Rules for Singapore Citzens and Permanent Residents Buying Overseas Property
With the recent property cooling measures, more Singaporeans or Permanent Residents may be setting their sights abroad to amke their money work better for them. However, unlike buying a property in Singapore, buying overseas properties may not be as straightforward for most owning a government subsized HDB Flats.
Amongst the key concerns for these investors are the existing rules and regulations for Singaporeans planning to buy foreign properties. Below are some general rules and regulations for Singaporeans and Singapore Permanent Residents (PRs) planning to buy overseas property:
1) HDB owners who wish to invest in overseas residential properties can only do so after fulfilling the 5-years Minimum Occupation Period (MOP).
In general, HDB flat owners must occupy the flat for a minimum period of five years before they can sell the flat in the open market, rent out the whole flat, and invest in private property – both local and overseas. The MOP is applicable for both new and resale flats, and starts from the date you take possession of your flat.
There is no limit on the number of private properties you can acquire once you fulfill your flat’s MOP, and the private residential property acquired can be still under construction or ready for possession.
2) HDB owners who wish to invest in overseas non-residential properties can do so even before fulfilling the MOP.
Non-residential properties are typically lumped under commercial real estate, which comprises the following property types: industrial, retail, offices, shophouses and mixed-developments.
Commercial properties can generally achieve higher rental yields. However, they also tend to be more volatile as the performance of a commercial property is closely tied to the growth of its sector. For example, if an industrial property is occupied by semiconductor manufacturers, then it will be closely tied to the performance of industry exports.
3) For HDB owners who are Singapore PRs, you will be required to sell your flat within 6 months of acquiring a residential property – both locally and overseas
As a HDB flat owner, you can choose to buy private residential properties locally or overseas if you fulfil the eligibility conditions that apply to your flat. This includes the five-year MOP.
However, if all owners of the flat are Singapore PRs, and you have already fulfilled your flat’s MOP, you will be required to sell your flat within 6 months of acquiring your completed/uncompleted private residential property.
4) You cannot use your CPF savings to buy overseas properties
CPF savings can only be used to buy properties in Singapore. A downside to this is that you will be required to fork out cash outlay for your purchase of overseas properties.
However, properties in emerging markets tend to be priced considerably lower and more affordable than properties in Singapore. In any case, it is important to first perform your financial assessment to find out your affordability and payment capacity before making a decision.
5) You may get a loan from a local or an overseas bank in some of the overseas properties investment
When obtaining financing for an overseas properties, buyers have a choice of taking a loan from either a local bank or a bank in the host country of your foreign property purchase. Some important things to note include interest rates, the loan currency and loan limits.
If you take up a loan from a local bank, you should be mindful that the Total Debt Servicing Ratio (TDSR) will apply. However, not all banks in Singapore offer overseas property loans, and many who do tend to offer such loans only for a handful of developed countries such as Australia or the United Kingdom. Further, some banks offer overseas property loans only for purchase of properties in certain cities within a country.
In such cases, the buyer will have to take up a loan from a bank in the host country of their foreign property purchase. One downside to this is that interest rates from overseas banks do tend to be higher. Generally, your loan-to-value limit will depend vary between different banks and countries, and can range between 50% and 80%. If you are taking loan from offshore banks in the host country, TDSR rules is not applicable.
6) Properties located outside of Singapore are excluded from your ABSD count
With the latest round of property cooling measures, Singaporeans buying their second property will now have to pay 12% Additional Buyer’s Stamp Duty (ABSD), from the previous 7%. Meanwhile, Singapore PRs will now have to pay an ABSD of 15%, from the previous 10%, when they purchase a second residential property.
The good news is, all residential properties located outside of Singapore are excluded from your ABSD count.
7) If you own residential property overseas, you will need to sell it within 6 months of buying a HDB flat
Concurrent ownership of residential properties during the MOP is not allowed. As such, you will have to dispose your private property within 6 months of the effective date of purchase of your HDB flat. This applies to both private residential properties located in Singapore or overseas.
You will also have to serve a five-year MOP before you can re-enter the market to purchase a second residential property.
Overseas Property Good to Look At
- The Peak Luxury Condominium : Next to Shangri-La Hotel. 12% Nett Guaranteed Rental Returns over 2 years by Oxley Singapore. Only from USD1xxk!
- The Peak Shoppes : 5-Level Retail Mall integrated with Shangri-La Hotel, Grade-A Offices and 2 Luxurious Residential Tower. Enjoy 55% Nett Guaranteed Rental Return over 10 Years. Freehold Shops and F&B for Sales. Only from USD85k!
- The View Riviera Point Vietnam at District 7, by Keppel Land, 2BR only from $2xxk!
- D1mension HCMC by CapitaLand in District 1 CBD with up to 8% Guaranteed Rental for up to 4 years from USD3xxk!
- Seasons Avenue Hanoi by Capital Land, 2BR only from $16xk!
- The Luxe KL : Freehold Condo near KLCC – Singapore Listed Developer. Low Cash Downpayment only from $20k to own a unit here.
- Oxley Tower KLCC : Freehold Mixed Development at KL City Centre, comprising Commercial Office, Branded Residences, SO Sofitel Hotel and Retail Podium. Signature Office. 100% SOLD!
- SO Sofitel KL Residences : The World’s First SO Sofitel Branded Residences at the Heart of KL City Centre. From RM 1.4M. Only approx RM 180K DP to own a unit
- Suasana JB : Freehold Condo by UMLand next to Komtar, CIQ, upcoming MRT Station. From S$2xxk!
1) Manchester Property
- CITU NQ Manchester : Luxury Apartment at the heart of Manchester City Center, UK 2nd Largest City Center, From GBP1xxk!
- JuNQtion Manchester : Fully Managed Serviced Office at the heart of Manchester City, North Quarter, from £65K with 30% Nett Guaranteed Rental Yield over 5 Years
- Anchoats Gardens Manchester : Deluxe Living in UK’s Hippest Neighbourhood, Ancoats Manchester. Within 5 minutes stroll to NOMA business hub and Northern Quarter. Available in 1, 2 & 3 Bedroom, attractive price from £239,715
- Royal Wharf London : Waterfront Mixed Development near Canary Wharf, between 2 Tube/MRT Stations & near to upcoming crossrail. From GBP 35xk
- Marine Wharf East : near Canary Wharf from GBP 390k
- Emery Wharf : Prime London Zone 1 location, 10 mins walk to Tower Hill Station. From GBP 540K.
- Cashmere Wharf @ London Dock : Tallest 26-Storey Building at London Dock, Wapping, No. 1 Property Hotspot for Capital Apprication, From GBP685k!
3) Liverpool Property
- Infinity Waters Liverpool : Luxury Waterfront Apartment at the heart of Liverpool Business District, ONLY From GBP 99.5k! Fully Furnished & Managed with 21% GRR over 3 years!
- Epic Hotel & Residence : 1st High-end Luxury Hotel Suite in Liverpool’s Baltic Triangle, Digital & Creative Industrial Hub. Enjoy 10% Nett Assured Rental Return over 10 Years. Fully Furnished and Fully Managed. No Stamp Duty and Maintenance Fee.