Another topic we frequently encounter is whether permanent residents can buy landed housing in Singapore. It's not as popular as "Can a PR buy a Condo?" (You can check out our other article). But if you're wondering about the restrictions related to PRs looking to purchase landed estates in Singapore, you've come to the correct place.
While Singapore is one of the most popular destinations for Singapore permanent residence, the regulations surrounding them can seem slightly daunting at first.
Our article takes you through everything you need to know step-by-step. From understanding local housing market regulations, like the Residential Property Act, to various financial considerations, we'll have you covered every step of the way. (Note: This article does not cover industrial and commercial properties)
But first, can a PR buy landed property in Singapore? The short answer is yes, but it’s mostly subject to approval.
What Is a Landed Property?
Before we cover the various regulations, it's good to understand the different types of landed housing in Singapore, mainly:
- Terrace house
- Semi-detached house
- Bungalow/GCB
- Cluster house
Currently, only ~5% of Singaporeans live in landed homes, so it's no surprise that it appears on the wish lists of many, especially for PRs.
These landed properties are not to be confused with Strata housing, which are properties that are managed by a Management Corporation Strata Title (MCST). You don't have to pay monthly maintenance or parking expenses, and you are not restricted by any sort of condo-like management rules.
It's important to note that "Shophouses" are not considered Landed Property. While many articles claim this, it simply is not true. Shophouses should be considered a class of their own, given their own set of regulations.
Cluster houses are a sort of hybrid landed property since they have strata titles, but they are on landed housing estates. Consider it like a condominium where the residents share facilities and pay a monthly maintenance fee. They are instead low-rise projects with terrace houses, semi-detached homes, bungalow homes, or a combination.
The difference between a landed and non-landed property is the land title; the plot of land on which the house is built belongs to the owner of a landed property. This simply means that you have complete control over what is built and torn down on that piece of land -- provided that it meets the Building Construction Authority (BCA) and Urban Redevelopment Authority (URA) standards.
What Are The Restrictions For Permanent Residents?
According to Residential Property Act, a foreign person means any person who is not one of the following:
- Singapore citizen
- Singapore company
- Singapore limited liability partnership; or
- Singapore society
Based on this definition, a Singapore Permanent Resident is considered a foreigner. A foreign person looking to buy landed housing in Singapore will face restrictions on the types of property they can purchase. Such properties are known as Restricted Properties.
We took the full list of Restricted & Non-Restricted Properties, and filtered out those not considered to be landed housing for simplicity:
Types of Restricted Residential Property
- Terrace house
- Semi-detached house
- Bungalows
- Cluster house
Types of Non-Restricted Residential Property
- Landed property in Sentosa Cove
- Leasehold estates in a landed residential property for a period of no more than 7 years
As you may have noticed, landed properties in Singapore are generally considered Restricted.
For a restricted residential property, foreign nationals must first obtain permission from the Singapore Land Authority, via their Land Dealings Approval Unit.
Each applicant is assessed on a case-by-case basis, taking into consideration, but not limited to, the following factors:
- You have been a Singapore PR for at least 5 years
- You have a track record of providing economic contribution in Singapore
- Your employment income assessable for tax in Singapore
Applications need to be submitted via the Singapore Land Authority's online portal. It generally takes around a month to complete the process.
For those who want to save themselves paperwork and skip approval processes with the Land Dealings Approval Unit, housing in Sentosa Cove may be the best choice. All properties in Sentosa Cove are open to foreign ownership, whether you hold a PR status or not.
What if I’m not a PR and still want to buy a larger property?
If properties in Sentosa Cove are out of your budget, you can opt for a strata landed house in an approved condominium development. Additionally, you can also buy a leasehold estate in a landed residential property, so long as your stay does not exceed 7 years.
What if I still don’t meet the requirements?
In Singapore, renting a residential property is much simpler than owning one. Regardless of whether you’re a Singapore Permanent Resident, or a work permit holder, you’re allowed to rent private properties without needing to meet many requirements.
You can easily rent landed housing in any part of Singapore. Details such as your length of stay and terms for rental are dependent on your landlord.
How many properties can PRs buy in Singapore?
You can buy as many residential properties as you like (including commercial or industrial properties). That being said, there are additional duties you’ll need to pay for depending on how many properties you’ve bought in the past. More details on that will be covered in the section below.
Key Financial Considerations When Buying Landed Property
If you are a foreign person with the government’s approval to purchase, it’s important to check a few more things before securing your landed property.
Total Debt Servicing Ratio (TDSR)
This debt-to-income ratio must be determined for any mortgage to acquire a property, as well as any loan secured by a property and the refinancing of these loans.
According to the Monetary Authority of Singapore, as of 16 Dec 2021, property buyers are required to have a Total Debt Servicing Ratio (TDSR) of less than or equal to 55%. This is applied to both individuals and certain businesses.
Property loans may still be granted to borrowers whose TDSR exceeds the MAS threshold on an exceptional basis, subject to more rigorous credit scrutiny. While the TDSR is a MAS regulation, buyers of landed housing must be aware of their bank's loan limits.
Bank Loan Amount
The maximum amount an individual can borrow from a financial institution for a housing loan is limited by the Loan-To-Value (LTV) ratio, which measures the proportion of a property's value that is financed through a mortgage.
For example, if an individual borrows $750,000 to acquire a property for $1 million, the LTV is 75%. For a bank loan in Singapore, the maximum LTV ratio is capped at 75% on your first loan. If the loan tenure is greater than 30 years or extends past age 65, this ratio is reduced to 55%
Other factors that can lower LTV include:
- Your credit rating/score
- The property's remaining lease
- The property's location
- The state of the property
Bank Loan Tenure
In Singapore, the maximum loan term for non-Housing Development Board properties is limited to 35 years.
This maximum amount of money that a borrower may borrow is determined by age, loan period, property type, and any existing housing loans taken. An income-weighted average age is used to evaluate joint borrowers in Singapore.
Tax Considerations
Regardless of whether you’re a Singapore citizen or foreigner, if you’re buying a private property, you will need to pay a property tax known as the Additional Buyer's Stamp Duty (ABSD).
Rates of these duties may differ, depending on your status, nationality, and how many properties you've bought in Singapore. Here’s a quick breakdown of the different rates:
The Process of Buying Landed Property for PR
If you are a permanent resident in Singapore and are looking to purchase landed property, you will be glad to know that we have a separate article with a section that discusses the step-by-step process you can take to buy one.
If this interests you, read more on how to purchase landed property by scrolling to the last section.
Do PRs need to buy residential properties through a property agent?
There’s a long list of considerations when you’re buying a property. Due to land scarcity, many regulations are put in place to ensure that Singapore citizens get priority. Preference is also given to nucleus family units, over those who are single.
You don’t necessarily need a property agent to purchase landed property, however, with so many regulations in place, having a professional who’s well-versed in real estate can help you ease the load - especially if you have decided on a restricted residential property. Navigating local regulations and local authorities alone, like the Residential Property Act and the Singapore Land Authority, can be a lengthy process without proper guidance.
If you’d like advice on renting or buying a private property and you’re looking for a hassle-free experience, reach out to us to find out more. We have a team of readily available local property market experts who can help Singapore permanent residents find their perfect home in Singapore.