Compass Real Estate > Cambodia Investment Guides > Brief introduction of Singapore property

Brief introduction of Singapore property

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2020-07-17
Summary:As one of the most developed and fully equipped countries in Asia, Singapore has a very good real estate investment environment. If you want to buy a house in Singapore, you must do your homework.

Property type

HDB

HDB is equivalent to affordable housing, with 79% of Singaporeans living in HDB flats. As the welfare of local citizens, the requirements for buying HDB flats are stricter. New HDB flats are limited to Singapore citizens; second-hand HDB flats can be purchased by either spouse as long as one of them is a citizen, or jointly purchased by citizens and parents holding a long-term visa Or both spouses are permanent residents (PR) for more than three years. For details, please visit the HDB official website.

DBSS

DBSS), an upgraded version of a HDB flat, designed, built, and sold by a private developer. The purchase conditions are the same as HDB and cannot be privatized.

 

EC

EC, like DBSS, welfare houses provided by the government are designed, constructed, and sold by private developers, and basically have the same facilities as private apartments. The purchase conditions are similar to HDB. EC is partially privatized after five years and can be resold to citizens or PR, and fully privatized after ten years and can be resold to citizens, PR and foreigners

Condo

Condos are built and sold by private developers. There are no purchase restrictions. Citizens, PRs, foreigners, and companies are qualified to buy Condo. The difference is that the stamp duty and additional stamp tax required for different identities will be different.

Luxury Condo

Luxury Condo), designed, contracted and sold by well-known developers. There are no purchase restrictions. Citizens, PR, foreigners, and companies all qualified to buy it. They are mainly located in the core central area of Singapore. Orchard Road, Dongling Road, Amo Park, Bukit Timah, Marina Bay, Sentosa and other areas, surrounded by famous schools, complete first-class commercial facilities, the price of SGD 4 million-100 million, is the top of the international rich Collection.

Landed

(Landed) is divided into town houses, semi-detached bungalows, bungalows and high-quality bungalows (Good Class Bungalow). High-quality bungalows occupy an area of at least 1400 square meters and are distributed in a full set of 39 high-quality bungalow areas. It is Singapore's top rich settlement, but under normal circumstances, landed houses can only be purchased by Singapore citizens. With the 2 exceptions, one is that permanent residents with special contributions to Singapore can apply for purchase, the other is to purchase a 99-year leasehold landed residence in Sentosa Cove, Sentosa.

Purchase policy

1. Detached bungalows with land, semi-detached bungalows, and row houses can only be purchased by Singapore citizens, but villas and town houses in Sentosa Island can be purchased by foreigners. Foreigners or permanent residents can purchase most of the apartment industry including condominiums that have lived for more than ten years.

2. The property rights of Singapore apartments are mainly divided into two types, 99-year title deed and permanent title deed. In the same area, the price of permanent title deeds is about 20% higher than that of 99-year title deeds. In 1999, the rate of return on the title deed was higher, and as the government no longer granted new land titles for permanent title deeds, the housing in the permanent title deeds would retain their value. Foreigners can buy apartments or even villas with 99-year or freehold title.

3. The area of Singapore is net area as marked on the floor plan, and also includes air-conditioning slots and balconies. The area of Singapore has no public pools, and the design of the new building is more reasonable. There are no bay windows, no greening areas, and no shelters.

4. Singapore belongs to the standard of move in condition. The walls of the entire unit are painted, the circuit lines and the sink have been laid, and the air conditioner has been installed, and they can be used directly. The floor has been paved with marble or tiles, the room has been paved with solid wood or laminate flooring, and the wardrobe is equipped. Kitchen with cabinets, cooker hood, induction cooker or gas stove, sink, washing and drying machine, oven, a small amount will provide dishwashers, wine cabinets and so on. Bathroom with cabinets, wash basin, toilet, shower, a small number of bathtubs, etc. Buyers only need to collect the keys and install lighting and curtains, and buy furniture (sofa, bed, TV, etc.) to move in.

5.Foreigners and Singaporeans have the same loan rights. Bank can borrow up to 60% -75% of the total housing price, Singapore loan interest is about 2%.

6. Singapore's forward delivery project, after paying the 20% down payment, the remaining balance is paid according to the progress of the project. For example, after the foundation is completed and passed the acceptance, the developer pays 10% of the foundation first, then the buyer pays (if the loan can be paid through the loan), and the money is not paid directly to the developer, but transferred to this project account. Specially established project account (project account, under government supervision, special purpose). Only 85% of the total price of the property is paid until you check in with the key, and the remaining 15% of the remaining amount will not be paid until the apartment is completely repaired and maintained. This will also ensure that Singapore has no bad buildings.

7. There is no difference in property purchase rights between Singaporean foreigners and Singaporean locals. The same rights and obligations do not restrict foreigners from buying.

