Factors To Consider When Buying Singapore Property

For any foreign investor who wishes to purchase any Singapore real estate property, the following tips can be of valuable help:

1. Engage a Property Agent

The first thing to do before undertaking any property transaction is hiring a property agent. It is important for the agent to be competent enough, because he will be your key representative in the whole process. Also, it is not advisable to switch agents in between a single transaction to avoid unnecessary confusion. Openness between you and your agent in terms of property price, location, size, etc is a must. I must also add at this point that it is more beneficial to look for a property agent who can pair up as a legal and financial consultant.

2. Choose from a Wide Range of Property

When buying property in Singapore, let your agent search for a wide range of houses. After narrowing down to a few of them, the next step will be to do actual viewing of the property. While inspecting, be careful to give extra attention to furniture, fixtures and any other specifications you may desire. Negotiate for renovation and the purchase price to your satisfaction- do not make a rush choice when making such a huge and crucial investment.

3. Complete the Transaction

After making the final choice, leave the rest into the agent’s care. He should ensure the completion of the sale within an 8 to 10-week period by first conducting a search on the property from the government and the financial institutions, so as to make sure that the property is not security on any loan. Within 14 days of signing the Sales and Purchase Agreement, you will be required to pay a stamp duty of about 3% of the agreed purchase price to the Inland Revenue Authority of Singapore (this is only applicable to property exceeding S$300,000). It is important to note that the commission given to the agent (1 or 2 percent of the purchase price) should be paid by the seller, but you are required to meet all the legal costs involved in the transaction. However, a fee of 3,000 Singapore Dollars is to be paid to your agent for that transaction.

4. Apply for Bank Loan

As a salaried foreigner (working outside Singapore) it is possible to secure a loan from most banks in Singapore that can go up to a maximum of 80% of the purchase price. The bank does not go by the purchase price stated by the seller, but it does its own valuation. Most banks in Singapore have an interest rate of repayment ranging between 3-4% for foreign investors. This is the lowest rate in the region, most of which stand at close to 7%.

5. File for Property Tax

The next thing you should do once the property is yours is to file for annual property tax. The amount to be paid is calculated based on the annual value of the property, which is multiplied with the current tax rates. The property’s Annual Value, abbreviated as AV, is taken to be the approximate value of the rent collected yearly from your property. The tax rate currently stands at 10% annually. Your agent should give you a close approximation of how much monthly rent you should charge. This, of course, differs with location.

Mindy Yong 杨雯诗

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Tel: (+65) 91002985
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mindy@mindyyong.com

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