Buying and renting property

Many expats seeking accommodation in Singapore are just passing through: brought there by their company and likely to move on to a new role somewhere else in a matter of years or months.

With this transient expat community, and restrictions on buying property in Singapore, it’s no wonder so many newcomers choose to rent a home instead of becoming embroiled in a complex property purchase.

Each area of Singapore has its particular character: from the busy urban lifestyle and bright lights of the city to the calmer northern area; the international schools and green lands of the west to the cultural hub and beaches of the east.

There are also different types of housing to suit different criteria. The city offers high-quality, high-rise condominium living, giving residents access to swimming and leisure facilities as well as open spaces. In other areas, clustered housing in gated communities gives the same level of amenities in a less densely populated environment, and housing estates provide a full range of services for their residents including supermarkets, doctors’ surgeries, and recreational facilities.

Rental

Here’s a general look at the way renting property works, but it’s worth undertaking your research to make sure you’re clued up on the way the local property market works. 

Many people acquire an estate agent through word of mouth or their company recommendation. Once a reliable agent has been engaged, they will take your list of requirements, sift through their database, and arrange some viewings.

Take a notebook and ask questions, such as if there are any problems with the building or the area, and whether there are any new construction projects in the vicinity that are likely to cause a noise issue. You may also like to ask about how easy it is to access local amenities and what it’s like to commute into town.

When you have found the right property, the landlord will require a Letter of Intent and a good faith deposit, usually a month’s rent. This is non-returnable, and it is a good idea to put an expiry of a week on the Letter of Intent so that negotiations and paperwork are completed in good time.

From here, the tenancy will either go ahead, or the landlord will stall proceedings and return your deposit to you.

The next step is the Tenancy Agreement which will detail the responsibilities and rights of both sides of the arrangement. A standard agreement should be relatively straightforward, but if in any doubt, have it checked by a lawyer as Singapore laws tend to favour the landlord.

You’ll have to provide a copy of your passport, work permit or pass, one month’s rent in advance, and a security deposit of one month’s rent. The security deposit can be returned at the end of the tenancy, and if a good faith deposit were provided with the Letter of Intent, this would be taken off the initial amount due.

Tenants are reminded to practise due diligence when signing an agreement with a landlord, to make sure that they are genuine and to obtain and retain receipts for payments made. There will also be agency charges to pay, which as a rough guide can be half a month’s rent for a year’s lease and one month’s rent for a two year; bear in mind there will be GST (Goods and Services Tax) surcharge of 7% on the top. Expect to also pay the Singapore Inland Revenue Stamp Duty.

After moving in, you’re advised to do a general check of fittings and appliances as the landlord must repair any breakdowns within one month of the start of the tenancy. It is also advisable to pay particular care to upkeep, so you retain your security deposit at the end of the tenancy.

Buying

For those wishing to navigate the Singapore property regulations, it is possible to buy a place to live.

To protect housing options for native Singaporeans, there are significant restrictions on what expats are allowed to buy. That said, the government is eager to attract investment from abroad, and so concessions have been made.

For example, newcomers need to obtain prior approval before purchasing properties like bungalows, vacant land, and terraced houses. Apartments in certain types of apartment blocks are not subject to the same regulations.

Property can form part of an investment under the Global Investor Programme (GIP), which is under the jurisdiction of the Economic Development Board. This may be another route into owning property in Singapore.

When buying, it is advisable to use only one agent to save confusion or embarrassment, as they all have access to the same information and will likely book you the same viewings.

Decide your budget, calculate the stamp duty and bear in mind that there may also be an Additional Buyer’s Stamp Duty (ABSD) to be paid. Home loans are available to expats in Singapore, and the amount of money you can borrow will depend on factors such as the value of the property, the length of the agreement, your age, and the type of property you wish to purchase.

From here, it is advisable to employ the services of a good, experienced, and recommended solicitor to guide you through the Option to Purchase or Offer to Purchase paperwork. If everything goes to plan, the sale should complete within eight to 10 weeks. Bear in mind that there will be Stamp Duty and possibly Additional Buyer’s Stamp Duty to pay as well as estate agency fees.

Falling house prices and rent prices

In our 2020 Global Housing Market Trends report, we analysed rental and house purchase data from 2015 to mid-2020 to discover how COVID-19 has impacted housing markets across the globe. The metrics we used were:

• Price-to-rent ratio — the average cost of ownership divided by estimated rental cost. Higher values suggest that it is better to rent rather than buy
• Price-to-income — a ratio of apartment prices to average disposable income. Lower values mean more affordable housing
• Mortgage as a percentage of income — a ratio of mortgage costs to take-home family income. Lower values mean more affordable housing.

We found that the COVID-19 pandemic has, seemingly, affect the housing market in Singapore, with the emergence of more affordable purchasing options. Despite Singapore being the first nation that effectively ‘beat’ COVID-19, with cases remaining minimal since summer 2020, housing price to income ratio and mortgage as percentage of income have both dropped as of 2020.

After reaching relative highs in mid-2019 for price-to-income ratio and mortgage as a percentage of income, both of these metrics have since seen a downturn since the start of 2020, at 6.3% and 6.9% respectively.

Price to rent ratios also saw a drop in the first half of 2020, after increases in the previous six months. This means that the rent is a high proportion of the ownership cost, making buying a more attractive option.

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