 

Tax

 

Stamp duty

Charge in steps based on purchase price:

USD 0-180000 part: 1%

$ 180001-360000 part: 2%

$ 360001-640000 part: 3%

$ 640000 and more: 4%

Additional stamp duty

The current tax rate for foreigners to buy a house is 20% of the purchase price.

lawyer fee

Property transactions in Singapore must be handled by lawyers. For properties under S $ 2 million, attorney fees are generally around S $ 3,000

Loan cost

There is no additional cost for direct loans through banks. The loan ratio is up to 75%, and the loan interest rate is between 2-2.4%.

Process

Understand eligibility to purchase

Singapore is an affluent island country with a large number of individuals and foreigners. Foreigners can only buy apartments, but not landed residences and government HDB on the main island of Singapore. Only the top rich can buy Sentosa, a wealthy area on Sentosa Island. A villa with a sea view on the bay.

Confirm financial situation

Confirm your financial situation, and then choose the right property according to your needs. You should plan your purchase budget and confirm that you have sufficient funds and loans to complete the purchase transaction. In addition to the amount of the housing price, you also need to prepare stamp tax attorney fees and other fees. (Foreigners can apply for loans up to 80% of the house price, and the latest fixed interest rate is about 1.2% -1.7% per year)

 

Learn about different types of properties

Generally speaking, the Singapore real estate that can be purchased can be divided into new real estate and resale real estate from the perspective of the current status of the real estate. The new real estate can be divided into forward delivery project and new project. Project used refer to the commercial housing in the period from the beginning of obtaining the pre-sale permit of the commercial housing to the acquisition of the real estate title certificate (production certificate). Item acceptance, the property can be officially settled in.

 

Choose unit and pay down payment

After choosing a suitable property, a down payment is required, and then the lawyer are needed during purchase procedures are completed.

 

Forward delivery project / new project purchase process

1. The developer issues an option to purchase to the buyer, that is, a pre-sale agreement for the house. The pre-sale agreement must use the standard format specified by the government. After signing an Option To Purchase (OTP), the buyer pays a 5% deposit and needs to provide relevant documents (ID card or passport) to reserve the unit.

2. The house pre-sale agreement expires three weeks after the developer handed over the purchase contract and the title deed to the buyer or his lawyer. During the period, the developer cannot change the price or resell the unit to other buyers. The buyer decides whether to buy or not within the time limit. If the buyer is unwilling to buy, he / she will be required to pay 1/4 of the liquidated damages.

3. If the buyer decides to purchase the property, he needs to sign a lawyer agreement, and the subsequent purchase of the housing can be handled by a lawyer.

4. Sign a sales & purchase agreement (S & P). The developer will send the formal sales contract to the buyer's designated law firm within two weeks after the buyer executes the OTP. Within three weeks of the lawyer receiving the sales contract, the buyer needs to sign at the law firm. After signing the sales contract, the buyer is the legal owner of the legal process.

5.Payment of Buyer's Stamp Duty (BSD) and Additional Buyer's Stamp Duty (ABSD) are required to be paid within the signed purchase and sale contract. Cash or CPF can be selected. These are all done through the operation of lawyers. Generally speaking, the second stage and the third stage can be carried out at the same time, that is, when the sales contract is signed, the stamp duty is paid together.

6.Within 8 weeks after signing the OTP, the remaining 15% deposit (including a total deposit of 20%) is paid through the law firm.

7. For the forward delivery project which under construction, payment shall be made in accordance with the progress of the project.

8. Lawyers assist in registration procedures, delivery procedure, and housing inspection. After the apartment is completed and obtained the Temporary Occupation Permit, go to the online reservation to get the key, and get the key to move in.

Purchase second hand housing

The first stage: After selecting an interested unit, the real estate agent will prepare a Letter of Offer (LOO) for the buyer and submit it to the seller. At the same time, a 1% deposit (Option Fee) must be paid to obtain a house purchase Right contract (Option To Purchase, referred to as OTP). The general validity period of the LOO of purchase is 3 days, and it can also be extended reasonably as appropriate. Before paying the deposit, you need to verify the identity of the seller, and if the buyer has any conditions attached, such as repainting, etc., it is best to write in the letter of intent, so as to avoid disputes that may occur when the house is delivered. If the seller accepts the buyer's bid and the conditions, the seller will deposit a deposit check and prepare the OTP for the buyer.

The second stage: the implementation of OTP and the payment of stamp duty. The validity period of the option contract is generally 14 days. The validity period can be reasonably extended at discretion. During this period, the seller cannot change the price or resell the unit to others. Buyers can perform OTP within the validity period and pay an  Exercise Fee 4%. If the buyer regrets and does n’t want to buy it, he can automatically invalidate the OTP and the seller will forfeit the 1% deposit. Within two weeks of completing the OTP, the buyer is required to pay buyer stamp duty (BSD) and additional buyer stamp duty (ABSD) through a lawyer.

