Singapore is viewed as a safe haven for property investment due to its sound economy. As such many foreigners are keen to buy properties in Singapore, including landed residential properties. However, it is not so easy as foreigners must go through an approval process.
This article will provide an overview of such process, including what you need to look out for if you are a foreigner interested in buying a landed residential property in Singapore. It will cover:
- What is considered a landed property
- Whether foreigners can buy a landed residential property in Singapore
- Whether foreigners can buy a landed residential property at Sentosa Cove
- The process of foreigners buying a landed residential property in Singapore
- What else should foreigners look out for when buying a landed residential property in Singapore
What is Considered a Landed Property?
A landed property refers to any type of property that sits on land. Owners of such property have the title to both the building and the land on which it sits. This is as opposed to apartment-style housing such as condominiums where ownership is limited to the space within the unit.
The following are some examples of landed residential property in Singapore:
- Semi-detached house: One half of a pair of two houses, each with its own land title, separated by a common party wall along one side of the premises.
- Terrace house: A dwelling house with its own land title that forms part of a row of at least 3 dwelling houses abutting the common boundary party walls.
- Bungalow: A detached landed house with its own land title
Can Foreigners Buy a Landed Residential Property in Singapore?
Foreigners (i.e. non-Singapore Citizens, including Singapore Permanent Residents) can buy landed residential property in Singapore but must obtain approval from the Land Dealings Approval Unit (LDAU) under the Residential Property Act (RPA).
It should be noted that landed properties are classified as restricted properties for foreign ownership. This is because foreign ownership of landed residential properties in Singapore is restricted under the RPA to ensure that such properties remain the primary preserve of Singapore Citizens. Hence, foreigners must seek approval.
Examples of restricted properties include:
- Vacant residential land
- Terrace house
- Semi-detached house
- Bungalow
- Strata landed house which is not within an approved condominium development under the Planning Act (eg. townhouse or cluster house). In other words, such houses may be part of a shared community with common facilities but are not granted condominium status.
- Shophouse
Further restrictions on the type of property that can be bought apply (discussed below).
Can Foreigners Buy Landed Residential Property at Sentosa Cove?
Foreigners, including Singapore Permanent Residents and non-Permanent Residents, can buy restricted (landed) residential property at Sentosa Cove. However, as with other restricted properties above, they must seek approval from the LDAU under the RPA. Further restrictions on the type of property that can be bought also apply (discussed below).
What is the Process of Foreigners Buying a Landed Residential Property in Singapore?
As mentioned above, foreigners must first seek approval from the LDAU. This can be done online via the Singapore Land Authority’s LDAU e-Application centre.
How will applicants be assessed?
Each applicant is assessed on a case-by-case basis, taking into consideration (including but not limited to), the following criteria for approval:
- You should be a Permanent Resident of Singapore for at least 5 years; and
- You must make exceptional economic contribution to Singapore. This is assessed taking into consideration factors such as your employment income assessable for tax in Singapore.
What is the application processing time?
The general processing time is about 1 month from the date all the relevant documents and information (see below) required to process the application are submitted.
Some applications may take longer to process and this can typically range from 2 – 6 months.
What documents must be submitted?
When submitting your application for LDAU approval, you must upload the digital or scanned copies of the following documents:
- Identity card
- Entry permit
- Marriage certificate
- Pay advice
- 3 years of tax assessment
- Option to Purchase
- Tenancy agreement, if applicable and subject to approval. Should approval be granted and the property is tenanted, the remaining tenancy must not exceed 1 year from the date of legal completion of the purchase of the property.
Applying for an in-principle approval first
You should look out for relevant clauses in the Option to Purchase (OTP) if you need time to get approval from the LDAU. This is because once the OTP is exercised, there is a contract and you can be liable for forfeiture of monies paid if the LDAU approval is not granted.
For example, the clause might state that you, the buyer, must get the LDAU approval by completion. If you cannot get the LDAU approval, you will have to forfeit typically 1+4% (1% for OTP and 4% deposit). However, it is not realistic to get the LDAU approval before exercising the OTP since the OTP period is 2 weeks.
You may therefore wish to apply for an in-principle approval first before looking for a property or entering into any contract to purchase a restricted property. This can be similarly done online via SLA’s LDAU e-Application centre.
When submitting your application for in-principle approval, you must upload the digital or scanned copies of the following documents:
- Identity card
- Entry permit
- Marriage certificate
- Pay advice
- 3 years of tax assessment
Note that if approval is granted, you have to submit the details of the property you intend to purchase within 1 year from the date of the letter of approval. Otherwise, the approval will lapse and you will have to make a fresh application. There is no extension of validity for the approval in-principle granted.
