Introduction

With the recent news of a Chinese national charged with appointing a Singaporean to buy landed property on his behalf, we are reminded once again of the importance of seeking professional advice especially if you are a foreigner purchasing a landed property in Singapore.
Here at SMTP, we have a professional and experienced team in our conveyancing department that assisted many of our clients with their purchase of landed property. In this newsletter, we aim to explore the procedure foreigners should be aware of when purchasing a landed property in Singapore.

Residential Property Act

The Residential Property Act (the “Act”) prohibits any foreign person to purchase any Residential Property (as defined in the Act), which shall include any vacant land or landed property, unless approval is obtained for such purchase.
A foreign person would be one who is not an approved purchaser as
defined under the Act, being one of the following:-
– A Singapore company
– A Singapore limited liability partnership
– A Singapore society
– A foreign person to whom approval has been granted under section 25, 30 or 31 of the Act
– Any person, company, limited liability partnership, society, association or other organization or body who or which has been exempted by the Minister under section 32 of the Act
– Any body, corporate or otherwise, declared by the Minister by notification in the Gazette to be a public authority or an instrumentality or agency of the Government

It is crucial to note that a Singapore company is defined under the Act to be a company incorporated in Singapore and its directors and members are all citizens of Singapore.

Applications for Approval to Purchase Restricted Property

There are two forms of application
that are available for foreign persons for the purposes of purchasing or acquiring such restricted properties. One may apply for: –
a) A LDAU Approval under Section 25 of the Act, where the subject property will only be for your own occupation and that of your family as a dwelling-house and not for any other purpose; or
b) A Qualifying Certificate under Section 31 of the Act, where you intend to apply as a housing developer for the purposes of re-developing the subject property.

For the purposes of this article, we will elaborate more on acquiring a landed property for your own occupation as a dwelling house.

LDAU Approval-in-Principal

To apply for a LDAU Approval, it is important to note the following:-
1) Each application is considered on its own merits and the main requirements are that you are a Singapore PR and make an economic contribution to Singapore.
2) You should be a permanent resident of Singapore for at least five (5) years.
3) The application process takes approximately four (4) to six (6) weeks from the submission.
4) For the application of in-principle approval, you will need to submit particulars of the specific property you wish to purchase within six (6) months after the issuance of the letter of approval, failing which your approval will lapse.

Please note that there is an exception amongst the landed properties in Singapore that does not require the first two criteria mentioned earlier. Purchasing a landed property in Sentosa Cove does not require the purchaser to be a permanent resident for at least five (5) years or make an economic contribution to Singapore. However, please be aware of the other conditions as follows: –
1) The land area of the property purchased must not exceed 1,800 square metres.
2) The property is solely for personal occupation and that of the members of your family as a dwelling house and not for rental or any other purpose i.e., investment.
3) If you currently own a restricted
property and was granted approval for the purchase, you will be required to dispose of your existing restricted property on or before the date of legal completion of the purchase of the new Sentosa Cove property.

In the event where any of the conditions have been breached, you may be required to pay a financial penalty or be liable, upon conviction by a court, to a fine of up to $200,000 and/or imprisonment for a term of up to 3 years.

Should you decide to proceed to make an LDAU Approval application, you should be prepared to furnish the following details (where applicable): –
I. Copy of your Identity Card;
II. Copy of your Spouse’s Identity Card;
III. Copy of your Passport and valid entry / re-entry permit;
IV. Copy of your Marriage Certificate;
V. Copies of your tertiary/professional and/or technical qual-ifications;
VI. Copies of your spouse’s ter-tiary/professional and/or technical qualifications;
VII. Copies of your notice of assessment of income tax for the last three (3) years;
CONVEYANCING NEWSLETTER
VIII. Copies of your spouse’s notice of assessment of income tax for the last three (3) years;
IX. Your child/children’s birth certificates/NRICs;
X. Copy of your latest pay advice or letter from employer stating last drawn pay;
XI. Copy of your spouse’s latest pay advice or letter from employer stating last drawn pay;
XII. Details of yours and your spouse’s employment history (Name of employer, start and end date, designation and country of work); and
XIII. If you or your spouse have an interest in any company, please furnish copies of latest audited accounts and instant information print out of the company.

Additional Buyer’s Stamp Duty

In the event approval has been granted by the relevant authorities for the purchase of such restricted properties, you will also need to consider the stamp duties that may be applicable to you in such an acquisition.

On top of the Buyer’s Stamp Duty which is calculated based on the following calculation:
– 1% on first $180,000
– 2% on next $180,000
– 3% on next $640,000
– 4% for the remainder

you will also need to consider the relevant Additional Buyer’s Stamp Duty that may be applicable to the purchase based on your profile as shown below:

Foreigners – at the rate of 30%

Companies, partnerships and societies (including all corporate entitles and developers-companies) – at the rate of 35% (plus additional 5% for housing developer which is non-remittable).

Singapore Permanent Residents (PR) – at the rate of 5% for their purchase of the first residential property and PR who already own 1 residential property – at the rate of 25% and PR who already own 2 or more residential properties would have to pay at the rate of 30% on the purchase of another residential property.

Singapore Citizens (SC) who already own 1 residential property would have to pay at the rate 17% and SC who already own 2 or more residential properties would have to pay at the rate of 25% on the purchase of another residential
property.

Please also note that if a buyer is liable to pay ABSD but fails to do so, the document is considered not duly stamped. Non-stamping without lawful excuse is an offence and would attract penalties.

It may also be note-worthy that Nationals of United States of America, Switzerland, Liechtenstein, Norway and Iceland will be treated like Singapore Citizens and will be entitled to apply for remission of ABSD and you will not have to pay ABSD if it is remitted by the relevant authority.

Conclusion
In conclusion, the key take-away from this news article is that for private properties, foreigners are subjected to additional regulations which are crafted to balance the housing supply in Singapore due to the scarcity of land in the country. Statutes such as the Residential Property Act are in place to ensure a fairer opportunity of home ownership. Parties are prohibited to use a trust arrangement (whether an express trust, resulting trust or constructive trust) to by-pass such public policies.

In light of the above information, it is therefore essential that you speak to your lawyers before considering any acquisition of property or properties in Singapore to advise you of the adequate requirements for foreign ownership and stamp duty implication.