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Eligibility to Buy Private Property

In the year 1973, the Singapore Government has imposed restrictions on foreign ownership of all private residential property in Singapore. Such ownership is governed by the Residential Property Act.The Act aims to give Singaporeans a stake in the country by being able to buy and possess their own residential property at an affordable price and also encourage foreign talent by allowing permanent residents and foreign companies who make an economic contribution to Singapore to purchase such properties for their own occupation.

The Residential Property Act (RPA) is then amended on 19 July 2005 to allow foreigners to purchase apartments in non-condominium developments of less than 6 levels without the need to obtain prior approval.

For restricted property such as vacant land, landed properties such as bungalows, semi-detached and terrace houses, prior approval is still needed if foreigners wish to buy. Landed properties is a special class of residential property that Singaporeans aspire to own, and should remain restricted. Foreigners need to apply for approval from Singapore Land Authority before buying.

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,
Singapore 068811

What are the non-restricted residential properties?
Foreigners are not restricted from acquiring:
* Developments approved as a condominium development under the Planning Act

What are the restricted residential properties?
Foreign persons (including natural persons, foreign companies and societies) are restricted from purchasing: * Vacant land * Landed residential property, such as bungalows, terrace houses, semi-detached houses * Residential property in a building of less than 6 levels

Other restricted properties
* A HDB Shophouse
* A HDB flat purchased directly from HDB
* A resale HDB flat where HDB has consented to the sale
* Executive Condominium bought under the Executive Condominium Housing Scheme Act, 1996

Property Investments for Permanent Resident Application
Under the Global Investor Programme (GIP) administered by the Economic Development Board (EDB), foreigners can be considered for Permanent Resident (PR) status if they invest a certain minimum sum in business set-ups and/or other investment vehicles such as venture capital funds, foundations or trusts that focus on economic development.

Private residential properties investment will be considered for application for Permanent Resident application. A foreigner can be considered for PR status if he invests at least S$2 million in business set-ups, other investment vehicles such as venture capital funds, foundations or trusts, and/or private residential properties.Up to 50% of the investment can be in private residential properties, subject to foreign ownership restrictions under the Residential Property Act (RPA). This is to attract and anchor foreign talent in Singapore.

Depending whether you are buying the property for own stay or investment, location plays an important role. Properties in prime districts retain their value very well and they usually have the highest capital gain in a bullish property market. Properties in the suburbs are lower in price and may be more suitable for own stay than investment. If you are purchasing the property for investment, the properties in prime districts like district 09, 10, 11 or the Central Business District are the safest buy. Properties with sea view at the East Coast are also great for a resort home or for investment.

How much cash upfront you are willing to pay for the property? How much CPF in your ordinary account that you can use for the purchase?
The latest MAS ruling allows purchaser to loan up to 80% of the valuation or purchase price, whichever is lower. 10% must be paid in cash and the other 10% can be paid using CPF or cash.

Rental Yield
If you are buying the property for investment and intend to rent out the property, calculate the yearly rental yield versus the purchase price. Properties at district 09, 10 and 11 easily yield the highest rental returns. Due to the premium in price for freehold properties, they most likely have lower rental yields than leasehold properties.

If you are a non-residential foreigner (with no valid employment permit or pass for long stay) purchasing a property for rental returns, do not forget to factor the personal income tax, which is moderately high at 20%. For foreigners who are working in Singapore with valid employment status, the tax rate will be much lower. Visit the IRAS http://www.iras.gov.sg website for more info on taxes.

Valuation & Loan
Check the indicative valuation for the property you intend to buy. Valuation directly affects the amount of loan you can get for the property. Take into account the number of years that you can loan, the monthly instalments, etc.

You need to check whether your credit status and income proof can enable you to loan (with effect from 19 July 2005) 90% of the of the valuation or sale price (whichever is lower). For a foreigner, major banks or financial institutions in Singapore can only loan up to 70% or 80% of the valuation or sale price (whichever is lower).

If you are looking for competitive housing loan and indicative valuation, we have contacts with major banks and can help you get a good financial package. We can help you check for indicative valuation, apply for a housing loan or get an Approval-In-Principle before the purchase. Just give us a call at 91826611

Documentation for Private Property ( For T.O.P Property)
T.O.P – Temporary Occupation Permit

* Option to Purchase ( For T.O.P property)
All property which has obtained T.O.P can be occupied physically. The Term T.O.P means that the development has obtain relevant government building and fire safety authority approvals to declare the property is fit for human occupation. Hence if you have decided to purchase a property, prepare 1% of the purchase price (as a consideration) in exchange for the Option to Purchase from the seller. Option to Purchase is usually prepared by the seller's (vendor) solicitor or property agent. You are usually given 14 days to decide whether to proceed with the purchase. If you decide to proceed, exercise the option by signing in your solicitor's office and forward it to the seller's solicitor together with another 4% or 9% (agreement between the vendor and purchaser) of the purchase price.

Option to purchase (For Non T.O.P developments)
All Non T.O.P property development is properties that have obtain relevant government authorities approval for sale before construction. They are under construction or with approval plans and license for sale. The purchaser have to pay an option Fee of 5% (know as option fee) of selling price. And 14 to 21 days later if decided to purchase would have to forward 15% of selling price there after. With the option to purchase

Offer to Purchase
Alternatively, you can ask your realtor to prepare the Offer to Purchase and attention to the seller. In the Offer to Purchase, you need to state clearly the purchase price, sales completion date and others. Terms and conditions can be drafted by your solicitor or your realtor.

Completion of Sale
From then on, leave it to your solicitor for the completion of the sale, which will be completed in around 8 to 10 weeks time (agreement between the vendor and purchaser). Your solicitor will lodge a caveat on the property, coordinate with the financial institution, CPF board (if applicable), and prepare the mortgagor/mortgagee documents.
Stamp fee will be payable to Inland Revenue Authority of Singapore within 14 days upon exercising the Option to Purchase or signing the Sales and Purchase Agreement when you buy from a property developer. For properties above S$300,000, stamp fee payable will be 3% of the purchase price minus S$5,400.

Inspection Before Taking Over Property
The buyer can request and state clearly in the Option to Purchase for permission to inspect the property before the completion of the sale. Check the fixtures and fittings, and also the items that the seller had agreed to sell with the property.

Commission Payable
For private property, agency commission is paid solely by the seller, which varies from 1% to 2% of the selling price.
Buyer and seller should ensure that an invoice from a licensed real estate agency is issued to them. Upon payment, do not pay cash directly to the realtor, instead, issue a cross-cheque payable to the realtor's agency according to the invoice.







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