Pre-purchase checks

• Singapore citizens who own a HDB flat, DBSS flat or Executive Condominium must fulfill the minimum occupation period of 5 years before they can purchase private residential properties
• A foreign person will require approval from the Land Dealings Approval Unit of Singapore Land Authority before they can purchase the following types of residential properties:

o   Vacant residential land

o   Terrace house

o   Semi-detached house

o   Bungalow/detached house

o   Strata landed house which is not within an approved condominium development under the Planning Act (eg. townhouse or cluster house)

o   Shophouse (for non-commercial use)

• A foreign person can purchase the following types of residential properties without special approval:

o   Condominium unit

o   Flat unit

o   Strata landed house in an approved condominium development

o   A leasehold estate in a landed residential property for a term not exceeding 7 years, including any further term which may be granted by way of an option for renewal

o   Executive condominium unit, HDB flat and HDB shophouse

• Estimate your budget by using a TDSR and mortgage calculator

Selecting your dream home

• Consider the qualities your dream home should possess, such as location, amenities, facilities and design
• Shortlist the developments and available listings that fit your requirements. Consider engaging a real estate salesperson (property agent) who can assist you in making your selection and handling the paperwork

• Check that the salesperson is registered with the Council for Estate Agencies (CEA)
• According to market practice, the buyer does not need to pay commission to his salesperson. Buyer’s salesperson will share the commission paid by the seller to his salesperson.

• Visit the shortlisted units to learn more and zoom in on your dream home

• Take a look at the common areas and facilities to check on maintenance
• Talk to the neighbours if you have the chance. They can give a more unbiased view compared to the seller and salesperson
• Take advantage of this Council for Estate Agencies guideline in the Professional Service Manual- “When asked by a buyer or through his salesperson, the seller’s salesperson must find out from the seller and convey to the buyer or the buyer’s salesperson information on the property, such as loan shark harassment, bankruptcy issues, recent deaths from unnatural causes, and defects such as spalling concrete and water leakages.”
• Check the maintenance and sinking fund fee

Procedure for purchase

• Obtain an Approval in Principle (AIP) for a bank loan

• An AIP lets you know your eligible loan quantum and the monthly mortgage payable
• Having an AIP before booking prevents the forfeiture of your option fee should there be hiccups in the process of mortgage approval
• Some sellers will not proceed with a sale to buyers without an AIP

• Issue Offer to Purchase and make payment of 1% Option fee to the seller in exchange for the Option to Purchase (OTP)

• It is advisable to obtain proof of property ownership before making the offer
• Proof of ownership can be obtained through a land title search at http://www.sla.gov.sg/inlis/

• The standard OTP is valid for 14 days
• The property is reserved exclusively for the buyer during this period

• Submit OTP to bank

• Receive Letter of Offer (LO) from bank

• The LO is a contract stating the terms of the loan offered by the bank to the borrower

• Sign Letter of Offer (LO)

• This forms a binding contract between the bank and the borrower

• Sign and deliver the OTP and the 4% Exercise fee to the seller’s lawyer within 14 days

• 1% Option fee will be forfeited if the OTP is not exercised

• Upon the buyer’s exercise of the Option, the buyer and seller enter into a Sale and Purchase agreement(S&P)

• The S&P is usually based on The Law Society of Singapore’s Conditions of Sale 2012
• Buyer will receive duplicate of signed S&P within 14 days of the exercise of the option
• Buyer’s lawyer will perform duties, such as lodging a caveat and conducting legal requisitions on the property

• Pay Stamp Duty within 14 days of the exercise of the option

• The Buyer’s Stamp Duty (BSD) is computed based on the purchase price or market value of the property, whichever is higher
• Buyer needs to pay BSD of 1% on the first $180,000, 2% on the next $180,000 and 3% on the remaining amount of the purchase price
• The Additional Buyer’s Stamp Duty (ABSD) depends on the buyer’s residency status and number of residential properties owned
• Singapore citizens need to pay 7% ABSD for the purchase of a second residential property and 10% ABSD for the third and subsequent residential property
• Singapore Permanent Residents need to pay 5% ABSD for the purchase of a first residential property and 10% ABSD for the second and subsequent residential property
• Foreigners need to pay a 15% ABSD for any residential property purchased
• Nationals and Permanent Residents of Iceland, Liechtenstein, Norway or Switzerland; and Nationals of the USA are accorded the same ABSD rates as Singapore citizens

• Completion

• The scheduled completion date is stated in the S&P
• If the sale is not completed by the scheduled date, the Buyer may be liable for Late Completion Interest to the Seller and vice versa, under the Conditions of Sale 2012

Source: URA, SLA, IRAS, CEA, The Law Society of Singapore, The Edge Property