Buying a Property in Singapore
Up until 2005 foreigners were subject to strict limitations on the properties they were allowed to purchase in Singapore. The Residential Property Act of 1973 was created to given native Singaporeans a stake in the country by allowing them to buy and possess their own property. Until the act was revise in 2005 foreigners were not allowed to purchase any property but are now allowed to purchase apartments in non-condominium developments of less than 6 levels without the need of official approval.
Purchasing a property
With the amendment of the property act in 2005 foreigners do not have to seek prior approval before buying apartments, also known as strata-titled properties.
If you are a foreigner (or expatriate) and you wish to purchase a restricted residential property, you need to download the application form at http://www.sla.gov.sg/htm/ser/ser0307.htm#d
You can submit the form together with the relevant supporting documents such as your entry and re-entry permits and qualifications to:
Land Dealings (Approval) Unit
No. 8 Shenton Way,
#27-02 Temasek Tower,
What property is restricted?
The following types of property are restricted;
- Vacant land
- Landed Residential property, such as bungalows, terrace houses, semi-detached houses
- Residential property in a building of less than six levels
Property tax in Singapore is ten percent of the annual value, and is levied no matter what the use of the property. However, if the property is owner-occupied then property tax is only four percent and the owner is eligible for tax rebates. The annual value of your property is the estimated annual rental value of your property, and is calculated by analysing rents of comparable properties.
Renting a property
Renting is always an alternative to buying a property and could be the preferred option if moving to Singapore for a short duration or as part of a business placement. The best place to look for rentable property is in local newspapers or via online. When looking you should hire the assistance of an estate agent as they will assist you in navigating any obstacles or potential pitfalls.
If you have decided on take up a property and you will need to prepare the following:
- Photocopied passport
- Photocopied employment pass
- One month’s rental for the good faith deposit
Your agent will then prepare the necessary documents for you such as the Letter of Intent and Tenancy Agreement.
The Letter of Intent, LOI for short, is a letter proposing your intention to lease and your requirements to the landlord. You should take note of the following:
1. Diplomatic or Repatriate Clause
This clause is to safe guard you if in the event you are no longer employed, transferred to other countries, you can terminate the lease after 12 months by giving 2 months notice. Thereafter, the security deposit will be refunded to you. Please note that most landlords will only include the diplomatic clause if the lease is more than a year.
2. Good faith deposit (booking deposit)
This is the booking deposit, usually the amount is one month’s rent. After the landlord signed the Letter of Intent and accept this deposit, he cannot rent the property to other party. This deposit will become part of the security deposit or advance rental after the Tenancy Agreement is signed.
3. Security deposit
The amount of the security deposit is usually stated in the Letter or Intent. The standard practice in Singapore is usually one month’s rent for every year of lease. It will only be payable upon signing of the Tenancy Agreement. When the lease term ends, the deposit will be refunded without interest. However, the landlord reserves the right to deduct from the deposit all costs and expenses arising from the tenant for breaching any of the covenants stated in the Tenancy Agreement.
4. Terms of lease
In Singapore, the standard lease period is more than 1 year, with or without an option to renew the lease. The lease renewal is usually for another 1 to 2 years. For the lease renewal option, the landlord would normally require that you give 2 or 3 months’ advance notice of your intention to renew. Most landlords will not accept leases that are less than 1 year.
5. Your requirements
Ensure that all your requirements and requests are stated in the Letter of Intent clearly. Like requesting a new sofa, new bed or new washing machine etc. After the landlord had signed the Letter of Intent, he is bound by the Letter to provide your requests.