foreigners buying property in singapore rules

Foreigners Buying Property in Singapore’s World-Class Market

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Charming bungalows along Bukit Timah lure with views of lush palms and bring the outdoors in. Beachfront condos in Sentosa Cove call coastal horizons inside like modern sirens. Who hasn’t been captivated by the idea of indulging in a luxurious home while on a vacation abroad?

But international real estate is more than an impulse buy — or it should be if you’re smart.

foreigner buying property in singapore

Owning a second or more homes abroad isn’t just about luxury; there are pragmatic benefits to purchasing property in another country. It can be a way to diversify an investment portfolio or provide rental income. Buy in Singapore, and you automatically gain access to one of the world’s hottest — and safest — property markets. International purchases made a decade ago are considered very wise today.

“It turns out buying property in Singapore as a foreigner has been a good idea and offers several benefits, such as a stable property market with strong growth potential, the opportunity to generate rental income, and the possibility of capital appreciation,” says Sunita Gill, cofounder and COO of Singapore Luxury Homes.

Additionally, specific investments might make foreigners eligible for residency statuses like the Long-Term Visit Pass or Permanent Resident status. Singapore’s real estate market is known for its substantial investment value and regulatory environment that balances international investment with local market stability​.

Rules for Foreigners Buying Property in Singapore

Of course, there are risks as well: Currencies can slide, taking with them the value of overseas investments; political changes can affect ownership laws; and the buying process can be complex and confusing, especially when foreign funds are in play. So, while it may seem like a lark, foreign buyers should put even more care and thought into purchasing internationally than at home.

“You shouldn’t assume that the real estate system mirrors your home country’s,” Gill continues. “The marketing approach to property and the tax system can vary significantly based on your nationality.”

Can foreigners buy property in Singapore?

Some principles should be followed when buying real estate anywhere. It is common sense to ensure that the person selling you your dream home has a title to the property. But beyond that, providing the property’s legal status and any encumbrances is also an essential step. Investigating the neighbourhood’s future development plans is wise, as these can impact property values. Understanding the local real estate market trends and economic factors can guide a more informed purchase decision.

Rules for foreigners buying property in Singapore

Every country has different rules and conventions, which means prospective buyers need to consider diverse issues, including ownership restrictions, tax ramifications, development regulations, currency issues and political climate — before they fall in love with a home, but here are some common ones that you should be aware of if you’re a foreigner buying property in Singapore:

The Additional Buyer’s Stamp Duty is an extra tax imposed on certain property purchases in Singapore to cool the residential market and discourage speculative buying. It applies to locals and foreigners, with foreigners facing a higher rate. The ABSD rate for foreigners is significantly higher than for Singapore citizens or Permanent Residents, underlining the government’s approach to prioritising housing affordability for its citizens.

ABSD remissions can apply under specific conditions, such as for Singapore Citizens buying their first residential property, for foreigners and Permanent Residents (PRs) under certain Free Trade Agreements (United States, Switzerland, Iceland, Norway and Liechtenstein), and family transfers under specific conditions. Married couples with mixed residency status may qualify for rebates, and housing developers may receive remission for ABSD rates, although an additional 5% is non-remittable. Read our article, “Additional Buyer’s Stamp Duty (ABSD) Remissions & Exemptions for Foreign Investors”.

The Buyer’s Stamp Duty is a tax that foreigners and Singaporeans must pay when purchasing property in Singapore. BSD rates are based on the property’s purchase price or market value, whichever is higher, meaning properties with higher prices will incur higher tax rates.

For foreigners to buy landed property in Singapore, approval from the Land Dealings Approval Unit (LDAU) is required. The process includes restrictions under the Residential Property Act, needing applicants to have PR status for at least 5 years and to have made significant economic contributions to Singapore. Conditions post-approval include using the property solely for living purposes by the applicant and family, with a no-sale period of 5 years. The criteria for Sentosa properties are less strict and do not require PR status. Applications take about a month to process LDAU.

Foreign buyers in Singapore do face different considerations regarding home loan eligibility compared to locals. Banks offer varied loan packages, and a buyer’s income, employment status, and creditworthiness significantly influence loan eligibility. The Loan-to-Value (LTV) ratio, which indicates the maximum amount a bank can lend based on the property’s value, typically ranges between 50-70% for foreigners, varying by bank.

Foreign buyers with LDAU approval for purchasing landed property in Singapore face no specific resale restrictions. However, the higher ABSD rates for foreigners compared to locals and (PRs) might influence the willingness of sellers to accept offers from foreign buyers. This discrepancy in ABSD rates could impact the ease with which foreign buyers can transact in the resale market.

