Can Foreigners Buy Property in Singapore?

Like most countries in Southeast Asia, buying properties as a foreigner will come with a few hurdles. While everything you need to know will be in the Residential Property Act, it’s normal for anyone to be intimidated by the pages and pages of legal jargon. Knowing what to expect as a foreigner is essential if you want to have realistic expectations and know what opportunities are open to you. Let’s take a look at what foreigners should know about buying property in Singapore.

What is a Foreigner in Singapore, Exactly?

The first thing you have to know is what qualifies as a “foreigner” in the country. In short, anyone who isn’t a citizen, permanent resident, or an entity incorporated in the country is a foreigner. You should also know that being a permanent resident will not give you full rights to buy property. This brings us to our next point.

The Country Favors its Citizen

Most countries will have programs and opportunities that are open to their citizens only, and Singapore is no exception. But you have to understand the country’s market and its limitations. For one, it is a tiny island that is densely populated, which greatly limits the supply. The government’s measures are mainly to protect that supply and allow Singaporean citizens the chance to own a stake in their country.

You shouldn’t despair, however, since there are still plenty of opportunities to be had. You also have the possibility of buying or renting an hdb flat if you marry a citizen and gain permanent resident status. If this is something you could see happening in the near future, you could always start looking at hdb rental units on sites like PropertyGuru. You’ll get a rough idea of how much units will cost you in different parts of the country. You could also get a general sense of the vitality of the rental market in these different areas.

Restricted and Non-Restricted Property

One thing you should know is that the barriers to buying residential real estate are way higher than those for buying commercial real estate. As a matter of fact, practically anyone can buy commercial real estate in the country. Some fees will not be levied, like the Additional Buyers Stamp Duty, for instance.

But, if you want to buy residential property, things can get very complicated. For example, you won’t be able to buy things like a terraced house, a semi-detached house, or even a bungalow without the government’s consent. You also won’t be able to buy vacant residential land. So, that’s something you’ll need to know about if you were intending to develop.

There are still plenty of opportunities open to foreigners, however. Condominiums are one of them. You can also own leasehold property as long as it’s a landed property and the term doesn’t exceed seven years. Other types of units that are open to foreigners include flat units, strata landed houses in approved condominium projects, or any executive condominium unit that was privatized.

How Can You Get Approval for Restricted Property

As we said, restricted property is not totally off-limits to foreigners. If you want to get approved for these, however, you have to make what is called an ‘adequate economic contribution’ to the state and society. This doesn’t have to come in the form of investments, though it is one of the factors that is viewed as an economic contribution. Your academic background, career scope, and professional or technical qualifications are all things that can qualify. In short, the government wants to know if you’ll be an asset to the country and its residents.

Extra Taxes and Fees

You may have heard of some of the special fees that foreigners have to pay when buying property in Singapore. An Additional Buyer Stamp Duty fee (ABSD) will be levied on most types of residential property. This is a 25% tax on the property’s sale price and has to be paid within two weeks of signing your sales and purchase agreement.

However, you should know that residents hailing from countries with deals with the government are exempt from this tax, and that includes the US, so you don’t have to worry about it. Permanent residents and nationals from Norway, Switzerland, Iceland, and Liechtenstein are also exempt. Know that you will still have to pay things like a Stamp Duty Tax and regular property taxes just as any citizen, however.

Inheritance and Capital Gains Taxes

You’ll be pleased to know that there is no inheritance or capital gains taxes in Singapore. You should know, however, that the government is fiercely against house flipping and levies a Sellers Stamp Duty tax to prevent it. You’ll have to pay a 12% tax if you sell a property within the first year, 8% within two years, and 4% within three. There are no taxes to pay after this period.

The Singapore real estate market is not the most open to foreign investors, but it still offers tons of opportunities. You now know more about what is accessible and can therefore start to build a strategy.