wilsonlim.property@gmail.com

+65 81835132

wilsonlim.property@gmail.com

+65 81835132

FAQs 

 

What is the normal Buyer Stamp Duty (BSD) applicable for purchasing private residential property in Singapore ?
  • For residential property with purchase pricing of SGD1million or less, the normal BSD applicable will be 3% of Purchase Price LESS $5400  
  • For residential property with purchase pricing in excess of SGD1million, the normal BSD applicable will be 4% of Purchase Price LESS $15400  
What is the ABSD applicable for Singapore Citizen(s) purchasing private residential property?
  • For Singapore Citizen(s) purchasing their 1st private residential property in Singapore, there will be NO ABSD (Additional Buyer’s Stamp Duty) applicable 
  • For Singapore Citizen(s) purchasing their 2nd private residential property in Singapore, there will be a 12% ABSD (Additional Buyer’s Stamp Duty) applicable
  • For Singapore Citizen(s) purchasing their 3rd & subsequent private residential property in Singapore, there will be a 15% ABSD (Additional Buyer’s Stamp Duty) applicable

 

 

What is the ABSD applicable for Singapore PRs purchasing private residential property?
  • For Singapore PR(s) purchasing their 1st private residential property in Singapore, there will be a 5% ABSD (Additional Buyer’s Stamp Duty) applicable
  • For Singapore Citizen(s) purchasing their 2nd & subsequent private residential property in Singapore, there will be a 15% ABSD (Additional Buyer’s Stamp Duty) applicable

 

 

Can a foreigner purchase a private residential property in Singapore?

Yes, a foreigner can purchase private residential property in Singapore.

  • The purchase will be subjected to a 20% ABSD (Additional Buyer Stamp Duty) from the purchase price

 

 

Can a foreigner purchase a commercial property in Singapore ?

Yes, a foreigner can purchase a commercial property in Singapore.

  • There will be no ABSD applicable since the purchase is a commercial property.
  • However, GST will be applicable for commercial property purchase in addition to the normal Buyer Stamp Duty (BSD) which works out to be 3% of Purchase Price LESS $5400

* The current GST rate in Singapore is 7%. 

 

 

 

What is the ABSD applicable for private residential property purchased under a company entity in Singapore ?

The ABSD (Additional Buyer’s Stamp Duty) applicable for a company entity purchasing of residential property in Singapore is 25% of the Purchase Price

 

 

What are the countries that will be accorded the same Stamp Duty treatment as Singapore Citizens ?
Under the respective FTAs, Nationals or Permanent Residents of the following countries will be accorded the same Stamp Duty treatment as Singapore Citizens:

  • Nationals and Permanent Residents of Iceland, Liechtenstein, Norway or Switzerland
  • Nationals of the United States of America

 

 

How can I own a property without paying any ABSD?

You can consider purchasing a commercial or foreign property where ABSD will not be applicable.

Examples of commercial property :

  • Office Space
  • Retail / F&B / Restaurant Space
  • Shophouses

* Do take note that if a shophouse is classified as residential under URA, ABSD will be applicable. As such, it is best practice to clarify with URA authority before proceeding with the purchase/transaction.  Commercial Property may also be subjected to GST

 

 

 

 

What is TDSR (Total Debt Servicing Ratio) ?

The Total Debt Servicing Ratio (TDSR) is a framework to ensure that people borrow, and banks lend, responsibly.

In a nutshell, the TDSR limits the amount borrowers can spend on debt repayments to 60 percent of their gross monthly income.

Unlike other cooling measures, which are expected to be temporary, the TDSR is a permanent structural reform that all banks and financial institutions must follow when assessing:

  • housing loans,
  • the refinancing of housing loans, and
  • loans secured by the property

Why was it introduced?

The TDSR was introduced to “strengthen credit underwriting practices by financial institutions” (ensure loans are only issued to borrowers who can afford them) and “encourage financial prudence among borrowers” (help borrowers consider the true budgetary impact of a mortgage).

The TDSR standardises the framework banks use when assessing a potential borrower’s capacity to make loan repayments and helps prevent high-risk loans being issued.

So how does the TDSR affect you?

The TDSR limits the amount you can borrow – your loan quantum – by ensuring your monthly repayments account for less than 60 percent of your income.

For HDB flats and ECs, mortgage repayments must not account for more than 30 percent of a borrower’s gross monthly income, even if they have no other debt obligations. (See Mortgage Servicing Ratio)

How does the TDSR impact my ability to secure finance?

The calculation of the TDSR itself (see below example) is not difficult. However, partly as a result of other cooling measures, and partly because of tweaks made to close loopholes in the original framework, the actual mortgage calculation process has become much more restrictive:

  • Loan-to-Value ratio limits apply (from a maximum of 80%, it is now down to 30%),
  • new rules for loan tenure apply (now with a maximum tenure of 35 years),
  • a stress-test interest rate (currently 3.5 percent for residential properties) is used,
  • variable income and certain financial assets are subject to a haircut, and
  • guarantors, mortgagors and borrowers are now effectively one and the same.

In the case of HDB flats and ECs

  • a Mortgage Servicing Ratio (Link to MSR) of 30 per cent applies.

In the case of joint borrowers, the TDSR is calculated based on the aggregate gross monthly incomes and debt obligations and:

  • the income-weighted average age of borrowers is used to determine loan tenure.

How is TDSR calculated?

