Friday, May 31, 2019
Most of the expatriates face common issues at the time of buying or renting in Singapore. Most times, the rental prices for housing are higher than what they might expect. Thus, most of the expatriates inquire about buying a property.
On average, real estate in Singapore is not cheap. Moreover, it does require a time commitment. When you are an expat, you need to consider asking certain questions before buying or renting in Singapore.
Here is a list of the 5 most important questions for expats to consider before they buy or rent in Singapore:
Keep in mind that in Singapore, there are some different property classes. These include public housing or HDB flats. A good part of the populace lives here. This housing is usually not available for foreigners to purchase. When it comes to private residential property, foreigners can only purchase 10 years after completion of construction. These are usually costlier with lesser restrictions on foreign ownership. Same goes for executive condominiums. These are public-private hybrids.
Thus, private property is the top option for foreigners, mainly those who are looking to purchase in Singapore. Most of the non-landed private property, such as condominium projects and apartment buildings, do not have restrictions on foreign ownership. It is the common choice of expatriates and foreigners. In the case of landed property, foreigners need to seek approval from the Land Dealings Authority Unit before the purchase. However, it is not the same if the house is part of a larger condominium project, or located on the luxury enclave of Sentosa Cove.
Every type of property is available for rental to foreigners and expatriates. When it comes to public housing, only Singaporean citizens can rent out their entire flats. They are expected to need to meet a five-year minimum occupancy period prior to leasing out to you.
In case you are looking to rent a public housing flat, you must check if the owner/landlord has met these criteria. This is mainly because the state will evict you if you have rented out the flat illegally.
Most of the expats buying in Singapore need to consider how long they intend to hold on to the property for. The Singapore government levies a Sellers Stamp Duty (SSD) for any seller who is selling a home within a period of the first four years of buying.
Even when you think of moving out of Singapore early, you can consider renting out the property for passive income. The gross rental yield for Singapore property is between 2.5 - 5 percent. However, the yield highly depends on market conditions and the concerned property.
Keep in mind that private property in Singapore is pretty expensive. You will have to do a careful property search in Singapore. Most of the major banks will loan mortgages to non-Singaporeans who can demonstrate the required income. However, there are certain regulations that stipulate that they can only loan you up to 80 percent of the value of the apartment. Thus, you might expect to pay upwards of SGD$200,000 only in down-payment. The prices tend to rise more once to go towards the core.
If you lock yourself into a piece of property and a mortgage, there is a bunch of trade-offs. When you are planning to be a renter in Singapore, you might have to live in various areas.
You can use the down-payment for other investments, such as mutual funds or stocks. You can even plan to buy real estate in another market. Moreover, as far as the cost of a servicing a mortgage and overall homeownership in Singapore is concerned, you might get over-stretched if you also had to pay down property in your own home country.
Most of the foreigners cannot purchase HDB flats. Usually, your home insurance policy comprises of a plan that provides renovation, fire & theft and contents coverage. You do not need to build coverage. This is because your condo's management will take care of the building grounds. If you wish to go for a home insurance policy, you must find a plan that offers good renovation and contents coverage. You must also go for certain benefits that can come in handy.
In general, prices vary between S$51 to S$278 for an annual plan. However, you must be careful not to buy based only on price. This is more important to abide by if this is your first real estate purchase. It is then that you can match your coverage to the cost of renovation and home contents.
The Residential Property Act (RPA) is amended on 19 July 2005. This was established to allow foreigners to purchase apartments in non-condominium developments of less than 6 levels without the need to gather prior approval.
As far as restricted property such as vacant land landed properties such as bungalows, semi-detached and terraced houses, is concerned, prior approval is still required. This is mainly needed if foreigners wish to buy. Most of the landed properties is a special bunch of residential property that Singaporeans aspire to own. Foreigner renters and buyers need to apply for approval from Singapore Land Authority prior to buying.
Keep in mind that finding an economical house in a central area with urban facilities and top-level services in Singapore can be challenging. In a majority of cases, expats find it difficult to decide the ideal location. As per a report made by the Economic Intelligence Unit in March 2018, Singapore holds the title of the most costly city for expatriates.
Expatriates need to know that the cost of living in Singapore may not be budget- friendly, after all. If you are an economic-conscious expat, you must consider this point! Also, keep in mind that because the city-state is small, land for development is reduced. This certainly impacts accommodation.