Guide to Buying Property in Singapore as a Foreigner: Restrictions, ABSD, and Free Trade Agreements

Can Foreigners Buy Property in Singapore?

Foreigners are welcome to invest in Singapore’s property market, but the type of properties they can purchase is limited by the Residential Property Act (RPA). Here’s a breakdown of what foreigners can and cannot buy:

Properties Foreigners Can Buy

• Condominiums and Apartments: Foreigners can freely purchase non-landed private properties like condominiums and apartments.

• Commercial Properties: Office spaces, retail units, and industrial properties are open to foreigners without restrictions.

Properties Restricted to Foreigners

Foreigners require approval from the Land Dealings (Approval) Unit (LDAU) to purchase the following types of properties:

• Landed residential properties (e.g., detached houses, semi-detached houses, bungalows).

• HDB flats and HDB Executive Condominiums (ECs) under 10 years old.

• Vacant residential land.

Exceptions for Landed Properties

Foreigners may apply to purchase landed properties on Sentosa Cove.

Understanding Additional Buyer’s Stamp Duty (ABSD) for Foreigners

The Singapore government imposes ABSD on property purchases to manage demand and maintain market stability. Foreigners are subject to higher ABSD rates compared to Singapore Citizens and Permanent Residents.

ABSD Rates for Foreigners

Here’s a table summarizing the current ABSD rates:

As of 2023, foreigners pay a hefty 60% ABSD on all residential property purchases, regardless of the number of properties they own.

ABSD Remission for Foreigners under Free Trade Agreements (FTAs)

Foreigners from countries with specific Free Trade Agreements (FTAs) with Singapore may be eligible for ABSD remission. This means they may pay the same ABSD rates as Singapore Citizens when buying their first residential property.

Eligible Nationalities under FTAs

Foreigners from the following countries may qualify for ABSD remission under FTAs:

• United States (including U.S. citizens, nationals, and Green Card holders).

• Switzerland

• Norway

• Iceland

• Liechtenstein

ABSD Rates for Eligible Foreigners

To apply, eligible individuals must submit an application to IRAS (Inland Revenue Authority of Singapore), along with proof of their nationality and other required documents.

Key Considerations for Foreigners Buying Property in Singapore

1. Financing and Loan-to-Value (LTV) Limits

Foreigners can take loans to finance their property purchases, but they are subject to the same Total Debt Servicing Ratio (TDSR) and LTV limits as Singapore Citizens. Banks may also impose stricter conditions for foreign buyers.

2. Approval for Restricted Properties

Applying for approval to purchase landed properties or restricted properties can be a lengthy and uncertain process. Applicants must demonstrate significant economic contributions to Singapore to increase their chances of approval.

3. Leasehold vs. Freehold

Most properties in Singapore are leasehold (99 years). Freehold properties tend to retain value better over time, but they are also more expensive and limited in supply.

Why the ABSD Exists

The ABSD was introduced to:

• Cool the Property Market: High ABSD rates deter speculative property investments.

• Encourage Local Ownership: By imposing higher taxes on foreign buyers, the government prioritizes housing for Singapore Citizens and Permanent Residents.

For foreigners, understanding these policies is crucial before making a purchase to ensure the investment aligns with long-term goals.

Conclusion: Is Singapore Property a Good Investment for Foreigners?

Singapore’s property market is attractive for its stability and long-term appreciation. However, the restrictions on foreign ownership and the high ABSD rates require careful financial planning. If you’re eligible for ABSD remission under FTAs, your investment becomes significantly more cost-effective.

At Homeasset.sg, we’re here to help you navigate the complexities of buying property in Singapore as a foreigner. Whether you’re exploring your options or seeking advice on ABSD remission, our team is ready to guide you every step of the way. Reach out to us today for tailored property solutions!