5 Housing policies in Singapore every expat must know
Singapore is a country with one of the world’s leading economies. It is stable and is proven to be resilient. That is why various businesses from different industries flock to this country. Everyone wants to set up a branch here to increase their brand’s competitiveness. Along with these businesses, the working force has also filled up Singapore’s busy streets. However, Singapore has a relatively small land area. They have less land to offer to its residents. In economics’ basic law of supply and demand, the demand is higher than supply thus driving Singapore house prices high. Since Singapore has less land to offer than its demand, the country has been known to have one of the highest costs of living in Asia. The competition for its land supply is not only among its residents but also with foreigners or expats.
Singapore has been a hotspot for foreign workers as it is one of the best cities to live in despite high costs. However, just like any other country, it is biased toward its citizens. Locals experience a more relaxed process when they buy property in Singapore compared to expats. Although expats can buy property in Singapore, there are just certain guidelines and policies they have to follow. So, in this article, we will talk about 5 housing policies in Singapore every expat must know.
#1 Ethnic Integration Policy
This policy exists since Singapore is a melting hotpot for all different types of races. This is to integrate racial harmony among its residents. This sets a limit to different races in the percentage of owning an HDB flat in Singapore. The Chinese, Malay, and Indian limits are 84%, 22%, and 10% per block respectively. Certain ethnic groups will not be able to buy property in Singapore if the limit is reached for the particular block or neighbourhood. This is important to know to have an idea of where to purchase flats or housing units. This kind of policy is intended to increase racial harmony among its residents which is why it is constantly reviewed and revised.
It was stated that Singapore is biased towards its residents when it comes to housing opportunities. However, they allow foreigners that have an Employment Pass, S Pass, and Work Permit to buy property in Singapore. They also allow those who have Student Pass, Dependant Pass, and Long-Term Social Visit Pass. However, these passes must have a validity period of at least 6 months as of the date of application.
These are some of the housing types that expats are allowed to purchase without approval under the Residential Property Act:
- Condominium unit;
- Flat unit; and
- Strata-landed house in an approved condominium development.
While these are some of the properties that should be approved first before expats can buy property in Singapore:
- Vacant residential land;
- Terrace house; and
- Semi-detached house.
#3 Extra taxes
Singapore house prices are already high but there are additional taxes for foreigners. It is a tax on documents related to property. The amount usually depends on Singapore house prices. For example, you will have to pay 1 percent for every S$180,000. 2 percent for another S$180,000 after that, and 3 percent of the remaining price. So, if you are buying a house that costs S$400,000.
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You will have to pay 1 percent for the first S$180,000, 2% for the next S$180,000, and 3% for the remaining S$40,000. This fee is dependent on the Singapore house prices of your house choice. Also, there is an Additional Buyer Stamp Duty, an additional fee for people who have more than one property. You also have to settle this when you want to buy another property.
#4 Non-citizen quota
For a non-Malaysian non-citizen (Singapore Permanent Resident or foreigner), you are subjected to a non-citizen quota to maintain a good mix of races in housing blocks. It is at 8% at the neighbourhood level and 11% at the block level. Only Singaporeans and Malaysians can buy property in Singapore if the quota is reached. This is also applicable to renting.
#5 For renters, there is a rental period
If you find Singapore house prices too high and are opting to rent, there is a rental period requirement. One must rent an HDB flat or bedroom for at least 6 months. While the maximum rental period per approval is 2 years. This is to ensure the insurance for those who are renting it out. The maximum rental period is implemented to give way to other renters.
As a foreigner, there are other policies you must follow. Make an informed decision before renting or buying that property. In SRX Property we guide you to the right choice. Visit us today and rent that perfect house tomorrow.