The hidden costs when buying property in Singapore
Buying a property is a significant decision to make in your life, so while location, price and size are among your top factors to consider, you should also be aware of the fees and peripheral costs that come along with a property purchase. These can add up and quickly inflate the budget to buy your dream home.
Valuation Fees, Stamp Duty and Additional Buyer’s Stamp Duty (ABSD)
One of the first steps you’ll need to do is to get a valuation to ensure that you’re paying a fair amount for your property. Depending on the type of property, a fee is paid to the bank who will engage a firm within its panel to conduct the formal valuation.
Outside of the property itself, another huge cost you need to consider is stamp duty. This tax imposed on property transactions also varies depending on the purchase price or market value, whichever is higher, and the final tax amount is calculated based on different tiers and rates. For the base stamp duty, a 3% rate is used if the purchase price or valuation is less than SGD 1 million. If it is more than SGD 1 million, then a 4% stamp duty rate is applicable.
On top of that, some property buyers may also be subject to ABSD, which is another layer of tax to be paid. The ABSD rate is also based on purchase price or market value of the property, whichever is higher. Singapore citizens have to pay a 20% ABSD when purchasing a second property, and 30% ABSD for their third and subsequent properties. Meanwhile, Singapore Permanent Residents will need to pay a 5% ABSD when buying their first property, 30% ABSD for their second and 35% ABSD for subsequent properties. Foreigners buying any property have to pay a 60% ABSD.
Legal and Conveyancing Fees
With any property purchase, you’ll want to make sure that all the legal aspects are settled properly - depending on the complexity of the transaction and the property value, these legal and conveyancing fees can vary. Some of these processes may be confusing for someone who’s not an expert, so hiring one means you’ll have someone to assist in submitting CPF applications (where necessary) to the CPF board, if you’re using that towards the payment of the property or the monthly instalments, or even for the payment of your stamp duty and legal fees. They’ll also take care of any legal documents needed for mortgages.
Agent’s Commission
The property agent is there to help provide advice on the transaction and to make sure it goes smoothly, and typically charge a commission based on the property’s selling price. This can range from a few percentage points to a substantial sum as there’s no fixed rule for the calculation of commission and is sometimes dependent on the complexity of the sale. For private properties such as condominiums or landed properties, the buyer normally doesn’t pay for the agent’s commission. This is covered by the seller instead. For HDB resale flats, you’d be looking at around a 1% commission as the buyer.
Insurance
There are several different types of insurance you can buy along with your property, including mortgage insurance, home contents insurance and fire insurance. Fire insurance is mandatory for every HDB purchase.
“The property market in Singapore is currently very strong, and we want to make sure that our clients are aware of all the hidden costs which can impact their budget.
That’s why we’re committed to ensuring that our clients have access to a good advisor who can help them understand and account for these costs. We want Citi clients to make an informed decision about their home purchase and avoid unwelcomed surprises,” says Matt Read, Head of Retail Banking, Citibank.
Find out more about Citibank’s Home Loans and wealth management services, to get customised guidance from their experts. Their team are on-hand to help you make the most informed decisions.
Disclaimers
This article is for general information only and is not intended to be a forecast of future events nor a guarantee of future results and should not be relied upon as financial advice. All views and opinions are as of the date hereof, and are subject to change based on market and other conditions without notice. The article has no regard to the specific objectives, financial situation and particular needs of any specific person. It is neither an offer nor a solicitation to purchase, nor endorsement or recommendation of any products or services mentioned therein, and the products or services mentioned may or may not be offered by Citibank Singapore Limited, its related entities and their respective directors, agents and employees (together "Citigroup").
This article and its contents do not constitute the distribution of any information or the making of any offer or solicitation by anyone in any jurisdiction in which such distribution, offer or solicitation is not authorised or to any person to whom it is unlawful to distribute such information or make any offer or solicitation.
Citigroup is under no duty to update this article and shall not be liable for any complaint, suit, action, claim, expense, loss or damages directly or indirectly arising out of or in connection with any person’s reliance on, or acting upon, or use of, any contents on this article. The article is subject to amendment without notice. Investment Products are (i) not insured by any government agency; (ii) not a deposit or other obligation of, or guaranteed by, the depository institution; and (iii) subject to investment risks, including possible loss of the principal amount invested. The information contained herein is not intended to be tax or legal advice, or an exhaustive discussion of the strategies or concepts mentioned herein. Please seek advice from your tax, legal or financial adviser as appropriate about the contents discussed herein or before investing in any investment products. Should you choose not to seek such advice, you should carefully consider the risks associated with any investments and make a determination based upon your own particular circumstances and assess whether such investment product is suitable for you.
