It means all residential landed properties, including vacant land, detached houses, semi-detached houses, terrace houses; and any land or building zoned or gazetted for residential purposes.

Approval will have to be obtained from the Minister for Law to purchase any of the above.

The type of ownership and the legal rights over a property can significantly affect its value. Property will usually be either freehold or leasehold property.

For properties built on freehold land, the land belongs to the leasehold owner indefinitely so there’s no need to worry about the lease running out.  The owner of a freehold generally controls and owns all the property: the land itself, any buildings/structures on it, the subsoil below and the airspace above it.

With leasehold property, the interest is contractually time limited to the length of the lease. Residential properties in Singapore are typically leasehold e.g. 60-, 99-, or 999-year lease. Freehold residential property command a premium and are mostly in suburb areas.

The cost of buying a property is more than just the purchase price negotiated with the seller. There are SSD, BSD, ABSD, Conveyancing Fees, Property Agent Commission & Valuation Fees involved. Hence, it is important that you plan your finance based on these “extra” costs before heading out to buy your property.

1. Reason for purchase

First and foremost, buying a property for investment or owner-occupation makes a difference.

Naturally, if it for investment, the chief factor in consideration will be the capital gain. On the other hand, buying for owner-occupation makes capital gain a secondary concern. In this case, more important factors will be the current or future size of the household. A retiree or single may opt for a smaller flat. While a young, married couple may also choose a small flat if their financial means are limited, or a large flat if they are planning to have children and provided if they are rich enough to afford it.

2. Type of Housing

The next consideration is the housing type. With the many types available, buyers are often spoil for choice. The below two tables compare the private and public housing segments.

Table 1: Available Housing Types in Singapore

** Executive Condominium becomes private after 10 years.

Table 2: Comparison of HDB and Private Housing

3. HDB flats’ investment potential

From the Government’s standpoint, HDB flats are meant for living purposes and not for speculation. Hence HDB flats are subjected to a Minimum Occupation Period (MOP) of 5 years whether for a resale or direct purchase from HDB. This curbs house flipping of HDB flats.

Nevertheless after MOP, owners of larger HDB flats can make a profit by downgrading to a smaller unit. Those who are tempted to sell for a profit during a booming property market may not be better off as they will have to pay a high price for another flat. Moreover, if their current flat was bought with a housing grant, they will have to incur a resale levy when they buy a second subsidised HDB flat.

However, some Singaporeans are still profiteering from renting out their HDB flats.

Under current regulations, owners of subsidised or non-subsidised HDB flats have to meet the requirement of a 5-year MOP before they are allowed to rent out their flats. Exceptions are made for owners who live overseas.

Furthermore, there are restrictions on the rental periods. For Singaporean owners they could rent out their flats for a period of 3 years after which they could request for extensions with no cap on the number of requests. For PRs, however, it is a different story. They are only allowed to rent out for a period of a year, subject to discretionary extensions, with a limit of 5 years on the total rental years allowed.

4. Private housing’s investment potential

In contrast, the rental rules for private properties are less stringent. Of note is that Singaporeans are not allowed to own HDB flats and private homes concurrently within the MOP. After the MOP, Singaporeans often make a profit by living in HDB flats while renting out their private properties.

However, for adventurous homeowners who are looking at flipping private properties to increase their wealth, they are restricted by the string of anti-speculative measures instituted by the Government since 2009.

Properties acquired after 20 February 2010, are subjected to a Sellers’ Stamp Duty of 4% to 16% of the selling price or market value, whichever is higher , if they are disposed of within 1 to 4 years after purchase.

In addition, for property purchases after 8 December 2011, an additional Buyer’s Stamp Duty of 3% is imposed on Singapore citizens buying their third and subsequent properties. For PRs, the 3% will be imposed on their second and subsequent purchases, instead.

1. Purchasing of Private Residential property

When buying a private residential property, there are many factors to consider and look into. You should familiarise yourself with these considerations which may affect your purchase.

If you own a HDB flat, a DBSS flat or an Executive Condominium, you have to fulfil the minimum occupation period set by HDB before you can purchase any private residential properties. Visit their website to find out more.

