There has been a lot of talk about whether or not a Singapore permanent resident (PR) can purchase property in Singapore, and if so, what type of property they are able to purchase out of the many options available. One of the leading factors influencing what kind of property a foreigner can purchase in Singapore is their residency status. For Singapore citizens, the only limitation they have is what they are able to afford, but for someone like a Singapore PR, there are additional restrictions that come into play before they can even make an application to buy a property. So, inevitably, the short answer to this question is yes.
A foreign person who wishes to purchase a landed residential property is required to seek approval under the Residential Property Act, and all applications have to be submitted online to the Singapore Land Authority (SLA). The general processing time for applications is one month, but it is important to submit your application as soon as you can, as some applications may take longer than others.
Now you may ask, what and who is considered a foreigner? The Residential Property Act states that a foreign person means any person who is not any of the following:
- Singapore citizen;
- Singapore company;
- Singapore limited liability partnership; or
- Singapore society
Therefore, it would be safe to say that a Singapore PR is a foreign person and is, therefore, eligible to purchase a property if he/she meets certain criteria. Although each applicant is assessed on an individual, case-by-case basis, the following factors will usually be taken into account. However, this list is not exhaustive and therefore does not take into consideration all the factors that might be evaluated before approval is given:
- The Singapore PR must have been a permanent resident of Singapore and have lived in the country for at least five years.
- The Singapore PR must make exceptional economic contributions to Singapore. This is specifically assessed by
taking into consideration factors such as the annual employment income assessable for tax in Singapore. Research shows that the Singapore PR should have at least a minimum annual income of around S$30,000.00 before considering applying for or purchasing a property of any kind.
- For public housing (HDB), you must be at least 21 years old with a family nucleus or an orphan to be eligible to
purchase. For a single or divorced person, you need to be at least 35 years old, except if you have been widowed.
- For private property, you must be at least 21 years old. You may be allowed to purchase a private property if you are younger than 21 years old, but this is only possible through a Trust.
If the above restrictions are met, and the application has been approved by the SLA, the Singapore PR can go on to purchase a property in Singapore.
What Type Of Properties Does A Singapore PR Have To Seek Approval For In Order To Make A Purchase?
The complete list of the types of property for which a Singapore PR must first seek approval before purchasing, as required by the Residential Property Act, are as follows:
- Vacant residential land;
- Terrace house;
- Semi-detached house;
- Bungalow/fully detached house;
- Strata landed house which is not within an approved condominium development under the Planning Act (e.g. townhouse or cluster house);
- Shophouse (for non-commercial use);
- Association premises;
- Place of worship; and
- Workers’ dormitory/serviced apartments/boarding houses (not registered under the provisions of the Hotels Act).
Can A Singapore PR Purchase Any Other Landed Properties Without First Obtaining Approval From The SLA?
The answer is positive for Singapore PRs when it comes to purchasing a landed house in Singapore. They do, in fact, have a few options available to them that do not require approval from SLA under the Residential Property Act. These are:
- Condominium unit;
- Flat unit;
- A Strata landed house in an approved condominium development (not projects classified as apartments by URA);
- A leasehold estate in a landed residential property for a term not exceeding seven years, including any further term which may be granted by way of an option for renewal;
- Shophouse (for commercial use);
- Industrial and commercial properties;
- Hotel (registered under the provisions of the Hotels Act); and
- Executive condominium unit, HDB flat and HDB shophouse.
There are various archetypes of strata landed houses in a condominium, and as a Singapore PR, it is recommended to reconfirm with URA or the managing agent and/or developer to establish if the project is classified as a condominium or an apartment. It goes without saying that these houses share communal facilities such as swimming pools, which are not the same as a typical landed house. Appreciably, these developments are managed by the Management Corporation Strata Title (MCST), similar to a condominium.
Singapore permanent residents are able to obtain a private condominium unit (new or second-hand), without too much of a struggle, unlike with HDB flats. Private condominiums are more often viewed as a status symbol due to the fact that the vast majority of Singapore citizens live in HDB flats. Private condominiums are great investment opportunities, as they may be rented out for at least six months, whereas in HDB flats, the minimum period is three months.
