Pre-purchase checks

• Singapore citizens who own a HDB flat, DBSS flat or Executive Condominium must fulfill the minimum occupation period of 5 years before they can purchase private residential properties
• A foreign person will require approval from the Land Dealings Approval Unit of Singapore Land Authority before they can purchase the following types of residential properties:

o   Vacant residential land

o   Terrace house

o   Semi-detached house

o   Bungalow/detached house

o   Strata landed house which is not within an approved condominium development under the Planning Act (eg. townhouse or cluster house)

o   Shophouse (for non-commercial use)

• A foreign person can purchase the following types of residential properties without special approval:

o   Condominium unit

o   Flat unit

o   Strata landed house in an approved condominium development

o   A leasehold estate in a landed residential property for a term not exceeding 7 years, including any further term which may be granted by way of an option for renewal

o   Executive condominium unit, HDB flat and HDB shophouse

Procedure for purchase

• Obtain an Approval in Principle (AIP) for a bank loan

• An AIP lets you know your eligible loan quantum and the monthly mortgage payable
• Having an AIP before booking prevents the forfeiture of your option fee should there be hiccups in the process of mortgage approval
• Some sellers will not proceed with a sale to buyers without an AIP

• Issue Offer to Purchase and make payment of 1% Option fee to the seller in exchange for the Option to Purchase (OTP)

• It is advisable to obtain proof of property ownership before making the offer
• Proof of ownership can be obtained through a land title search at http://www.sla.gov.sg/inlis/

• The standard OTP is valid for 14 days
• The property is reserved exclusively for the buyer during this period

• Submit OTP to bank

• Receive Letter of Offer (LO) from bank

• The LO is a contract stating the terms of the loan offered by the bank to the borrower

• Sign Letter of Offer (LO)

• This forms a binding contract between the bank and the borrower

• Sign and deliver the OTP and the 4% Exercise fee to the seller’s lawyer within 14 days

• 1% Option fee will be forfeited if the OTP is not exercised

• Upon the buyer’s exercise of the Option, the buyer and seller enter into a Sale and Purchase agreement(S&P)

• The S&P is usually based on The Law Society of Singapore’s Conditions of Sale 2012
• Buyer will receive duplicate of signed S&P within 14 days of the exercise of the option
• Buyer’s lawyer will perform duties, such as lodging a caveat and conducting legal requisitions on the property

• Pay Stamp Duty within 14 days of the exercise of the option

• The Buyer’s Stamp Duty (BSD) is computed based on the purchase price or market value of the property, whichever is higher
• Buyer needs to pay BSD of 1% on the first $180,000, 2% on the next $180,000 and 3% on the remaining amount of the purchase price
• The Additional Buyer’s Stamp Duty (ABSD) depends on the buyer’s residency status and number of residential properties owned
• Singapore citizens need to pay 7% ABSD for the purchase of a second residential property and 10% ABSD for the third and subsequent residential property
• Singapore Permanent Residents need to pay 5% ABSD for the purchase of a first residential property and 10% ABSD for the second and subsequent residential property
• Foreigners need to pay a 15% ABSD for any residential property purchased
• Nationals and Permanent Residents of Iceland, Liechtenstein, Norway or Switzerland; and Nationals of the USA are accorded the same ABSD rates as Singapore citizens

• Completion

• The scheduled completion date is stated in the S&P
• If the sale is not completed by the scheduled date, the Buyer may be liable for Late Completion Interest to the Seller and vice versa, under the Conditions of Sale 2012

Pre-purchase checks

• Singapore citizens who own a HDB flat, DBSS flat or Executive Condominium must fulfill the minimum occupation period of 5 years before they can purchase private residential properties
• A foreign person will require approval from the Land Dealings Approval Unit of Singapore Land Authority before they can purchase the following types of residential properties:

o   Vacant residential land

o   Terrace house

o   Semi-detached house

o   Bungalow/detached house

o   Strata landed house which is not within an approved condominium development under the Planning Act (eg. townhouse or cluster house)

o   Shophouse (for non-commercial use)

