What can you buy? J u n e P a r t n e r. Better buy than borrow. Thomas Fuller ( ), Gnomologia, 1732, no.884

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1 S i n g a p o r e D r e a m i n g J u n e F o r e i g n e r s b u y i n g S i n g a p o r e r e s i d e n t i a l r e a l e s t a t e P a r t 1 : W h a t c a n a f o r e i g n e r b u y A m i t a D u t t P a r t n e r Better buy than borrow. Thomas Fuller ( ), Gnomologia, 1732, no.884 Renting property is akin to borrowing; like the payment of interest, rent is money thrown away as you miss out on the chance to own the property. Of course there are a myriad of other reasons as to why it is better to buy-invest, than to rent-borrow. If you are residing in Singapore, or intending to, then at some point or the other you may consider buying a home rather than having to move out of one on the expiry of a lease agreement or renegotiate an existing lease every couple of years. Or perhaps you are looking at places to park your wealth, and residential real estate in Singapore is an option. Whatever your purpose may be, this series of Singapore Dreaming articles may be a good place to start understanding some specific matters relating to the foreign ownership of residential property in Singapore. The legislation that governs the restrictions imposed on foreigners in the ownership of residential property is the Residential Property Act (Cap. 274). For convenience, we will refer to it as RPA. than others depending on whether you are a foreigner, a citizen or a Singapore permanent resident. Then again some foreigners are given the same treatment as Singapore citizens for a specific category of stamp duty known as the Additional Buyer s Stamp Duty (or ABSD as it is known). This is under the Stamp Duties Act (Cap. 312). For convenience, the SDA. Your status ascertains what you can buy and how much ABSD you have to pay. What can you buy? If you are contemplating buying nonresidential property, go right ahead. There are no restrictions on foreigners. However if it is residential property you are looking at, whether you are a foreigner, Singapore citizen or Singapore permanent resident is of consequence only if you are buying property which is landed. In buying residential property, everyone has to pay stamp duty. Some have to pay more Note: This article is only intended for general reading. Under no circumstances is it to be relied upon in substitution for specific advice on any issue(s) that may arise relating to its subject matter. Asia > Middle East > Europe International Capabilities Delivered Locally Page 1

2 Foreigner? A foreigner you most certainly are if you are not a Singapore citizen. Even a permanent resident of Singapore is a foreigner. Your being a Singapore tax resident has no bearing on the matter. Under the RPA, non-singapore citizens cannot buy a house lying on residential land without approval of the relevant authorities. A Table setting out in some detail the types of residential property available in Singapore and the position of a non-singapore citizen wanting to buy it lies below. Category of Property Part I Can a foreigner purchase without further ado? Part II If answer is Part I is No, is there the opportunity to seek approval 1) Any flat (as long as it is not a strata landed home) See Category 9 2) Any unit / flat in a condominium (as long as it is not a strata landed home) see Category 10 3) Any unit / flat in an executive condominium 4) All the flats in Category 1 No 5) All the flats in Category 2 No 6) All the flats in Category 3 No Approval under section 25 is unlikely - (see Note 4) Approval under section 25 is unlikely - (see Note 4) Approval under section 25 is unlikely - (see Note 4) 7) Vacant Land Zoned Residential No - (see Note 4) 8) Land on Sentosa Cove 9) A house on land in a development (which is not a condominium development) ( strata landed home ) see Note 3 No - (see Note 4) 10) A house on land in a condominium development ( strata landed home ) see Note 3 No (see if it falls under Category 11) - (see Note 4) 11) A strata landed home in a condominium development where the application to develop was submitted before 3 April 2012 and approved or such a home already built by 3 April 2012 see Note 3 Page 2