The third stage: After executing the OTP, it usually takes 8-12 weeks to complete the transaction. In the first two weeks of the transaction completion date, the buyer pays the remaining 15% of the down payment to his lawyer ’s escrow account (based on 80% of the loan ), On the day the transaction is completed, the buyer's lawyer will pay all the money to the seller's lawyer, the seller's lawyer will transfer the property to the buyer's name, and provide the key, door card and other corresponding items. If one party proposes to advance or delay the transaction date, as long as the buyer and seller agree and write it in the contract, it is acceptable.

Payment method

What is the advantages of open account in Singapore bank

1. Singapore is one of Asia's financial centers. It has a high degree of integration with international trade, a mature financial market, and a more mature and convenient banking business. It is a preferred choice for large asset financial professionals.

2. The Bank of Singapore is strictly regulated by the Monetary Authority and the interests of customers are guaranteed. In addition, Singapore ’s dominant political environment is stable, its economy is strong and strategically located, and various reasons indicate that Singapore is an ideal location for international banks.

3. Singapore and China signed a CRS agreement, but there was no exchange for landing (if there is no landing and signing, information will not be collected at the bank, and will not be exchanged back to the mainland. Some high-net-worth customers do not like their personal information to be Exchange back to their country, so they choose to open bank account in Singapore).

4. The success rate of opening an account in Singapore is very high, only need to provide a few business certificates, the application is convenient, and the account can be opened in 1-2 weeks. E- banking is opened in one step, and daily accounts are easy to operate.


6. Customers choose to match other countries' tax IDs + passports to perfectly avoid the financial crisis. The international reputation of the Bank of Singapore is very good, and it is convenient for customers to open and close international letters of credit.


7. The Bank of Singapore requires the first deposit and daily deposit balance of the account to be very low and there is no need to purchase any financial management. Without any foreign exchange control, global currency acceptance is high, and the currency exchange rate is very low.

Singapore Bank Application Conditions


1. The applicant provides the passport to open the account, financial affairs identity and proof of address.

2. The applicant completes the bank KYC file and confirms the information with the bank is correct.

3. Guarantee the minimum capital requirement of the bank account (20w SGD or equivalent currency).

Singapore bank account opening process

Individual:

1. Contract signing: The applicant signs the Singapore personal bank account opening contract.

2. Data collection: According to the client's capital plan for the coming year and the documents provided, the client can personally customize the resume, account opening plan, KYC file and other data.

3. Submit to the bank and bank for confirmation: arrange the mailed customer documents to be sent to the Bank of Singapore, provide telephone guidance for the customer in advance, and make an appointment with the bank for telephone time.

4. Bank account opening and activation: After the bank's background audit, it will be sent to the customer's mailbox by mail. After successfully opening the bank account, the bank will mail the bank card and online banking to the address provided by the customer.

1. Data collection: collect the corresponding account opening data according to the account opening bank needs.

2. Bank pre-approval: submit the collected data to the bank for pre-approval.

3. Appointment in Singapore : After the pre-approval of the information is correct, you can make an appointment for the Singapore bank.

4. Signature of Directors & Shareholders: Opening an enterprise account requires the signature of the person who manages the account designated by the company that opened the account. It can be one or more people. If there are multiple people, multiple people are required to sign the document.

5. After all the above procedures are correct, the account is successfully opened.

Transfer 

Most houses in Singapore are leased, with a lease term of usually 99 years. It is very rare own a property with full ownership. All land approved by the government since the founding of Singapore is 99-year property rights, while freehold property rights and other so-called 101-year, 103-year or 999-year property rights are the products left under the special historical conditions before Singapore ’s founding. The three types of property rights in 101, 103, and 999 are rare and most of the development land that the government has publicly sold on the market is 99 years.

Now the permanent property rights and the 999-year-old house on the Singapore market are products left over due to special historical reasons. In Singapore, in terms of housing, 99-year property housing is the most popular, because the 99-year property housing is sufficient to meet the needs of residents and adapt to market development.At present, there are three types of property in the Singapore housing market. Compared with it, the property with permanent property rights and 999 property rights is about 20% more expensive than the property rights with 99 years. According to the Singapore government regulations, foreign investors (non-permanent residents) can purchase three types of property without restrictions.

Freehold Singapore Property

In Singapore ’s housing market, there are fewer permanent property properties, and foreigners still need strict approval from the government to buy them. Not only are there fewer choices, but also the procedures are cumbersome. More importantly, the Singapore government has carried out plans to take back land ownership in a planned and step-by-step manner. Both public facilities and economic development have priority in the land held by the government. Singapore ’s municipal construction is mainly built and developed around the newly approved land , Such as subways, shopping malls, etc., are relatively close to 99-year-old houses. As a result, the current freehold property houses are far away from the subway, and most of them are concentrated in the old city reconstruction projects in the downtown area. A freehold project with a good location is not so easy to find.

