Please enter your username and password here:Forgot Password?
Please enter your details here:or Login
Despite being a country that attracts property investors from all over the world, Singapore does have a lot of landownership restrictions. Foreign nationals are often subject to discriminatory treatment when it comes to this, which all but ensures a level-playing field on the real estate market. Most importantly, foreign nationals have to pay an additional buyer’s stamp duty (ABSD) of 15% when they buy residential property. It results that transaction costs can get quite pricey for expats.
The Government of Singapore likes using tax policy to regulate the housing market. Due to foreign demand, expats are often hit negatively by the tax rises. The Government is actively trying to discourage speculation as well. Hence there is a seller stamp duty (SSD) in the case of sales of properties held for less than four years, with tax rates rising up to 16% for holding periods below one year. If we exclude SSD and ABSD, the cost of buying and selling property in Singapore is around 6.45%, which is fairly low by international standards.
As far as property rights in Singapore are concerned, they can be viewed as strongly protected. In that respect, Singapore is quite a reliable country. Be aware, however, that many (but not all) of the properties on sale in Singapore are not freehold property, but leasehold properties with a tenure ranging from 99 to 999 years. The value of these properties tends to depreciate over time, especially when the tenure gets below 60 years.
Singapore has reliable housing statistics as well. Such data can be wound on the website of the Department of Statistics.
Foreign property investment in Singapore
There are no foreign ownership restrictions for commercial property. The residential market, however, is much tighter. As a rule, foreign nationals need prior permission to buy the following properties:
Housing Development Board (HDB)
HDB flats are built by the Government as part of a programme to boost Singapore’s much-needed housing supply. They are basically the type of dwelling that the vast majority of Singaporean citizens have, but foreign nationals are generally not allowed to live in an HDB flat.
As HDB flats are much cheaper than what you would get on the private sector market, the Government is effectively forcing foreign nationals into expensive accommodation. In other words, the Government is taking money from expats’ pockets in order to redistribute it to its citizens. Singapore’s HDB policy is thus part of the many things that should be borne in mind by expats before assuming that Singapore is a low-tax, low-redistribution country.
Singapore housing market generally
On the private sector market, Singapore is a very expensive country. Its prices are comparable with those seen in London, Hong Kong or Paris. Prices per square metre are between US$7,000 and US$10,000 in cheap areas. In high-end districts, expect them to rise quickly over the US$10,000 mark. Prime property may sell for up to US$20,000 per square metre, perhaps more.
Overall Singapore is an extremely volatile market. Yearly price variations are often a double digit matter, either way. In the most extreme cases, prices may vary by up to 40% over a 12-month-period. In the past 15 years, home prices have doubled in nominal terms. An important part of it can be explained by lower interest rates, which have nearly halved throughout the period. As interest rates are already very close to zero, any rate rise, even for 0.5%, would likely have a lot of consequences on the housing market.
An assessment of the Singapore housing market must include many additional macroeconomic factors, including:
Get your documentation right before applying for a mortgage, and do it early to avoid disappointment. In Singapore, the Government tends to regulate mortgage conditions in order to boost or tighten housing demand.
Singapore imposes a land value tax on property owners, which is assessed on the property’s rateable value. The tax rates have been raised substantially recently, with the latest rises taking effect from 1 January 2014. These measures have yet to feed through property prices, even though demand has been reported to cool down so far.
As of 2014, the tax rates are progressive (10% to 19%), plus another 10% if the property is foreign-owned. A lower scale applies for owner-occupied properties (up to 15%). They are set to increase further in 2015.
Higher land taxes mechanically shrink property values and rental yields. Prior to purchasing property, it is essential that you check how much land tax and municipal rates you can expect to pay.
Letting your property
If you are renting out your property in Singapore, you must be aware of the applicable landlord and tenant law, which is based on English common law. Things are mostly governed by rental contracts, rather than statutes. Here are a few points you need to know:
As far as gross rental yields are concerned, they are generally reported to be between 4 and 5%. Recent price rises have made it more and more possible to see yields drop into the low 3% in some cases.
In addition to property taxes, you must pay tax on your rental income, if applicable. Rental income is subject to the progressive rates of income tax (up to 20%) unless you are non-resident, in which case it is taxed at 20%. See Investment Taxation for Expats in Singapore.
Sections in FINANCIAL CONSIDERATIONS IN SINGAPORE:
» Money Transfers for Expats in Singapore
» Foreign Exchange for Expats in Singapore
» Banking for Expats in Singapore
» Pensions for Expats in Singapore
» Investment for Expats in Singapore
» Wealth Management for Expats in Singapore
» Property Investment for Expats in Singapore
» Insurance for Expats in Singapore
We value input from our readers. If you spot an error on this page or have any suggestions, please let us know.
If you are considering moving to Singapore or are soon to depart, you can find helpful information and advice in the Expat Briefing dedicated Singapore section including; details of immigration and visas, Singaporean forums, Singaporean event listings and service providers in Singapore.
From your safety to shopping, living in Singapore can yield great benefits as well as occasional drawbacks. Find your feet and stay abreast of the latest developments affecting expats in Singapore with relevant news and up-to-date information.
Working in Singapore can be rewarding as well as stressful, if you don't plan ahead and fulfill any legal requirements. Find out about visas and passports, owning and operating a company in Singapore, and general Singaporean culture of the labour market.
About | Useful Links | Global Media Partners | Media | Advertising And Sales | Banners And Widgets | Glossary | RSS | Privacy & Cookies | Terms And Conditions | Editorial Policy | Refer To A Friend | Newsletters | Contact | Site Map
Important Notice: Wolters Kluwer TAA Limited has taken reasonable care in sourcing and presenting the information contained on this site, but accepts no responsibility for any financial or other loss or damage that may result from its use. In particular, users of the site are advised to take appropriate professional advice before committing themselves to involvement in offshore jurisdictions, offshore trusts or offshore investments. © Wolters Kluwer TAA Ltd 2017. All rights reserved.
The Expat Briefing brand is owned and operated by Wolters Kluwer TAA Limited.