3 Notes: 1. What is residential property? The meaning is consistent under the RPA and SDA. The zoning and use of property are the determinants. Generally, where vacant land or an entire building is being purchased, you would be looking at whether the land is zoned residential. If, and more likely so, you are contemplating buying a house or a flat/unit in a building or development, the permitted or lawful use would be residential. How do you know for sure? The Urban Redevelopment Authority in Singapore has a standard form that you can submit (with a fee of no more than S$60) for the information on the use and zoning of any property. 2. Can a company buy landed residential property? It certainly can. The position of a company is the same as that of an (individual) foreigner ie. it can be a purchaser but approval is required. However the approval route is different depending whether it is a Singapore company or a company which is not a Singapore company that is buying. A Singapore company is a defined term. It is one which is incorporated in Singapore, and all of whose shareholders and directors are Singapore citizens. The route to apply for approval to own house on land if you are a Singapore company is slightly easier; it is under section 10 of the RPA. This section is reproduced under Note 4. A company which is not a Singapore company (having not fulfilled all the requirements of a Singapore company as set out in the paragraph above) applies for approval under section 25 of the RPA (like any foreigner). This section too is reproduced under Note Strata landed homes Generally strata landed homes is a term coined to describe houses lying on land within a development. The development need not be a condominium development, a term used to describe a specific category of developments in Singapore. Condominiums (among other things) can contain a combination of flats and houses. A foreigner having to seek approval to buy strata landed homes in a development which is not a condominium is nothing new; it has always been the case. The application for approval would be under section 25 of the RPA (see Note 4). A foreigner buying a strata landed home in a condominium development never needed any approval until 3rd April Since that date, strata landed homes in condominiums fall into 2 categories; depending on which category your property falls under, you may or may not need approval. Homes (in condominium developments) built before 3rd April 2012 or condominium developments with applications for construction submitted before 3rd April 2012 are the only ones that can still be bought freely without the need for approval. Truly they have become collectibles. Strata landed houses in a condominium development with approval to develop granted pursuant to an application submitted on and after 3 April 2012 require a foreigner to seek approval under section 25 to purchase. Any home on Sentosa does not require approval. Page 3

4 4. Applying for approval If it is a Singapore company that is buying a house on land, section 10 of the RPA is the route to take when seeking approval. Approval, if granted, is subject to several restrictions especially pertaining to changes in the ownership and directorship of the company. If approval is forthcoming, the Singapore company is issued with a Qualifying Certificate. Section 10 reads as follows:- (1) Notwithstanding anything in any written law, a Singapore company which intends to acquire any estate or interest in any residential property other than non-restricted residential property shall, prior to the vesting of the estate or interest in that residential property in the company, furnish the Controller with a list of its directors and members containing the particulars of their nationality and such other particulars as the Controller may require. (2) The Controller may, if he is satisfied that the requirements of subsection (1) are complied with and that the company is a Singapore company, issue to the company a certificate stating that the company may acquire and retain residential properties subject to the provisions of this Act. (3) The Controller may at any time require a Singapore company which has been issued a certificate under subsection (2) to produce its register of members and directors for his inspection if the Controller desires to ascertain whether the Singapore company has ceased to be a Singapore company. (4) The Controller may at any time cancel a certificate issued under subsection (2) if he is satisfied that :- in the case of a Singapore company which does not own any residential property that is not non-restricted residential property, the Singapore company has become a foreign company without obtaining the prior written approval of the Controller under section 14; or in the case of a Singapore company which owns any residential property that is not non-restricted residential property, the Singapore company has become a converted foreign company without obtaining the prior written approval of the Controller under section 26. (5) The Controller shall, upon the application by any Singapore company which a holder of a certificate issued by the Controller under subsection (2), cancel the certificate if the Controller is satisfied that the Singapore company does not own any residential property that is not a nonrestricted residential property. (6) Any Singapore company which contravenes subsection (1) shall be guilty of any offence and shall be liable on conviction to a fine not exceeding $10,000. Any other foreigner, individual or company which does not fall within the meaning of a Singapore company (as described in Note 2) applies for approval under section 25 of the RPA. Page 4

5 The essential parts of Section 25 read as follows:- (1) For the purposes of this Act, there shall be a committee to be known as the Residential Property Advisory Committee which shall consist of a Chairman and such number of other members as the Minister, from time to time, appoint for such period as he may think fit. Any member so appointed who ceases to be a member shall be eligible for reappointment. (2) Subject to subsection (14), any foreign person who desires to purchase, acquire or retain any estate or interest in any residential property other than non-restricted residential property shall apply to the Minister through the Controller for the grant of the Minister s approval to acquire or to retain residential property, as the case may be. (3) Every such application shall be in such form and shall state such particulars as the Controller may require. (4) The Controller shall forward every such application to the Committee; and after consideration thereof, the Committee shall make recommendations thereon to the Minister who may, in his discretion, grant, with or without conditions (or refuse to grant), approval : for the purchase or acquisition of the estate or interest in the residential property in respect of which the application was made or for the retention of such estate or interest; or for the purchase or acquisition of the estate or interest in residential property of such class or nature as the applicant may desire to purchase or acquire. (5) Without prejudice to the generality of the powers of the Minister under subsection (4), he may, in his discretion, grant approval, with or without conditions, to the applicant, being a natural person, who intends to purchase or acquire residential property for the purpose of his own occupation and that of his family as a dwelling-house and not for the purpose of rental or any other purpose; and for the purposes of this subsection an applicant means one: (c) who is a permanent resident; who, in the opinion of the Minister, is of economic benefit to Singapore or who, in the opinion of the Minister, makes or is able to make an adequate economic contribution to Singapore; or who, not being a citizen, possesses professional or other qualifications or experience which, in the opinion of the Minister, are of value or of benefit or advantageous to Singapore. (6) Without prejudice to the generality of the powers of the Minister under subsection (4), he may grant approval, with or without conditions, to an applicant, being a foreign company or a foreign limited liability partnership which : in the opinion of the Minister; (i) (ii) is of economic benefit to Singapore; or makes or is able to make an adequate economic contribution to Singapore; and Page 5

