Regulations in Singapore Real Estate

Before you purchase your first residential real estate in Singapore, you might want to find out a little bit more before you sign on the dotted line. In the past couple of years the Singapore real estate scene has seen drastic changes to the regulations governing transactions in residential property. This was mainly due to the rapid surge in property prices during this period, which caused a major concern to home buyers in the market. Listed below are the current regulations in place.

* Loans

In order to dissuade buyers from speculating midtown modern in property, the Government has reduced the initial 90% Loan-To-Value (LTV) to the current 80% LTV. However if the buyer has an existing housing loan in place, the next loan used for a residential property will be capped at 60% LTV. This measure severely cripples the speculator who is merely out to make a quick buck from leveraging on the banks.

* For Foreigners

Probably the group worst hit by the new regulations, foreigners now are required to pay an additional buyer’s stamp duty of 10% on top of the prevailing 3%. This measure has severely dampened foreign investor interest in and will likely continue to be in force until the market stabilizes. However on the bright side, investors from the following countries would enjoy tax privileges on the same terms as Singaporeans: USA, Switzerland, Norway, Liechtenstein and Iceland.

* For Corporate Entities

Non-individual entities who purchase property are also subject to the additional 10% buyer’s stamp duty. Moreover, their loan-to-value is capped at 50% which makes financing the property much more difficult.

* For Permanent Residents

Home buyers in this category will be pleased to note that for their first property, only the buyer stamp duty of 3% is payable. However, upon purchasing their 2nd property, an additional 3% will be levied on top of the prevailing buyer stamp duty.

* For Singaporeans

As the group least affected by the new measures, the buyers in this category are eligible to purchase 2 properties under the normal stamp duty of 3%. The additional 3% will be payable upon their purchase of the third property.

The measures have been a success at weeding out the speculators who have been driving up the property prices in Singapore. It is interesting to note however, that property prices have been held at a steady level for the past year since 2011. This comes as welcome news for investors who have been increasing their property portfolios to prepare themselves for the next 5-10 years.