Complete guide to buying Singapore property as a foreigner

As a foreigner, you need to know these tips before setting to invest in property in Singapore. All these requirements and guidelines are included in the Residential Property Act in the Laws of Singapore; however, it is a few hundred pages full of legal jargon making it easy to miss a major point that would make your investment challenging or costly than it should be. This Act aims to give the citizens of Singapore a fair opportunity to buy property while at the same time; it does cater for expats seeking to acquire property in the country. Besides paying attention to the laws, one should also read up as much of Singapore property news as possible to stay up to date with the changes to the property market in Singapore.

Who is a foreigner according to the laws of Singapore? 

 A foreigner according to the laws of Singapore is anyone who is not:
- a citizen of Singapore
- a Singaporean company
- Singaporean society
- Singaporean limited partnership

 It is worth noting that not all foreigners can acquire property in Singapore. One has to make a significant economic contribution before proving their worth.

 The type of property a foreigner can purchase
You should have a target on the kind of property to buy before going too far. There are residential and non-residential properties where the residential properties can be restricted or be non-restricted. These categories are usually based on use, type and location. A property categorized as non-restricted residential or non-residential are available for purchase by foreigners just as they are for Singaporeans. You don’t need government approval to purchase
them. Foreigners, however, cannot buy restricted residential properties without government approval.

Non-restricted residential includes:
- Those approved for condominium development
- A building flat of level 6 or higher, ground level and sub levels
- A leasehold estate for a term of below seven years in restricted residential property

 Restricted residential includes:
- Vacant land
- Terrace houses, bungalows and semi-detached houses among other landed residential properties
- A residential real estate in a building that is less than six levels

Other restricted properties are:
- HDB shophouse
- HDB flat that is purchased directly from the HDB
- Any resale HDB with HDB consent for sale
- Executive condos purchased under the EC housing scheme Act

Know some background before buying the property
Before starting the search, it is advisable that you do a background study of the Singaporean real estate market. This market is segmented in a way that it favors the citizens. From the 70s, the government has tightly managed the property in Singapore with several thresholds and restrictions imposed on foreigners seeking to own property. These restrictions were based on the limited supply of land in the small country. The laws have been aimed at providing the citizens affordable access to property while giving economically invested foreigners a chance to purchase a property. As a foreigner, getting the property you like in a foreign country can be a challenge hence the need for a helping hand to guide you through the maze.

 How to get approval 
If your dream property falls under the restricted residential property, you don’t need to be worried. Even though the law bars foreigners from this type of property, it also leaves a window for foreigners in the following categories:
a) permanent residents (PR)
b) those who make a considerable economic contribution to the Singaporean economy

Factors like your academic background, professional or technical qualifications, career and your history of investment can be considered as the economic contribution to help you qualify to buy the restricted properties. A foreigner can be considered for PR status if he invests at least 2 million Singaporean dollars in a business set-up, ventures, trust, foundations or private residential property.

The steps to take before acquiring the property
i) it involves signing the Options to Purchase (OTP) and pay between 1-5 percent of the property value to the seller to reserve the property for you.
 ii) The sale and purchase agreement is then entered to within two weeks where you pay a deposit then set deadlines to pay the legal fees like stamp duty.
 iii) In the case of plans to take out a loan to purchase the property, read about the restrictions placed on the amount of loan you can obtain. Those with an outstanding loan can borrow up to 60% of the property price whereas those without any loan outstanding can get up to 80%. 10% can be paid in cash with the remaining 10% paid in CPF or cash. Contact the banks in advance then apply for the Approval-in-Principle (AIP) since most sellers won’t accept your OTP with the AIP. This AIP expires after six months but can be renewed if need be.
 iv) Your solicitor or agent carries out the pre-completion checks then completion where several documents are executed then the keys handed over to you.

How to go about property search 
 - Engage a Realtor: a professional real estate agent will help you identify the property that interests you and protect your interests all through the purchase process including getting you the best possible price. Given their experience, the agent is best placed to advice and recommends the best property based on your preferences and help process all the documents and ensure you deal with the legitimate property owner.

 - Work with only one agent: most of the agents in Singapore use the same property database; therefore, one agent is enough, using several agents will result in you being shown the same property repeatedly wasting your time and causing unnecessary embarrassment. Only if the one you chose shows incompetence or is unresponsive can you pick another agent who is well versed with Singapore property news and can walk you through to the end. - Making use of property listing websites such as PropertyGuru, the largest property listings site in Singapore.

- The location of your intended purchase determines the price significantly. Those in prime districts are known to retain their value and have the highest capital gains when the property market is bullish. Those in the suburbs have lower prices and are more suited for staying rather than as investments. Properties offering a sea view along the East Coast as suitable as resort homes and can also be great investments just like those in the prime districts 09, 10, 11, and the Central Business District.

The cost of buying property in Singapore
Irrespective of what type of property you seek to purchase you will have to pay
the stamp duty which depends on the market value or purchase price whichever is higher and its type. The number of properties you already own and your status in the country will also determine the stamp duty payable.

There are three layers of stamp duty; these are the buyer’s stamp duty (BSD), Additional Buyer’s Stamp Duty (ABSD) and the seller’s stamp duty (SSD).
 - Buyer’s stamp duty: this is 1-3% of the property value paid by the purchaser. This is paid irrespective of the buyer’s nationality. On the first $180,000 it is 1%, 2% on the next$180,000 and 3% of whatever remains after that.
- ABSD: this tax applies only to residential properties and foreigners pay a flat rate of 15% on acquisition of the residential property. For Singaporeans, this is pro-rated. However, due to the FTA agreement, citizens from Iceland, Norway, Liechtenstein, Switzerland and USA pays the same tax rate as Singaporeans.
 - SSD: this tax applies to residential properties and is covered by the seller. Apart from the purchase cost and related taxes, there are other costs like agent commissions, legal fees, transfer of ownership and registration fees among others.

Conclusion
You need to do a good background check of the property and match your objectives with the legal restrictions. You also need to watch a lot of Singapore property news to be well aware of the developments in the country. There are properties sold to foreigners that cannot be rented out; restricted properties can only be used by you and not rented out. A breach of this law can earn you three years imprisonment and a $200,000 fine. It is better to understand the property buying guide adequately before going out to buy. Starting out blindly can lead to endless frustrations and collisions with the law.