Buying a property in Singapore is a big deal! It is certainly the biggest ticket-item a person will purchase in his/her lifetime. It is a very challenging process and careful considerations must be taken before committing to a purchase. To do that, you need to know and understand these commonly used terms in the property industry.
The first home for most Singaporeans will likely be a flat directly from the HDB. These are some of the terms to take note:
MINIMUM OCCUPANCY PERIOD (MOP)
MOP is the period of time you are required to physically occupy your flat before you can sell it on the open market. The MOP duration depends on the purchase mode, flat type, and date of flat application. Usually the MOP period is 5 years but there are some variance depending on the purchase mode. For the complete MOP periods, you find more information here.
ETHNIC INTEGRATION POLICY (EIP) AND SINGAPORE PERMANENT RESIDENTS (SPR)
When purchasing an HDB resale flat, buyers need to ensure they are within the EIP proportion for the block or neighbourhood, and if applicable, the SPR quota as well. Non-Malaysian SPR households applying to buy an HDB resale flat need to be within the SPR quota for the block/ neighbourhood. The SPR quota ensures that SPR families can better integrate into the local community. Malaysians are excluded from this quota because of their close cultural and historical similarities with Singaporeans. Before selling your HDB flat to a non-Singaporean non-Malaysian, you’ll have to check the SPR Quota for your block and your neighbourhood here.
After fulfilling the MOP and if you are thinking of upgrading to a private property, here are some terms that you should take note of:
HDB flats have a 99-year tenure whereas private properties have three main lease types: 99-year, freehold and 999-year leases. 99-year leasehold means your ownership of the property will end after 99 years. Freehold properties belong to the owners indefinitely so there’s no need to worry about the lease running out. 999-year leasehold properties are as good as freehold properties as 999 years is a very long time and the property can be passed down to many generations.
New launch condominiums are all the rage these days and if you are thinking of investing in a new-launch property, you should take note of these terms:
DIRECT DEVELOPER SALES TEAM
These are property agents from real estate agencies appointed by new launch project developers to market their properties. They are more knowledgeable about the projects and have faster information flow as they work directly with the developers. They are usually stationed at showflats and can serve ad-hoc walk-in potential buyers (of course now with COVID-19 restrictions, walk-ins are not allowed and viewings are by appointments only).
This is an invitation extended to interested parties prior to the official public launch of new project. Prices are usually discounted during the VVIP Preview and you can secure priority booking to increase the chances of getting your desired unit.
TEMPORARY OCCUPATION PERMIT (TOP)
TOP is a permit that allows homeowners to occupy the building when the key building requirements are met. When a building is completed and certain requisites are met, a developer can apply for the TOP first before finally complying with all building requirements and obtaining a Certificate of Statutory Completion (CSC). An example of when a TOP can be issued is when the individual units are ready for moving in, but the condo facilities are yet to be completed.
CERTIFICATE OF STATUTORY COMPLETION (CSC)
The CSC comes after the TOP and is issued by the Commissioner of Building Control upon the completion of the project, indicating the completion of building works and compliance of all requirements.
For buyers of resale properties, you need to know the following:
OPTION TO PURCHASE (OTP)
The Option to Purchase reserves the buyers’ right to buy the property under specified terms for a limited period of time. Once you commit to the OTP, the buyer must pay an option fee, which is most often set at 1% of the purchase price.
If you decide to back out from the transaction at the later stage, the option fee will be forfeited. The OTP is usually valid for 14 days for condos and 21 days for HDB flats. During this period, the seller cannot advertise to sell the optioned property.
There are three types of duties payable on the sale, purchase, acquisition or disposal of properties in Singapore:
Buyer's Stamp Duty (BSD)
Additional Buyer's Stamp Duty (ABSD)
Seller's Stamp Duty (SSD)
As indicated in the name, the first two are payable by the buyer. BSD is payable on the purchase or acquisition of properties. Prior to 20 Feb 2018, the top marginal BSD rate for both residential and non-residential properties was 3%. With effect from 20 Feb 2018, there are differentiated BSD rates between residential and non-residential properties. The top marginal BSD rate for acquisition of residential properties on or after 20 Feb 2018 is 4%. You can find the complete list of BSD rates here.
If you buy or acquire residential properties (including residential land) on or after 8 Dec 2011, ABSD may also be applicable. The ABSD is only applied to second and subsequent residential properties. The Singapore government adjusts ABSD rates depending on market conditions. For the latest ABSD rates please refer here.
If you buy or acquire residential properties and industrial properties on or after 20 Feb 2010 and 12 Jan 2013 respectively, SSD is payable if the properties are sold within the holding period. The rates of SSD payable on residential property acquired on and after 20 Feb 2010 and disposed of within certain duration can be found here.