• A foreign person can purchase the following types of residential properties without special approval:

o   Condominium unit

o   Flat unit

o   Strata landed house in an approved condominium development

o   A leasehold estate in a landed residential property for a term not exceeding 7 years, including any further term which may be granted by way of an option for renewal

o   Executive condominium unit, HDB flat and HDB shophouse

Procedure for purchase

• Obtain an Approval in Principle (AIP) for a bank loan

• An AIP lets you know your eligible loan quantum and the monthly mortgage payable
• Having an AIP before booking prevents the forfeiture of your booking fee should there be hiccups in the process of mortgage approval

• Make payment of 5% to 10% booking fee to the developer for the Option to Purchase (OTP)
• Option to Purchase is valid for 3 weeks from delivery of S&P

• Buyer cannot do a sub-sale during the Option stage as the OTP is not assignable

• The developer will deliver the Sales and Purchase Agreement (S&P) within 2 weeks to your address or your lawyer
• Submit OTP to bank

• Receive Letter of Offer (LO) from bank

• The LO is a contract stating the terms of the loan offered by the bank to the borrower

• Sign Letter of Offer (LO)

• This forms a binding contract between the bank and the borrower

• Sign and send S&P to the developer, and pay the balance down payment of 20% of purchase price, less booking fee paid

• The developer may allow buyers to pay the balance down payment within 8 weeks of the Option date
• If Option is not exercised, 25% of the booking fee will be forfeited with the remaining 75% refunded to buyer

• Pay Stamp Duty within 2 weeks of signing S&P

• The Buyer’s Stamp Duty (BSD) is computed based on the purchase price or market value of the property, whichever is higher
• Buyer needs to pay BSD of 1% on the first $180,000, 2% on the next $180,000 and 3% on the remaining amount of the purchase price
• The Additional Buyer’s Stamp Duty (ABSD) depends on the buyer’s residency status and number of residential properties owned
• Singapore citizens need to pay 7% ABSD for the purchase of a second residential property and 10% ABSD for the third and subsequent residential property
• Singapore Permanent Residents need to pay 5% ABSD for the purchase of a first residential property and 10% ABSD for the second and subsequent residential property
• Foreigners need to pay a 15% ABSD for any residential property purchased
• Nationals and Permanent Residents of Iceland, Liechtenstein, Norway or Switzerland; and Nationals of the USA are accorded the same ABSD rates as Singapore citizens

Schedule of payment

• The purchase price will be paid in installments according to the Standard Payment Scheme
• Notice of progress payments must be supported by the architect’s Certificate of Stage Completion

Expected TOP and Vacant Possession Date

• The developer may provide an estimated Temporary Occupation Permit (TOP) date. The actual TOP date may vary depending on construction progress
• The developer is contractually bound to deliver Vacant Possession of the property by the date stated in the OTP and S&P. Failing which, the developer has to pay liquidated damages to the buyer

RESTRICTION OF FOREIGN OWNERSHIP OF LANDED RESIDENTIAL PROPERTY

For Singapore citizens, there are no restrictions imposed in acquiring landed residential property. However, for those other than Singapore citizens, certain restrictions apply and approval is required from the authorities.

This article would first clarify the concept of “landed residential property”. It then proceeds to briefly discuss the restrictions and avenues available to foreigners who wish to acquire landed residential properties.

What Is Landed Residential Property?

Landed residential property refers to properties for the purpose of residence and hence not for industrial or commercial use. It includes vacant land, detached houses, semi-detached houses, bungalows, terrace houses, buildings of less than six storey and any other land gazetted for residential purposes. But it does not include flats and condominiums of six or more storey high.

