Purchasing Real Estate in Singapore
Engaging a Buyer’s Agent
You can choose to engage a real estate buyer’s agent or to do-it-yourself. I have good news for you. Do you know that property buyers do not need to worry about the expense of hiring a buyer’s agent? That’s because the seller’s commission will be shared between the seller’s and buyer’s agents. Typically, the commission is equivalent to 2% of property transacted price, which is split evenly between sellers and buyer’s agents. This practice is applicable for private residential, commercial, and industrial properties with an exception of HDB flat, where buyers pay 1% commission to the buyer's agent, and sellers pay 2% to the seller’s agent.
A buyer’s agent will guide you through the property-buying transaction and be at your disposal for any question or concern. A Buyer’s agent will help you find the right property, help you negotiate on the offer, recommend other professionals i.e. conveyancing lawyer, mortgage banker, renovation company.Click here to find outTop 6Benefitsof Engaging Us in your buying process.
Financial planning is a key determinant to the success of every real estate purchase. Before you begin on your property search, it is imperative that you draw out a detailed financial plan. Financial planning includes analysis of your financial affordability, cost of purchasing, cost of owning a property, and set aside renovation cost.
Assess your financial affordability by looking into your cash and CPF Ordinary Account balance, if you are purchasing residential property. After looking into what you already have, decide whether you need bank financing, and if you do, do consult with mortgage bankers or brokers to assess your borrowing power. HDB flat buyers intending to take HDB loan must first obtain HDB Loan Eligibility Letter (HLE) prior to obtaining Options to Purchase from a flat seller. Click here to read about our blog article on Five Mistakes First Time House Buyers Commonly Make.
After assessing your affordability, now you shall look into the cost of purchasing properties. The cost of purchasing includes Buyer’s Stamp Duty (BSD), Additional Buyer’s Stamp Duty (if any), Conveyancing lawyer fee, and mortgage duty.
After purchasing the property, there is also the ongoing cost of owning it. Some costs include maintenance fee & sinking fund (or service & conservancy charges for HDB flats), annual property tax, fire insurance, mortgage, and even income tax if your property is being rented out generating rental income for you. Click here to read our blog article on the cost of owning properties in Singapore.
Unless you are purchasing a brand-new home from a show gallery from a real estate developer, you may end up needing to renovate. You might purchase supposedly well-renovated houses only to find out there are many unseen defects and it doesn’t look that nice without all the previous owners’ moveable furniture. If you do not plan this properly from the beginning, you may need to take up a renovation loan on top of your mortgage loan. Click here to read our blog article on the cost of purchasing properties in Singapore.
Buyer’s Stamp Duty (BSD) and Additional Buyer’s Stamp Duty (ABSD)
Buyer’s Stamp Duty (BSD) is payable by the Buyer to the Inland Revenue Authority of Singapore (IRAS) on the purchase of acquisition of real properties in Singapore
Refer to the table on the latest BSD payable differentiated based on residential and non-residential properties and purchase price or market value of the Property.
|Purchase Price or Market Value of the Property||BSD Rates for residential properties||BSD Rates for non-residential properties|
Additional Buyer’s Stamp Duty (ABSD) is payable in addition to the BSD by buyers of certain profile. It was first introduced on 8 December 2011 to curb the increasing property price beyond economic growth and have been revised two times with the latest revision on 6 July 2018.
Rates and Computation
|Profile of Buyer||Current ABSD Rates (w.e.f 6 July 2018)|
|Singapore Citizens (SC) buying first residential property||Not applicable|
|Singapore Citizens (SC) buying second residential property||12%|
|Singapore Citizens (SC) buying third and subsequent residential property||15%|
|Singapore Permanent Residents (SPR) buying first residential property||5%|
|Singapore Permanent Residents (SPR) buying second and subsequent residential property||15%|
|Foreigners (FR) buying any residential property||20%|
|Entities buying any residential property||25%|