carefully evaluated to avoid surprises in the procedure for buying private property in Singapore.
Whether you’re buying private property in Singapore for personal use or investment, understanding the purchase process is critical to successful acquisition. Read on for a detailed guide on how to purchase private property in Singapore.
Comprehensive Guide to Purchasing Property in Singapore
1. Pre-Purchase Research
Before making a property purchase, establish a realistic budget that includes additional costs such as Buyer’s Stamp Duty (BSD), Additional Buyer’s Stamp Duty (ABSD), and legal fees. Conduct a property search, shortlist preferred options, and arrange for inspections. Consider the property’s tenure (leasehold or freehold) and decide if obtaining a title search is necessary. You also need to determine if the property is tenanted or vacant, and if tenanted, review the tenancy agreement carefully.
2. Negotiating the Purchase Price
Initiate negotiations by submitting an initial offer, often facilitated by a real estate agent through an Offer to Purchase, which expresses an interest in purchasing the property. Be prepared for counter-offers and negotiate until both parties agree on the price and terms, ensuring these details are captured in the legally binding Option to Purchase (OTP).
3. Reviewing the Option to Purchase (OTP)
Conduct due diligence on the property and the seller before finalising the OTP. It’s important to carefully review the terms and conditions within the OTP and seek legal advice if necessary. Common clauses include a stakeholding clause, where the seller’s lawyer holds the balance deposit in a Conveyancing Account. The option period typically lasts 14 days, with the completion period extending 8 to 10 weeks unless negotiated otherwise.
4. Securing the OTP in Exchange for the Option Fee
The Option Fee is typically 1% of the purchase price. Upon payment, the seller grants the OTP, valid for 14 days unless extended by mutual agreement. Buyers are not required to sign the OTP immediately but should retain the original document.
5. Engaging a Conveyancing Lawyer
Select a conveyancing lawyer experienced in Singapore property law. Your lawyer will conduct an Anti-Money Laundering check upon engagement. Forward the OTP for legal review and guidance on the conveyancing process.
6. Legal Requisitions and Searches
Your lawyer will perform a title search to ensure the property is free of encumbrances. Additional checks include bankruptcy searches, legal requisitions, and reviews of road line plans to ensure the property’s legal standing.
7. Exercising the OTP Before Expiry
To exercise the OTP, sign the document at your lawyer’s office and pay the remaining deposit, typically 4% of the purchase price. Your lawyer will lodge a caveat with the Singapore Land Authority (SLA) to secure your legal interest in the property.
8. Paying Buyer’s Stamp Duty (BSD) and ABSD
Your lawyer will calculate the BSD and ABSD (if applicable) and advise on payment deadlines. These duties must be settled within 14 days of exercising the OTP.
9. Obtaining a Housing Loan (if applicable)
If financing the property, submit a loan application to a reputable bank. Confirm whether your lawyer can represent the bank to streamline the process. Ensure you secure your loan approval with clear terms before proceeding.
10. Using CPF Funds (if applicable)
For buyers using CPF funds, work with your lawyer to apply through the CPF Board. CPF funds can cover the down payment, legal fees and monthly mortgage payments.
11. Preparing for Completion
Your lawyer will coordinate document preparation, including the transfer instrument, completion accounts, and payment instructions. If securing a loan, submit proof of payment for the cash balance before the bank disburses loan funds.
12. Completion Process
If permitted by the OTP, conduct a final property inspection. The completion meeting typically occurs at the seller’s lawyer’s office, where both parties finalise payments and legal documentation. At this stage, property ownership is officially transferred.
Eligibility to Purchase Private Property in Singapore
In Singapore, eligibility to purchase private property varies based on residency status and property type.
- Singapore Citizens have no restrictions. Singaporeans can purchase private condominiums, apartments and landed properties.
- Singapore Permanent Residents can purchase Executive Condominiums (EC), private condominiums and apartments after the five-year Minimum Occupation Period (MOP), but purchasing landed properties requires approval from the Singapore Land Authority (SLA).
- Foreigners can purchase resale ECs only after the MOP of ten years, when the EC becomes fully privatised, condominiums and apartments without restrictions, and landed properties in Sentosa Cove. Purchasing landed properties in mainland Singapore requires approval from the SLA, typically granted to those who have made exceptional economic contributions.
Use of CPF Ordinary Account
In Singapore, your CPF Ordinary Account (OA) savings can be utilised for various aspects of property acquisition, including:
- Down Payments and Housing Loans: Covering initial down payments and servicing housing loans for private residential properties.
- Stamp Duties and Legal Fees: Paying for associated stamp duties and legal expenses incurred during the purchase.
- Construction and Land Purchase: Financing the construction of a house and purchasing vacant land, applicable to private properties.
The extent to which CPF OA savings can be used is subject to the valuation limit (VL) and withdrawal limit, currently set to 120% of the VL.
Ready to Invest in Private Property?
Whether buying your first private property in Singapore or adding to your investment portfolio, a strategic approach is key to success. Singapore’s property market is known for its robust legal framework, high-value assets, and global investor appeal. Engaging a real estate professional is essential, as they can offer market insights, manage negotiations, and ensure legal compliance, helping keep the process smooth and stress-free.
Contact Singapore Luxury Homes today for personalised guidance on navigating Singapore’s competitive property market and securing your dream home or investment property.