The Residential Property Act has restrictions on what foreigners can buy, and acquiring a property requires meeting certain legal and economic contributions to Singapore. Approval from the government is needed for restricted properties, but non-restricted properties like apartments, strata landed houses in approved condominium developments, and commercial properties can be purchased more freely. Economic contribution and specific qualifications might influence your eligibility for owning property and potentially impact your visa status​​.

Note these government regulations are based on the current information as of February 2024. For the latest information, visit the respective government websites for clarification, or contact our real estate experts at Singapore Luxury Homes to learn more about buying a property as a foreigner.

Globalised World, Local Knowledge to Help Foreigners Buy Property in Singapore

Overseas ownership accounts for 13–17% of condominium sales in Singapore, with the top group of foreign buyers throughout the past five years being Chinese, Americans, Malays, Indonesians and Indians, representing 66–76%. Buyers have been encouraged by increasing affluence and by a travel industry that has made the world more accessible to explore, as well as Singapore’s ongoing recruitment of top talent within specific industries. 

“The world is exclusively small. There are more job opportunities overseas and digital,” says Gill.

can foreigners buy Singapore property

But before you hop into a deal, get to know a place more than just a passing fashion. Gill advises that prospective buyers take several trips if it’s their first time in Singapore instead of staying in a resort. Real estate is very local, and you require enormous local information about the investment — it’s not like buying into a fund of overseas companies. And working with the right real estate agency is key as not all agents have the same breadth of knowledge to ensure your home is the right investment for your future financial goals.

Foreigner buying property Singapore

Once you ascertain that you are willing — and able — to buy, you may discover differences in how properties are listed.

The multiple listing system used in the United States, for example, is different from in Singapore. Properties development may have exclusive listing agents, and some of the best properties are off-market, offered privately and require the right broker with a vast network.

Non-resident foreigners buying property in Singapore

Offers may also be made differently. In the US, property buying involves making an earnest deposit upon offer acceptance, demonstrating buyer commitment, which is held in escrow until closing and varies by state. In the U.K., when a buyer’s offer is accepted, no deposit is required — but also no contract. Buying a property in Singapore works a little differently and more structured.

The process starts with verbal or formal offers and progresses to an Option to Purchase (OTP) issuance, costing 1% of the purchase price for exclusivity. Exercising the OTP requires an additional 4% fee. Next, both parties sign a Sale and Purchase Agreement, followed by conveyancing for legal and title transfer processes. The final step involves the buyer paying the remaining 20% of the purchase price and any mortgage contributions, officially transferring ownership, typically 8-10 weeks after the OTP is exercised.

Taxation Policies, Estate Laws and Renovation Restrictions

When buying internationally, it’s important to consider currency risks and government controls.

“If I invest my U.S. dollars in Singapore, does the seller take U.S. dollars, or do I need to convert them to Singapore dollars to pay for the property?” highlights Gill. “Once I sell my property, can I freely take out my money without additional taxation?”

Foreigners buying Singapore property

In Singapore, gains from selling property, shares and financial instruments are generally not taxable as they are considered capital gains. However, if the transactions are frequent or conducted with a profit-seeking motive, they may be deemed trading, making the gains taxable. Factors such as the frequency of transactions, the reasons for buying and selling, financial means to hold the property long-term, and the holding period are considered to determine if activities constitute trading.

There are other legal instruments for buying and selling property, but consulting with a professional real estate consultant, legal professional or accountant is beneficial to ensure your investment is financially sound. 

In Singapore, tax and estate laws for property owners, including foreigners, are specific and structured. While there is no capital gains tax, other taxes like the BSD and ABSD apply to locals and foreigners, with foreigners typically paying higher rates. 

Estate distribution follows the legal will of the deceased or the Intestate Succession Act if there’s no will. This differs from the scenario where a government might automatically divide an estate among survivors, indicating the importance of understanding local laws and regulations.

Can I buy property in Singapore as a foreigner?

Then, there are building and renovation restrictions. Conservation restrictions work to preserve charming shophouses in Singapore. Specific guidelines must be followed, especially regarding repairs and renovations, mandating that the work preserve the building’s historical and architectural heritage value. 

Renovations and additions to Good Class Bungalows in Singapore must follow strict Urban Redevelopment Authority guidelines to preserve their exclusive status, including limits on height, coverage ratio and architectural preservation.

Wading through the challenges and rewards of owning property internationally can be endless for foreigners buying a property in Singapore. But choose the right real estate team to guide you through the buying process effortlessly, leveraging our deep market knowledge and personalised service to unlock the potential of your investment and secure the most favourable outcome.

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