Ownership And Restrictions Imposed On Foreigners

The Residential Property Act defines a “foreign person” as any person who is not a citizen of Singapore, a permanent resident and any foreign company or converted foreign company. Any person or entity falling under this category is totally restricted from owning landed residential property unless approval is obtained from the Controller of Residential Property.

The only property that can be purchased by any person or entity falling under this definition without any approval required, include those residential properties which contains six or more storey including the ground floor or “any flat or dwelling-house shown as a unit in an approved plan bearing the title condominium”. In this case, there is no limit as to the number of units that a foreigner may purchase within the development.

The approval of the government is also required if the foreigner is a beneficiary or is entitled to receive landed residential property by way of gift, bequest, succession or inheritance. The rules are generally strict with regards to the transfer of landed residential property to foreigners. The legal personal representative of a foreign beneficiary or the foreign beneficiary himself is bound to sell such properties to a citizen or approved purchaser within a period of ten years from the death of the deceased owner.

However, foreigners are allowed by the Act to accept landed residential property as security for a loan. In exercising the power of sale, the foreign mortgagee is allowed to sell the property only to Singapore citizens or government approved purchasers. Finally, an alternative for foreigners who wish to stay in a landed residential property without having to go through so much hassle is to rent one. This is allowed provided that the tenancy does not exceed seven years.

How Can A Foreigner Own A Landed Residential Property?

A foreigner who wishes to acquire a landed residential property may apply to the Controller of Residential Property for a written approval. The Residential Property Advisory Committee will consider the application and thereafter make its recommendations to the Minister for Law.

If approval is granted, the foreigner is required to give an undertaking to the government that the property is to be used only for the purpose of residence and not for investment and any other income-generating purposes. The application takes approximately 3 months to process.

Form A needs to be submitted to the Land Dealings (Approval) Unit at No. 8 Shenton Way, #27-02 Temasek Tower. Application forms are to be submitted with income tax assessment statements, professional qualifications, marriage certificate, reasons for acquiring the residential property, and any other relevant supporting documents as required by Form A.

The following are foreigners who may apply:

1. permanent residents of Singapore;
2. foreigners who are of economic benefit to Singapore or who are able to economic contributions to Singapore; and
3. foreigners who possess professional or other qualifications or experience which are of value or benefit to Singapore.

When approval is received, a housing agent should be employed to assist with the selection and purchase of the property. Finally, a lawyer must be engaged to execute the details of the purchase, for example, mortgages or bank loans, title search, whether the property is affected by redevelopment, government projects etc.

For foreigners intending to purchase a landed residential property, it is important that they include an additional clause in the purchase contract or Option which reads:

“This sale and purchase is subject to the Purchaser obtaining the approval from the Land Dealings (Approval) Unit before completion. In the event that such approval is not granted, the sale and purchase herein shall be annulled and all monies paid shall be immediately refunded free of interest and neither party shall have any claim against the other thereafter.”

UNITED OVERSEAS BANK

• UOB Home Loan is open to all foreigners who wish to purchase or acquire a permitted residential property in Singapore for investment or to live in, subject to credit approval.

Q2. What are the benefits of a UOB home loan?

• Attractive interest rates and flexible repayment options
• Provides up to 80% financing of the purchase price or valuation of your new property, whichever is lower

Q3. What are the Loan Interest Rates offered to foreigners?

• UOB Home Loan offers wide range of home loan packages and flexible financing options to tailor your financial needs. Our packages include Fixed Rate package, Floating Rate Package and SIBOR pegged rate package, or up to a combination of 2 of these packages.

Q4. How much can I borrow as a foreigner?

• New Purchase
  If this is your first housing loan in Singapore, the financing is up to 80% of the purchase price or property market value, whichever is lower.
• Refinancing
  If you already have an existing residential property loan, the refinancing is up to 100% of your loan outstanding, or 90% of the property market value, whichever is lower.

Q5. What is the maximum loan repayment period?

