For some expatriates, the choice to rent or buy in Singapore can be more than a little complicated.
“Your choice to own a property or rent a place to stay should not be dependent on whether the property market is doing well or not. The key thing is to look for the best deal that fulfils what you need,” says Benny Koh, a consultant at a wealth management firm that specialises in real estate investments.
“If you have an immediate need to stay somewhere, try to avoid having a ‘wait and see’ attitude as that may result in you missing other opportunities. Sometimes, you just have to look for the next best option and come back to your preferred deal again in the future.”
That said, here are a few tips when it comes to finding your new home in Singapore, whether you’re renting or buying.
How long are you staying in Singapore, or are you relocating back home or to another country in the near future? Purchasing a property is a huge financial commitment that lasts a long time, so don’t buy a property if you are not sure about settling down.
If you intend to buy a home, understand the regulations behind freehold and leasehold properties in Singapore. Benny notes, “Freehold properties cost more as the ownership of the real estate, including the parcel of land for landed properties, is yours in perpetuity. Leasehold properties, though cheaper, will be repossessed by the government after a certain period, which is usually 99 years.”
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He also highlights that most leasehold properties depreciate each year, whereas freehold properties appreciate.
“Having said that, there are also many factors that affect the value of leasehold properties and the rate at which they depreciate,” says Benny. “Rather than focusing on the rate of depreciation, pay more attention to trends in the market and other ‘hard’ factors as well, such as location, type of development, as well as the pricing and competitiveness of similar developments in a particular area.”
If you feel that current property prices are not in your favour and you need a place to stay, then renting is still a viable option for the short term. Benny adds, “It all comes down to your priorities in life at any point in time. The downside of renting is that you don’t own a home of your own. You also have to bear any increases in rental fees as the value of the property appreciates.”
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You are usually required to pay an initial deposit to the landlord, which serves as an insurance for him or her to cater for any damages or repairs that may be incurred by you during your stay. But other than that, renting requires minimal commitment from you as a tenant.
Says Benny, “Renting is more affordable financially. You also avoid being caught in any financial difficulties if your income is affected by unforeseen changes in your career. The last thing you want to be bogged down by – in the event of a pay cut or medical emergency – is to have to pay off a mortgage.”
NEXT: Buying tips →
Location: The location of your property has a huge impact on the comforts of your day-to-day living. Find a place that is close to amenities and transport hubs. Having the convenience of shops and food outlets within easy reach will make your daily living more comfortable.
Developer’s track record: You are less likely to encounter any issues with property built by a reputable developer. Reputable developers also have standard sales and purchase agreements that are fairly straightforward, and drafted according to regulatory requirements. This makes it easier for you to follow up with them on any issues or defects that might arise later on with your property.
Financing: You may need to get a home loan to finance your property purchase, which puts you into debt. Ensure that you have sufficient cash flow to pay for both the down payment and monthly instalments for your mortgage loans to avoid overstretching your finances.
NEXT: Know what you’re buying or renting →
Do not make your property purchase based on the opinion of others.
Take for instance your property’s location. Some neighborhoods in Singapore are generally more concentrated with expats, but just because they choose to live there doesn’t mean it’s the best for you, too.
Be objective when you are assessing a property. While some opinions may be given with the best intentions, you should make your decision based on your fact checks and due diligence, as you are the owner of the property.
NEXT: The real value of real estate →
How do you know what the “real” market prices are for a condo?
The government tells you! Singapore’s Urban Redevelopment Authority (URA) lists signed lease contracts every month, including the condo, number of bedrooms, size and monthly rental. Select any condo to view the last few months’ data to get an idea of what everyone else is paying.
Key Location also provides this data for every condo, which is based on actual records from the URA. Each condo also has a graph of the last two years’ records, so you can see if its value is trending up or down. Good news: At the time of print, it’s down.
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Not all properties in Singapore can be bought by non-Singaporeans, whether you’re a permanent resident (PR) or not.
Looking to buy a private home? While you can purchase a condo unit or shophouse, you cannot buy landed property without prior approval, as you must either be a PR or contribute to the Singapore economy in some way for your application to be considered.
The exception: Expats are allowed to buy any kind of property at Sentosa Cove, as a fast-track approval will be given. However, a buyer’s stamp duty of 15 percent on the property price will be imposed, unless you are from a country with a free-trade agreement with Singapore.
NEXT: What about public housing? →
Eyeing an Executive Condominium (EC)? You may only invest in one that is at least 10 years old, or buy a brand-new apartment from the Housing Development Board (HDB) through the Build-To-Order scheme (reserved for married or engaged couples).
Alternatively, aim for an older HDB apartment from the resale market, but you must wait three years from the date of receiving your PR status before you can make a purchase. In any case, one of you must be a citizen, while your partner must either be a citizen or a PR.
Note that you’re not allowed to rent out your HDB apartment or any rooms inside to outsiders.
NEXT: Understand the regulations →
By Hector Tan, The Finder (Issue 283), May 2017
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