The scarcity of land in Singapore has contributed to the increase in the number of people living in residential properties. Approximately 80% of the country’s residents live in Housing and Development Board (HDB) flats while the remaining 20% own private residences, landed properties, and condominiums. The rules governing the property market in Singapore can be a bit difficult to understand since they involve many considerations such as location, dimensions, and budget. This has made the process of acquiring a condo such as Marina One Residences a bit more challenging especially for the first time buyers.
The Buying Process
Almost every Singaporean living in an HBD flat dreams of owning a condo or a private residence. This guide takes you through the procedure of buying a condominium and prevents you from making costly mistakes along the way.
Getting the Right Team for the Job
Most first time and even second-time buyers do not fully understand the process of buying a condo. Therefore, hiring experts such as a real estate agent and a lawyer is essential if you are looking forward to a smooth purchase. The two types of experts offer professional advice ranging from property valuation, completion of paperwork to solving legal matters.
Shop Around for the Ideal Condo
A real estate agent will get suitable living spaces depending on your preferences before inviting you for viewing. You should always pay attention to various factors such as the finishing and furnishing, quality of lighting and fixtures, accessibility and availability of amenities such as roads and schools while looking for an ideal condo. Remember that a home is one of the most significant investments, and you should only decide to buy if you are satisfied.
You may consider completing an Expression of Interest (EOI) form if you intend to buy a new launch condo. A blank check addressed to the developer account accompanies the form. The developer inserts a 5% booking fee on the property once the prices are revealed. Remember that the EOI form only helps you participate in the ballot system during the launch date in case you intend to proceed with the purchase. However, you can always get your 5% refund if you decide to withdraw from the purchase.
Purchasing the Condo
a) Option to Purchase
You can proceed with the buying process once you have settled for one particular condo. The buying process begins with the payment of an option to purchase fee which comprises of 1% of the agreed upon price. The fee allows you to hold the condo for a maximum of two weeks and no other potential buyer should view it. After the two weeks, you can sign the option to purchase form and send it to the seller’s solicitor along with 4-9% of the total purchase. Alternatively, your agent can draft the option to purchase form indicating the price and conditions and send a copy to the seller’s solicitor. You have up to four weeks to pay the second fee before the seller forfeits your 1% option to purchase fee. Remember the 1st and the 2nd amounts must be paid in cash, but there is no limitation on cash payment on the subsequent payments.
b) Down Payments and Bank Mortgage
You will pay a down payment of 15% or 45% for the first property and second property owners respectively. The bank then loans you 80% of the condo’s price if you are a first-time buyer while a second-time owner gets only 50% loan of the condo’s price. The Singapore banks offer competitive interest rates, but you should always compare the rates before settling on one bank. Other costs include the legal and agent fees. Legal fees entail payment to your lawyer and the Singapore Land Authority. The developer should pay your agent if you bought the condo during a launch while a seller pays his agent who then gives part of his pay to your agent in the case of a resale unit.
c) Buyers Stamp Duty
There is also the Buyer’s Stamp Duty, which every Singapore citizens and foreigners have to pay to the Inland Revenue Authority of Singapore while buying a condo. The rates include a 1% payment on the first $180,000 of the purchase price and 2% on the next $180,000. A buyer then has to pay a stamp duty of 3% for any property priced above $300,000. A second-time buyer in Singapore pays a 7% Additional Buyer’s Stamp Duty (ABSD) while a third-time buyer is subject to 10% ABSD. Permanent residents, on the other hand, are supposed to pay 5% ABSD on their first home and 10% for the second and subsequent homes. Foreigners are subject to 15% ABSD.
The buyer and seller finalizes the buying process by completing the ownership transfer process. Remember that you require permission from the Singapore Housing Authority before purchasing a residential property, so you should get one to avoid getting into problems later. Acquiring a condo such as Marina One Residences can be a slow and tedious process, but the joy of owning one is worth it.