Buying a property is probably one of the biggest financial commitments a person could ever engage on his entire life. Young and old, married or single – all of us wants to own a house we can call our own. This holds the same for locals and permanent residents living in Singapore, that someday they could likewise avail the luxury of purchasing a home.
Owning a home is not as easy and cheap as buying clothes in the mall. You need to have the courage, knowledge, patience and of course money to acquire your dream property. Purchasing a property is a long-term commitment that should be planned carefully. Because if carried out incorrectly, it could seriously wreck your finances with ballooning debts and slowly depleting savings.
Before you even begin searching for your dream home, it is advised to determine first the cost of purchasing property in Singapore. This way, you could easily assess your finances and smartly decide on what you CAN and CANNOT afford. Let’s take a look at the different property fees you might incur when buying a home in Singapore.
Cost of Purchasing Property in Singapore – Upfront Payments
To make things easier to understand, we’ve divided the different property fees Singapore into 3 main parts. First is the upfront fees that you need to settle for you to secure and process the acquisition of the property. This includes the option fee, option to exercise fee and down payment.
The Option to Purchase (OTP) fee is paid to secure the property. When paid, it forms a legal agreement between the seller and buyer. It gives the buyer a 14-day exclusivity period on which the seller is NOT ALLOWED to offer the property to other buyers. Buyers can change their mind however this will forfeit the option fee.
Private Property – the OTP fee is usually 1% of the property price.
HDB Flats – can cost between $1 to $1,000 (SGD).
Option to Exercise Fee
Also called Offer to Purchase fee, this is paid when the buyer is fully decided to acquire the property. If the property has been physically inspected by the buyer and finances are already established, the Option to Exercise fee is then settled. The earlier paid OTP fee will be deducted to the Offer to Purchase fee.
Private Property – usually 5% or 10% of the property’s agreed price.
HDB Flats – maximum of $5,000 including the OTP fee.
This is the minimum amount of sum to be paid in cash. Depending on the type of property you wish to purchase, the required down payment can be from 10% to 20% of the property price. The down payment also includes the option monies paid. To get the exact down payment needed for the property, simply minus the loan quantum granted to the total price of the property [property price – bank loan granted (including option monies) = down payment].
Private property – at least 5% of the required down payment must be paid in cash, the remaining 15% can be paid either through cash or from CPF savings.
HDB Flats – 10% of the property price. The down payment and all option monies can be paid through cash or CPF savings.
Cost of Owning a Home in Singapore – Stamp Duties
Aside from the option monies that needs to be paid, buyers should also be aware of the Buyer’s Stamp Duty (BSD) and Additional Buyer’s Stamp Duty (ABSD). Stamp duties are required by the government and it is applicable on both private properties and HDBs. Bear in mind that failure to pay the necessary stamp duty fees has legal repercussions.
Buyer’s Stamp Duty
The Buyer’s Stamp Duty or BSD is a tax on documents relating to the acquisition of the property. BSD is computed base from the purchase price or market value of the property, whichever is higher. Buyer’s Stamp Duty is important because in case of disagreements and problems, only documents with paid stamp duties are considered acceptable in court.
The current Buyer’s Stamp Duty is levied at:
1% – for the 1st $180,000
2% – for the next $180,000
3% – for the remaining amount
Additional Buyer’s Stamp Duty
As a cooling measure to stabilize the increasing prices of residential properties, the government introduced the Additional Buyer’s Stamp Duty or ABSD in December 2011. This is payable on top of the existing BSD. There are several rumors circulating online that the ABSD will be lifted by the government. But as of time of writing, no confirmation has been made yet.
Buyer’s Citizenship 1st Property 2nd Property 3rd property
Singapore Citizen 0% 7% 10%
Singapore PR 5% 10% 10%
Foreigners 15% 15% 15%
Those who are Nationals and Permanent Residents of Switzerland, Liechtenstein, Norway, Iceland and USA will be treated the same as Singapore Citizens due to special Free Trade Agreements.
Other Cost of Purchasing Property in Singapore
Aside from the upfront payments and stamp duties, note that there are other property fees Singapore that you need to pay such as the mortgage duty, legal fees, agent fees, valuation fees, and administrative charges. Although they usually cost less than thousands, still it is important to keep these fees in mind as they add up to the total budget of home ownership.
- Mortgage documents – this is the paperwork needed for securing standard mortgage. Usually, the rate is computed at 0.4% of the loan amount granted but currently capped at $500.
- Legal fees – this is the fee associated with legal bodies doing necessary background checks for the property. Professional fees of lawyers differ but the usual rate is from $2,000 – $3,000.
- Valuation fee – to qualify for the loan, banks will need a valuation of the property. Valuation fees may be waived by the bank but if third party appraisal is required, this can cost anywhere from $350 to $500.
- Agent’s commission – if you engage with property agents, they may charge you with a small commission fee depending on your agreement. This is completely negotiable and can range from 0% to 1% of the purchase price.
- Valuation fee – the same as with private properties, this is required to secure your home loan. HDB valuation fee can range anywhere from $140 to $200.
- Legal fees – this fee covers the preparation of needed documents, registration of deeds, paperwork for land titles, etc. HDB solicitors charges a minimum fee of $20.
- Insurance – fire insurance is compulsory when taking loans from HDB. It covers the internal structure but not including damage to furniture and home contents. The cost is $1.50 to $7.50 for a 5-year term.
- Administrative fees – when you submit an application for HDB flats, you’ll be charged an administrative fee of $10. Other levies may include the following but not limited to: miscellaneous fee $15, temporary extension $20, and agent’s commission from 0% to 1% of the property price.
These are the cost of owning a home in Singapore. Always remember that the rates listed above may change from time to time. It is advised to visit necessary websites such as HDB and IRAS for any price adjustments.
Check out our Guide to Costs Involved in Buying a New Property in Singapore for more information regarding property rates and required payments. Now that you know the cost of purchasing property in Singapore, it’s time to kick off the most exciting part which is property hunting!