If you are not a Singapore citizen, you have to obtain approval from the Controller of Residential Property in Singapore Land Authority (SLA), before you can buy landed houses including but not limited to strata landed houses.

2. Renting of Private Residential Property

Private properties approved for residential use may not be used for short-term rentals on a daily or weekly basis. Private residential properties must be rented out for at least three consecutive months. If you own a private property and wish to rent it out, you have to adhere to the following rules.

With effect from 15 May 2017, the maximum number of unrelated occupants that may be accommodated in a property is six.

This applies to all persons residing within your home. Unrelated occupants refer to any persons who are not part of the same family unit.

Domestic caregivers hired by a family are considered part of the same family unit.

If you have already signed a tenancy for seven or eight persons before 15 May 2017, it may run its course until the cut-off date of 15 May 2019. This will apply to all tenancies regardless of their contracted end-date.

Any internal partitioning works carried out on the property must not compromise the nature of the property as a single self-sufficient residential unit with essential features such as a living/dining area and kitchen.

1. Option To Purchase (OTP)

If you are selling an HDB flat, you must have submitted the Resale Checklist for Seller at least 7 days prior to issuing the OTP.

When you have agreed on a price with a buyer, the most common practice is to issue an Option to Purchase agreement to the buyer. If you have hired an agent, he/she should take care of this for you. If you have not, you may ask your solicitor who should be able to provide a template. You may also refer to the Option to purchase template provided by the HDB. If you are selling an HDB flat, you must use the official Option to Purchase form available from the HDB branches.

After validating the document with your solicitor, you may now submit it to the buyer who will need to pay 1% of the agreed price (max $1,000 for HDB flats) in order to be granted this OTP. The buyer should submit the document to his/her solicitor before committing.

2. Exercising the OTP / Legal completion

Once a buyer has signed the Option to Purchase, you must stop advertising your property. The buyer has 14 calendar days to decide if he/she wants to proceed or not with the transaction. If he/she does not, you will keep the option fee and you may start advertising your property again. If he/she does proceed, then the process varies depending if you are selling a private property or a HDB flat:

• Private property: the buyer will return the OTP and pay an additional 4 or 9% (depending on the conditions defined in the OTP). Your solicitor should take it from here and liaise with your bank and the CPF board (if applicable) in order to deliver the property title to the buyer on completion date and make sure you get your money. The whole process should take from 8 to 10 weeks.

HDB flat: the buyer will return the OTP to you or your solicitor and pay an additional deposit of max $5,000 (including the option fee). Then depending on the agreed time frame, both buyer and seller should submit the Resale Application to the HDB.

When you have found a resale HDB flat you want to buy, be sure to understand the resale procedures as stated below.

1) Register Intent to Buy

From 1 January 2018, resale flat buyers and sellers will need to login to the HDB Resale Portal using their SingPass, to start their buying or selling journey.

The portal will guide you through the following steps:-

1. Register Intent to Buy
2. Search for Suitable Flat and Get Option to Purchase (OTP)
3. Choose Mode of Financing
4. Submit Request for Value to HDB
5. Submit Resale Application
6. Acknowledge Resale Documents
7. Pay Fees (Online Payment)
8. Approval of Resale
9. Completion of Resale

2) Option to Purchase (OTP)

After registering your Intent to Buy, you can proceed to look for a suitable flat within your budget and obtain an OTP from the sellers when you have agreed on a price for the flat. If you intend to get an HDB housing loan, you will need a valid HDB Loan Eligibility (HLE) letter from HDB before the sellers can grant you an OTP. If you intend to get a housing loan from a financial institution (FI), you must have a valid Letter of Offer (LO) before you exercise the OTP.

You and the sellers must use HDB’s Option to Purchase (OTP) as the form of contract in the transaction. Any other agreements and supplementary agreements relating to the sale or purchase of the flat are not valid under the Housing and Development Act.

3) Resale Application

After exercising the Option to Purchase (OTP), you and the sellers must submit your respective portions of the resale application via the HDB Resale Portal, together with the necessary documents. Salespersons can use the Estate Agent Toolkit to submit resale applications on behalf of their clients.