The TDSR is calculated by dividing a borrower’s total monthly debt obligations by gross monthly income.

Consider the following examples:

Fixed income:

  • Ben earns a fixed income of S$10,000 per month. The total of his credit card, car loan and personal loan repayments is S$4,500 per month.

 

His TDSR threshold is S$6,000 (60% of S$10,000).

If Ben wanted to apply for a property loan, under TDSR rules the maximum repayment he could make each month would be S$1,500 (S$6,000 – S$4,500). If he wanted a larger loan, he would need to pay off his outstanding debts.

Variable income:

Chris earns a fixed income of $7,000 per month plus rental income of $3,000 per month. For TDSR purposes, his variable income is subject to a 30 per cent haircut, so his gross monthly income is $9,100 ($7,000 + $2,100). His existing debt obligations total $4,500.

Joint applications:

Shirley has a fixed income of $2,500 per month and debt repayments of $1,000. Her husband’s gross monthly income is $5,000 and his debt repayments total $3,000.

TDSR Exemptions

For certain categories of borrowers whose existing loans exceed 60 per cent of their gross monthly income, the Government has issued exemptions to the TDSR framework.

Owner-occupiers are exempted from the TDSR in cases where:

  • they do not own any other property, and
  •  they do not hold any other property loans.

Investors have until 30 June 2017 to reduce their debt obligations to within the 60 per cent threshold in cases where:

  • the Option to Purchase (OTP) on the property was granted before the introduction of the TDSR (29 June 2013),
  • the borrower satisfies the bank’s credit assessment criteria, and
  • the borrower commits to a debt reduction plan when refinancing.

The original TDSR framework also included a provision for financial institutions to grant property loans exceeding the 60 per cent threshold provided

  • they are granted only on an exceptional basis,
  • they are subject to enhanced credit evaluation by the financial institution, and
  • the reason/s for granting the loan and the details of the loan are reported to MAS.

How does the TDSR apply when upgrading?

For certain categories of borrowers whose existing loans exceed 60 per cent of their gross monthly income, the Government has issued exemptions to the TDSR framework.

Owner-occupiers wanting to purchase an HDB flat or EC directly from a property developer are also exempted from the TDSR threshold provided:

  • they will sell their existing property,
  • they own no other properties,
  • they hold no other property loans, and
  • they meet the financial institution’s credit assessment criteria

 

 

What is MSR (Mortgage Servicing Ratio) ?
Unlike the TDSR, which applies to all housing loans, the MSR applies only to loans for HDB flats and Executive Condominiums (ECs), and the refinancing of these loans.

Calculating MSR

MSR is calculated by dividing a borrower’s monthly mortgage obligations (including debts secured by property) by total gross monthly income. In the case of joint borrowers, their total monthly mortgage obligations is divided by their total gross monthly income.

However, when calculating the loan repayments it’s worth reading the fine print below.

For bank loan applications:

  • a medium-term interest rate (currently between 3 and 4 percent) is used to calculate the loan repayments,
  • variable income, such as commission and performance-based bonuses, is taken at 70 percent of its value,
  • financial assets must be pledged with the bank for four years, and
  • the maximum loan tenure is 25 years (for HDBs) and 30 years (for ECs) assuming the maximum Loan-to-Value ratio amount possible is to be borrowed.

For HDB loans:

  • the maximum loan tenure is 25 years, or 65 years minus the buyer’s age (whichever is shorter),
  • the loan is calculated based on the HDB concessionary interest rate (prevailing CPF interest rate plus 0.1 percent – currently 2.6 percent), and
  • there is a loan ceiling of 90 percent.

If the MSR comes out above 30 percent, the borrower can try extending the loan tenure, selling or reducing the repayments on any other properties, or reducing the amount borrowed by increasing the cash down-payment.

Exemptions

MSR does not apply to the refinancing of loans for HDB flats and ECs:

  • that are owner-occupied, and,
  • that were purchased before 12 January 2013 (for HDB flats) and 10 December 2013 (for ECs purchased directly from a property developer).

 

 

Why should I appoint an exclusive seller's property agent to market my property ?

As a seller, the reason to appoint an exclusive seller’s property agent to market the seller’s property for sale is that an appointed seller’s property agent with exclusive marketing rights will take care of the seller’s best interests in the entire selling process.

An appointed seller’s property agent will filter & qualify all enquiries with regards to the seller’s property for sale so that only qualified buyer(s) & co-broke agents with the buyer(s) turn up for the viewing which will generate the best possible chance to get the best possible offer.  At the same time, the appointed seller’s property agent will provide the seller with professional advice on all offers & updates as well as legal procedures involved in a property transaction.

As such, the seller is in control in the entire selling process of his/her property as there is only one reference point which is the seller’s appointed property agent.

 

 

 

What is the standard agent fee applicable when engaging a property agent for the sale of my property ?
 

As a guideline, the standard agent fee applicable for the transaction of any property is generally 2% subjected to GST.

Some seller(s) do reward their appointed property agent with additional incentives if their target price is achieved. The general consensus is that if the seller(s) pay their property agent well, their property agent will be more motivated to work harder & push for the best possible price/offer in the shortest possible time. This is so because the seller’s property agent can now allocate a bigger marketing budget to reach out to more potential buyers as well as other cobroke agents who may have ready potential buyer(s) in hand.

As such, the seller(s) can move on fast to their next property investment upon the successful transaction of the sale of their property.