For real estate sold on the market in the form of freehold property rights, developers must buy the land from private and rebuild new real estate for sale. Generally speaking, the price of freehold property rights is 20% more expensive than 99 year-property rights.

How to deal with the real estate service life expired in Singapore

Common treatment method (1): After the expiration of 99 years, the owner can gather money to apply for the extension of property rights, but the government may not necessarily approve it.

Ordinary treatment method (2): The government will compensate the land at the prevailing market price for land resumption. The government of Singapore requisitioned land, which is En-bloc (Singapore version of demolition). It can be initiated by the developer or the owner committee.  Old buildings over ten years old can be sold with the consent of the 80% owners. 90% owners’ consent of the housing built within 10 years, adopt the principle of minority obeying the majority. Of course, the government will compensate housing at the market price, and the owner will be able to buy the same type of house in the same location. Therefore, someone in Singapore bought the old building for En-bloc to get premium.

The most popular treatment method: Singapore ’s land area is very small, and the housing cannot be expanded horizontally, but can only be built higher. Therefore, housing with more than 30 years of age will be acquired by the developers, and your housing will be acquired at a price 15% -30% higher than the market price at that time, provided that the owner of the building is agreed with more than 90% owners. Then you can go to buy another new housing, or buy a new unit on the new project.

Housing trust

The rental return in the Singapore apartment market is usually expressed in terms of rental yield. It is calculated by dividing the rent for one year by the price of the apartment. For example, if someone buys an apartment at the price of S $ 1.3 million and rents it out at a monthly rent of S $ 3500, then the rent-sale ratio of this apartment is 3500 multiple 12 / 1.3 million = 3.23%.

It should be noted that the rental yield is a response to the rental return, but it does not fully represent the rental return. Rental return should also consider other costs such as property management fees, property taxes, bank interest, etc. These usually cost about 1.2 months of rent. In order to facilitate the comparison between apartments, the data in this article uses the rental yield.

Singapore apartment rental yield regional differences

The average rental yield rate of Singapore apartments is around 3.5%. The 2008/09 financial turmoil once reached 4.7%, instead of rental rose at that time, but a panic decline in housing prices. Over the past few years, housing prices have accelerated, while the rental market has been relatively stable, so the rental yield ratio has fallen.

Regionally, Mass Market is better than City and City Fringe. Urban areas and urban fringes, also known as CCR (core central region) and RCR (restof central region). Mass market refers to the so-called OCR (outside central region).

Why is the rental yield ratio of the more central place lower? This is because housing prices in the core area are far from other regions. Although the rent in the core area is considerable, it is still difficult to keep up with the housing prices.


Singapore apartment rental yield ratio and number of apartment rooms

Singapore apartments usually use the number of rooms to indicate the size of the apartment. An apartment with one room and a living room is called a one-room apartment, a two-room apartment with a living room is called a two-bedroom apartment, a three-bedroom apartment, a four-bedroom apartment, and so on. Compared with the size of the room, the number of rooms has a much greater impact on the rent. For example, the same three-room type, one is 1100 square feet, one is 1200 square feet, their rents are almost the same (in the same area, other conditions are the same). However, it is also 1,100 square feet. If one is a two-room type and one is a three-room type, the rent for the three-room type is higher.

Singapore apartment rental yield ratio and monthly mortgage payment

Many investment friends will be concerned about this issue. The apartment I bought is rented out, can you help me repay the monthly payment?

Here is a example:

For an apartment of S $ 1 million, the loan is 80%, the annual interest rate is 1.5%, the loan term is 30 years, and the monthly payment is S $ 2760.96.

The total cost of housing for one year is

1) Loan repayment 2760.96 X 12 = 33131.52

2) 2) The property fee is about 300 X 12 = 3600

3) 3) Real estate tax about 2000 Singapore dollars

4) A total of 38731.52 Singapore dollars.

How much can the rental yield ratio be balanced?

If the rental yield ratio reaches 3.87%, then congratulations, you need not to repay monthly money on the housing any more.

Then consider the situation of rising bank interest. If the interest rate rises to 3%, the monthly repayment will increase to 3372.83. At this time, the rental-sales ratio of the balance of payments will be 4.6%.


Disclaimer: The re-forward articles on Compass website are for the purpose of conveying more information, and it does not mean that the Compass website agrees with its views or confirms the authenticity of its content. Article noted as "Source: Compass original", please note that the source from Compass. The content of the article is for reference only and should not consider as investment advice, and it does not mean that Compass agree with its views.

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