What is the application fee?
The LDAU approval application fee (including for in-principle approval applications) is $1,220 per property.
For joint applications, other than married couples whose marriage is recognised by Singapore laws, applicants are required to submit separate applications. Each person would thus have to pay a separate fee of $1,220 per property.
Are there any restrictions on the property that can be bought?
Yes. You can only buy restricted residential properties which do not exceed 15,000 square feet, and which are not situated within a good class bungalow area. Foreigners who wish to purchase such properties are subject to much more stringent qualifying criteria, including making exceptional economic contributions.
If you are buying a restricted residential property at Sentosa Cove, on the other hand, the land area of the property must not exceed 1,800 square metres.
What are the conditions of approval?
Prospective owners of all restricted residential properties must only use the property solely for their own occupation and that of their family members as a dwelling house, and not rental or any other purpose.
If you are buying a restricted residential property on the mainland, not one at Sentosa Cove, you must also comply with other conditions:
- You must not dispose of the property within 5 years from the date of legal completion of the purchase of the property or, if the property is under construction, 5 years from the date of issue of the Temporary Occupation Permit or Certificate of Statutory Completion (whichever is issued earlier) for the property; and
- You must not subdivide the property without approval.
Should you breach any of these conditions, you may be required to pay a financial penalty or be liable, upon conviction, to a fine of up to $200,000 and/or imprisonment for up to 3 years.
What Else Should Foreigners Look Out For When Buying a Landed Residential Property in Singapore?
Road Line Plan (RLP)
The Land Transport Authority (LTA) safeguards land for road reserves to construct new roads or improve existing roads. The Road Line Plan (RLP) shows such safeguarding information including:
- The land required for road reserve
- Road names/categories
- Lines of road reserve (showing the extent of the future safeguarded roads)
- Cadastral information
- Accesses to properties.
Owners of land properties being intersected by the Road Reserve Line are affected by road reserves. For example, as a general rule, any building protrusions into the road reserve (e.g., an outdoor balcony of your bungalow house extending into the road reserve) will have to be removed.
It is therefore important to carry out checks on the RLP before buying a landed property, to see if the land/property is affected by the road reserve. You can do so by purchasing the RLP via the Integrated Land Information Services (INLIS) website at a fee of $54.50.
Urban Redevelopment Authority (URA) guidelines
The Urban Redevelopment Authority (URA) sets specific guidelines for residential developments. For one, your landed property must be located within safeguarded landed housing areas.
Further, each landed housing area must follow specific regulations regarding the type of housing and the permitted number of storeys. For instance, if a zone is designated for two-storey semi-detached homes, you are not permitted to construct three-storey semi-detached homes in that area.
You may wish to read up on these guidelines when looking for a landed property, to ensure compliance and prevent any future issues.
Stamp duty
Foreigners buying landed properties in Singapore must pay Buyer’s Stamp Duty (BSD) and Additional Buyer’s Stamp Duty (ABSD). These are taxes levied on purchases of property in Singapore. BSD rates are computed based on the purchase price of the property or the market value of the property, whichever is higher. As for ABSD, non-Permanent Residents must pay 60% while Singapore Permanent Residents must pay 5% on the higher of the purchase price or market value.
Buying another restricted residential property
Foreigners can only own one restricted property at a time. if you are granted approval for the purchase of another restricted property, you will be required to dispose of your existing restricted property.
Note that for restricted properties on the mainland, you must fulfil the 5-year non-disposal condition (as discussed above) before you can buy another property.
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Foreigners looking to purchase a landed residential property in Singapore must navigate a complex set of rules and regulations, particularly regarding eligibility and approval from the LDAU. It is crucial to understand that such properties fall under “restricted properties” and approval may even take several months.
You may also realise that Singapore Permanent Residents are more likely to be eligible for restricted properties on the mainland, while both Singapore Permanent Residents and non-Permanent Residents can buy restricted properties at Sentosa Cove.
If you are in doubt as to whether you qualify to purchase a restricted residential property in Singapore (whether on the mainland or at Sentosa Cove), it is highly recommended that you engage a conveyancing lawyer. A lawyer can assist you with the application process, review contracts, ensure compliance with all legal requirements, and provide valuable guidance to help you make informed decisions before finalising your big purchase.
Written by Mona J Oei