Furthermore, Singapore PRs are not permitted to buy Built-to-Order (BTO) flats directly from the Housing and Development Board unless married to a Singapore citizen. In order to be considered for the purchase of a BTO flat, the applicant’s Singapore PR status must exceed three years, and they must not be younger than 21 years old. There are further restrictions placed on such a purchase, with the Minimum Occupation Period being within the first five years following the purchase.
You, or your spouse, may also not own any other private properties – if you do, these will need to be sold within six months of purchasing an HDB flat. This, however, is not the case if the Singapore PR wishes to purchase an HDB resale flat. The only difference is that the Singapore PR must have family members in Singapore that have had PR status for at least three years.
What Are The Chances Of A Singapore PR’s Application To Purchase The Property Being Successful?
Firstly, the Singapore Parliament shared some interesting numbers from the 2022 parliamentary debates about new PRs and citizenship granted in Singapore last year. In 2021, 33,400 new Singapore PR applications were approved! What is enlightening about this information is that this has been the highest recorded amount since 2010.
With these numbers having been analysed, it was revealed that given the current situation, together with the fact that these numbers are directly correlated with the number of applications to purchase housing, the chances of obtaining an approval have inevitably decreased. This is because demand is higher than supply, which has also led to the introduction of the Additional Buyer’s Stamp Duty (ABSD).
Singapore PRs must also bear in mind that there is an Ethnic Integration Policy (EIP) quota and a Singapore Permanent Resident quota that might be applicable in the area they would like to purchase, and this can impact their chances of success. A Singapore PR cannot purchase an HDB resale flat on their own, but if one of the buyers is either a Malaysian PR or a Singapore citizen, then only the EIP needs to be met. However, if none of the buyers is a Malaysian permanent resident, then both quotas will apply. In order for the quotas to be met, both the buyer and the seller must belong to the same ethnic group.
What Is The Financial Impact On A Singapore PR To Purchase A Property?
There are some restrictions on the amount of money that can be borrowed in order to finance the purchase of a property. Home loans are granted to Singapore PRs at the discretion of the local and international banks that operate within Singapore. The total loan amount cannot exceed 80% of the purchase price or the market value of the property, whichever is lower.
This essentially means that the Singapore PR must be able to provide a deposit of at least 20% of the purchase price or market value of the property they would like to purchase. Not to mention that it is essential for the Singapore PR to have an excellent credit standing and not show signs of any financial distress. In these times, this can be quite hard to achieve, not to mention how unsettling it can be for first-time buyers, who perhaps have not had the means to save and gather the required deposit for financing their purchase.
For public housing (HDB), there are multiple schemes available that can be used to purchase a flat. However, there must be, in general, at least one Singapore citizen as part of the application.
Any person who wishes to purchase property in Singapore will need to pay buyer’s stamp duty (BSD) for their documentation to proceed. This is calculated according to the market value or purchase price (whichever amount is the highest) of the property they intend on purchasing and is meant to keep private property prices affordable for locals. As mentioned above, the surge in demand for property purchase and investment has led to the introduction of ABSD, which has recently been increased in December 2021 for second and subsequent purchases by Singapore PRs and entities.
The ABSD payable from 16 December 2021 for a first-time Singapore PR buyer is 5%; for a second property, it is 25%, and for a third and subsequent property, it is 30%. Finally, you may be exempt from ABSD if you are downgrading from private property to an HDB resale flat. Equally important to remember is that if you are a Singapore PR married to a Singaporean and a first-time buyer not currently owning any residential property, you will not be required to pay ABSD.
In conclusion, it can be said that yes, a Singapore PR can purchase property in Singapore, but there is a multitude of things to first consider before making an application to do so.
If you are planning to apply for Singapore PR, one of the advantages of becoming one is that you can purchase a property in Singapore and avoid paying high rentals. You would only need to pay ABSD of 5% for your first property as compared to foreigners who need to pay 30% of the property price. Contact Immigration SG today to know more about how you can become a Singapore PR and what other benefits come with it.