6 intends to purchase or acquire, or retain any interest in, residential property for the purpose of occupation as a dwelling-house by its executives, managers, partners, employees or other personnel and their families and not for any other purpose. (7) The conditions that the Minister may impose under subsection (4), (5) or (6) shall include all or any of the following : that the applicant : (i) (ii) being a natural person, shall use the residential property for his own occupation and that of his family as a dwellinghouse and not for any other purpose; or being a foreign company or a foreign limited liability partnership, shall use the residential property for occupation as a dwelling-house by its executives, managers, partners, employees or other personnel and their families and for any other purpose; (aa) that the applicant shall not sell, assign, transfer or otherwise dispose of his or its estate or interest in the residential property within such period as may be specified by the Minister; (c) that the applicant shall provide such security as may be determined by the Minister for the purposes of complying with any condition imposed by the Minister; that the applicant shall give an undertaking in writing to comply with the conditions imposed by the Minister. 5. Contract terms What can a foreigner do to protect himself/herself before putting down a deposit to buy landed property, prior to obtaining approval from the relevant authorities? The contract must state that the sale and purchase is subject to the buyer obtaining the approval of the relevant authorities to buy the property. The same provision must state what the consequences will be if the approval is not obtained by the completion date/closing, or not given at all. Ideally, if the application is rejected, the buyer should seek a full refund of all monies paid under the contract. If the outcome of the application is not known by the completion date, the buyer should ask for more time from the seller. There are many permutations to the provision that a seller and buyer may agree upon. Best seek the advice of a lawyer before any money is paid. Page 6

7 For more information, please contact: Amita Dutt Partner Finance & Real Estate Practice RHTLaw Taylor Wessing LLP Direct: , Mobile: About RHTLaw Taylor Wessing LLP RHTLaw Taylor Wessing prides itself as a law firm that delivers international capabilities, locally. Clients of RHTLaw Taylor Wessing can expect intelligent and innovative legal and business solutions from a team that is attuned to the nuances of working in Asia, with the added perspective and expertise of an international firm. Based in Singapore, the Firm opens doors to a network of over 900 legal professionals across 22 offices in Asia, the Middle East and Europe via a membership with Taylor Wessing group. The Firm is also the exclusive Singapore member of The Interlex Group, a global network of leading law firms. Our model is driven by the focus on helping clients succeed, which translates to clear and precise solutions with high-level legal and commercial insights. We proactively grow our practice in tandem with regional and international fast growing industries, with core areas of practice in Banking and Finance, Corporate and Securities, Intellectual Property and Technology, Litigation and Dispute Resolution, and Real Estate RHTLaw Taylor Wessing LLP This publication is intended for general information and to highlight issues. While we endeavour to ensure its accuracy and completeness, we do not represent nor warrant its accuracy and completeness and are not liable for any loss or damage arising from any reliance thereon. It is not intended to apply to specific circumstances or to constitute legal advice. RHTLaw Taylor Wessing LLP (UEN No. T11LL0786A) is registered in Singapore under the Limited Liability Partnerships Act (Chapter 163A) with limited liability. RHTLaw Taylor Wessing LLP is a Singapore law practice registered as a limited liability law partnership in Singapore ("The LLP"). It is a member of Taylor Wessing, a group which comprises a number of member firms which are separate legal entities and separately registered law practices in particular jurisdictions. The LLP is solely a Singapore law practice and is not an affiliate, branch or subsidiary of any of the other member firms of the Taylor Wessing group. A list of all Partners and their professional qualifications may be inspected at our main office at Six Battery Road #10-01, Singapore Page 7