Buying a completed Private Property in Singapore

There comes a time in life when you are ready to make the biggest purchase of your life for the first time. It can be both exciting and daunting at the same time. Besides being the biggest financial commitment for most Singaporeans, it also means a long-term commitment which should be meticulously and carefully planned and executed.

Buying a home involves a tedious process of planning your finances, calculating your budget and affordability, seeking out the perfect home, numerous rounds of bargaining and negotiations, getting the most attractive mortgage rates and the list goes on. What you can afford will depend on your income, existing debts, available savings and your loan eligibility.

Currently, there are three main categories of residential properties in Singapore: Landed, Housing Board Development (HDB) apartments as well as Private Apartments. They possess significant differences especially in terms of buyer’s eligibility. Landed property is generally restricted to only Singaporeans (foreigners have to obtain specific approval from the government) and HDBs are public housing available only to Singaporeans and PRs with many restrictions in terms of purchase and sale. Private apartments, either classified as apartments or condominiums, are a popular form of accomodation for many as they are categorised as non-restricted residential properties and as such, are usually less stringent in terms of eligibility for ownership in comparison to the other two categories of residential properties. Now, going into the topic for this entry, what are the processes involved in the purchase of private properties in Singapore?

STEP ONE: APPOINT A PROPERTY AGENT

Real estate agents are available to you for a reason; we have gone through rigorous trainings and examinations and are equipped with the knowledge and experience to provide the advice and know-hows of navigating the tedious path towards occupying that dream home of yours. A good agent can take off your hands the need to search, shortlist, negotiate and bargain and provide a proper legal and financial advice after purchase. Of course, there are bound to have black sheeps in every profession but in general, we work hard to make that 1 or 2% commission granted to us, usually by the seller, worth the money spent. Be frank and open to your realtor about your expectations, such as budget, location and size. Having an open relationship with your agent will direct you to your ideal home very quickly and fuss free.

STEP TWO: CHOOSE, FIND AND BARGAIN

Based on your affordability and needs, your agent will get down to searching and arranging for viewings.Take your time to inspect each and every unit and make each session worth your precious time. Feel free to ask questions regarding anything that may concern you. No question is a dumb question. Common questions are the facing of the unit (west facing are generally less popular with most people), the age of the development, the number of owners before you, nearby amenities etc. Next, once you have your heart set on a particular unit, relate to your agent about your desire and let the agent carry out the negotiations. This is usually a very trying and lengthy process; sellers want to get a price as high as possible and you want a price as low as possible. Be firm on your affordability.

This is probably the biggest item you will be buying for the first time in your life; ensure you are completely comfortable and sold before you agree to the purchase.

STEP THREE: OPTION TO PURCHASE / OFFER TO PURCHASE

The Option To Purchase (OTP) gives the buyer a 14-day exclusivity period to decide on purchasing the intended property. Upon signing the OTP, 1% of the purchase price is given to the seller as the ‘option fee’ or good faith deposit. Another 4% or 9% must be returned with the agreement to the seller should you decide to proceed with the purchase within the stipulated deadline, after which the 1% deposit will be forfeited.
Upon exercising the option, the OTP now becomes the Sales & Purchase (S&P) agreement.

STEP 4: MONEY MATTERS

Compare interest rates and take note of fine prints and terms when choosing your finance scheme and institution. An on-site valuation will be done by a bank once option fee has been given.

STEP 5: COMPLETION

Most agents can refer you to a reputable solicitor or consider engaging the bank’s panel of lawyers who will handle everything from here on. Within 8 to 10 weeks, he or she will complete the sale by lodging a caveat on the property, coordinating with the financial institutions, CPF board (if applicable) and preparing the necessary documents. A solicitor’s fees (usually about $3000) will be borne by you.

Within 14 days upon exercising the OTP, Buyer’s Stamp Duty (BSD) and Additional Buyer’s Stamp Duty (ABSD), if applicable, will be payable to Inland Revenue Authority of Singapore (IRAS). For stamp fee payable, please read Money Matters on Purchase of Completed Private Properties.

STEP SIX: INSPECTION

If you are purchasing the property with an existing tenancy, obtain a copy of the Tenancy agreement (TA) and Inventory List. Upon completion, any security deposit held by the seller is transferred to you, who is now the new landlord.

If you wish, include in the OTP for a final viewing before completion, to check the fixture and fittings are in good condition and left behind as promised by the seller. On completion date, the keys are handed over by the seller’s solicitor and all outstanding monies are settled by yours. As the new owner (hooray!), all maintenance fees, property taxes etc take immediate effect on the date of completion.

STEP SEVEN: SCREAM WITH JOY

Congratulations, you are now the proud new owner of your new pad/investment!