Upon receipt of the resale application and supporting documents, HDB will verify the information provided by the seller and yourself. You and the seller should make sure that both of you meet all the eligibility conditions and resale requirements when submitting your resale application. If the application is in order, we will notify you and the sellers of our acceptance of the application via SMS/ email. On average, it will take about 8 weeks from the date of our acceptance of the resale application, to process the application.

4) Appointment at HDB

With the streamlined resale process, buyers and sellers are required to attend only 1 resale appointment at HDB. You will need to be present for the resale completion appointment, if you have engaged HDB’s solicitor to act for you. If you have engaged your private solicitors to act for you, your solicitor representative can attend the resale completion appointment on your behalf.

5) Conditions after Buying

1. Minimum Occupation Period (MOP)
2. Disposal of Existing Flat
3. Resale levy
4. Refund of CPF Monies
5. Further conditions for proximity housing grant
6. Citizen top-up for grants received by sc/spr households

To find out more, read here.

If you plan to sell your HDB flat, this is what you need to know and consider, for both your sale and the purchase of your next home.

1) Register Intent to Sell

From 1 January 2018, resale flat buyers and sellers have to log in to the HDB Resale Portal using their SingPass to start their buying or selling journey.

The portal will guide flat sellers through the following steps:

1. Register Intent to Sell
2. Submit Resale Application
3. Acknowledge Resale Documents
4. Pay Fees (Online Payment)
5. Approval of Resale
6. Completion of Resale

2) Option to Purchase

1. Negotiate and agree on the resale priceYou and the buyers have to negotiate and agree on the resale price of the flat. You can make use of the Resale Flat Prices e-Service to check the resale transacted prices for the past 2 years to assist you in making an informed decision. The figures are updated daily based on HDB’s registration of the resale applications received.
2. You can only grant an OTP to buyers at least 7 days after registering your Intent to Sell. You should use this cooling-off period wisely and consider the housing options available to you.If you decide to sell your flat, you may grant an Option to the buyers, to sell the resale flat at the agreed resale price.
3. The Option period is 21 calendar days (including Saturdays, Sundays and Public Holidays), from the date of granting the OTP (refer to Step 2). It expires at 4pm on the 21st calendar day.If the flat buyers wish to purchase the flat, they have to exercise the Option within the Option Period. If the buyers do not wish to proceed with the purchase and exercise the OTP, you will need to wait for the Option Expiry Date to lapse. The buyers will forfeit the Option Fee previously paid in Step 2; you may keep the Option Fee.
4. Decide when to submit the resale application

After the buyers have exercised the Option, you and the buyers have to decide on a date to submit the resale application to HDB. Both you and your buyer’s portion of the resale application must be submitted within 7 days of each other’s. Both portions must also be submitted within the previously agreed number of days on page 4 of the OTP.

3) Resale Application

After exercising the Option to Purchase (OTP), buyers and sellers must submit their respective portions of the resale application, together with the necessary documents, to HDB via the HDB Resale Portal. Salespersons can use the Estate Agent Toolkit to submit resale applications on behalf of their clients.

4) Appointment with HDB

With the streamlined resale process, buyers and sellers are required to attend only 1 resale appointment at HDB. You will need to be present for the resale completion appointment if you have engaged HDB solicitor to act for you. If you have engaged your private solicitors to act for you, your solicitor representative will attend the resale completion appointment on your behalf.

5) Temporary Extension of Stay for Sellers

You and your co-sellers need to move out of the flat after the sale of the flat is legally completed. The buyers, being the new owners of the flat, will start Minimum Occupation Period (MOP) from this legal completion date.

If you are not be able to move out immediately upon the legal completion of the sale, you can arrange with the flat buyers, to extend your stay temporarily in the flat, for a period of up to 3 months after the legal completion.

To find out more, visit here.

Owners wishing to sell or let their property typically engage a property agent to market their property. They advertise the property in a variety of online and offline publications and media and contact parties who have registered with them. Buyers can register with these agents and ask for details of available properties. Alternatively, a buyer can appoint their own agent to find a suitable property investment (an agent’s fee is usually payable and is often linked to the rental value or purchase price for the property).

Agents also negotiate the key terms of the transaction. Once these terms are settled between the parties, they are documented in the OTP which are then used by the parties’ legal advisors to draw up the legal documentation for the transaction.