• Freehold Property
  Up to 35 years or 75 years of age at end of loan tenor, whichever is earlier. For example, if you are 25 years old now and buying a freehold property, the maximum loan tenor is 35 years. The loan duration plus the age of the applicant must be less than or equal to 75 years.
• Leasehold Property
  Up to 35 years or 75 years of age at end of loan tenor, whichever is earlier, and remaining lease of at least 35 years at the end of loan tenor.

Q6. How do I repay my loan?

• If the permitted residential property purchased is completed with TOP issued, instalment will be payable upon the drawdown of the loan and the instalments calculated are based on the full loan amount and loan tenor.
• If the permitted residential property purchased is under construction, you can opt to pay your instalments based on the disbursed loan amount until the Temporary Occupation Permit (TOP) is issued. Thereafter the instalments will be calculated based on the outstanding plus undisbursed loan amount over the outstanding loan duration.

Q7. What are the documents required for a Home Loan application?

• The following are the documents required for a Home Loan application:
  • Duly completed loan application form
  • Copy of your passport
  • Copy of Identity Card for Malaysia Citizens
  • Latest certified true copy of your income documents:
    • Pay slip or employment letter AND bank statement (latest 3 months) showing salary credit.
    • For self-employed, latest 3 months’ bank statements and latest two years’ notice of tax assessment
  • Copy of property’s option to purchase or copy of Sales & Purchase Agreement.

Q8. What happens if there is a difference between the purchase price and valuation price?

• Prior to the approval of your home loan application, we will appoint a valuer to assess the market value of the property. Your loan will be computed based on the lower of valuation price and purchase price.

Q9. Is fire insurance necessary?

• Yes. Fire insurance is required by the Bank to insure your property against fire.

Q11. What are the relevant regulatory guides on foreign ownership of permitted residential property and other restricted properties in Singapore?

• Before deciding which property to buy, you may find it useful to understand the relevant regulatory guides on foreign ownership of permitted residential property in Singapore. Foreigners are only permitted to acquire or purchase certain types of residential properties in Singapore. Please refer to the Singapore Land Authority’s website and Housing & Development Board’s website for the types of residential properties which foreigners may acquire or purchase in Singapore.

Q12. What are the Fees & Taxes Relating to Buying a Property (including permitted residential properties) in Singapore?

• In addition to the property purchase price, you will have to make provision for the Legal Fee, Stamp Duty, Property Tax & Income Tax.
• Legal Fee
  When buying property (including permitted residential properties), you need to engage a lawyer for legal contracts for the sale and purchase of the property (including permitted residential properties). You can request your Lawyer to give you an estimate of such stamp fees, legal fees and disbursements that will be incurred in the purchase of the property(including permitted residential properties).
• Stamp Duty
  Stamp duty is a tax on executed document relating to properties (including permitted residential properties) or interest in properties (including permitted residential properties). These documents include a lease, sales & purchase, gift or mortgage of property (including permitted residential properties).
  To know more details and calculate your stamp duty, please log on to www.iras.gov.sg/irashome
• Property Tax
  Property Tax is a tax on the property (including permitted residential properties), and is payable by the owner whether or not the property (including permitted residential properties) is owner-occupied, rented out or vacant. Property Tax is calculated based on a percentage (Tax rate) of the Annual Value of your property (including permitted residential properties).
  To know more details and calculate your property tax, please log on to www.iras.gov.sg/irashome
• Income Tax
  Rent received from the letting of property (including permitted residential properties) in Singapore is subject to income tax. Your rental income includes rent of the premises, maintenance, furniture and fittings. After deductions for allowable expenses (such as property tax), the net amount is taxable.
  To know more details and calculate your income tax on rental, please log on to www.iras.gov.sg/irashome

Currently, UOB International Property Loans are available for the purchase of properties in United Kingdom, Australia, Japan, Thailand, Malaysia and Singapore:

UOB LOAN FOR INTERNATIONAL PROPERTY