How to avoid pitfalls when buying a Singapore property

As a top world destination for expat professionals, it’s no surprise many relocating career-minded expatriates are looking to stay in Singapore long-term.

If you’re planning a long-term stay in this fascinating city-state, buying a home makes more sense than taking on endless rounds of rental charge increases. However, buying a property here involves stringent planning as well as a hefty deposit and proof of solid earnings. At the present time, property prices are on the increase, making purchasing a good option as regards capital appreciation in the long-term.

Before your search for a suitable property begins, you need to familiarise yourself with what’s out there as regards real estate options. From the bottom up, there’s public housing offered by Singapore’s Housing and Development Board (HDB), followed by private condos and apartments, semi-detached homes and villas with land. The majority of Singaporeans are housed in HDB properties, with non-resident expats unable to buy unless they are married to a Singapore national. Landed properties are also off limits to foreign buyers unless they’re approved by the relevant government department.

The next hurdle to jump is your status, with permanent residence the most important. Otherwise, you’ll need to prove you’re making an ‘exceptional economic contribution’ to the local economy. Factors linked to this stipulation include after-tax wages of no less than between S$7,000 and S$10,000 a month per household, with a size limit of 15,000 square feet or a location within an upscale bungalow area. You should remember that renting out your property is forbidden, as is selling it less than five years after its purchase.

Obviously, properties outside the city’s central area are less expensive than those more centrally located, and Singapore’s MTA transport system makes getting to work a breeze. Once you’ve found your perfect chunk of Singaporean real estate, you’ll realise how very different the system is than in your home country. After you’ve made your down payment, there’s a raft of taxes which also need to be paid, including stamp duty at 15 per cent, option to purchase fees, offer to purchase fees, land valuation fees and, of course, your legal fees.

As regards financing, you can use a home loan for 80 per cent of the purchase price, with the remaining 20 per cent plus the fees coming out of your pocket. Shopping around is the way to make sure you’ve got the best interest rate, with using a carefully selected and trustworthy mortgage broker the easy way out. You’ll probably also need advice as regards home insurance, as well as avoiding the temptation to buy the cheapest option.