Buying a House in Singapore: Benefits for PRs vs. Work Pass Holders

Part 1: Introduction

A family moving into their new home

Buying a house in Singapore is a dream for many expatriates who are drawn by the city state’s bustling economy, first-world infrastructure, and high quality of life—essential elements that can support a long-term future. Naturally, the desire for stability and a sense of ownership often drives these expatriates to consider buying property, just like anyone planning to live in a country long-term would. However, purchasing property in Singapore is not straightforward, especially for foreigners who must first navigate strict regulations. 

If you are an expat looking for advice, check out this guide to learn more about the various options that you have when it comes to buying property in Singapore, the cost of housing for expats,  and whether it would be better to do so as Work Pass holders or hold off until you have attained Permanent Residency (PR). We will also highlight key differences in property eligibility, costs, financing options, and regulatory requirements to help you make well-informed decisions regarding property ownership.

PART 2: Key Differences for PRs vs. Work Pass Holders

An image of a condominium

2.1. Property Eligibility

Property eligibility is one of the biggest distinctions between Permanent Residents (PRs) and Work Pass holders when it comes to buying a house in Singapore. The Singapore property market for PRs is more diverse and accessible, while there are usually more property restrictions for Work Pass holders, especially when it comes to government-subsidised housing.

HDB Flats

The Housing & Development Board (HDB) flats are a primary choice for many Singaporeans and PRs who are buying a house in Singapore. This is due to their affordability and stable value. However, HDB flats are strictly regulated by the government, and only eligible groups are permitted to purchase these flats under specific conditions.

Singapore PRs are allowed to purchase both new and resale HDB flats if they meet certain eligibility criteria. Currently, there are two main schemes pertaining to HDB flat eligibility for PRs:

New Flats

HDB Public Scheme

To answer an age-old question—PRs can buy BTO flats if they are married to a Singapore citizen, which is basically the gist of the HDB Public Scheme. It allows PRs to buy 2-room flexi, 3-room, 4-room, and 5-room flats based on their income ceiling. 

There are other requirements that must be met by the applicant, namely:

  • You must be at least 21 years old
  • You must not sell or lease out your entire flat during the stipulated Minimum Occupancy Period (MOP), which is five years.
  • You will also need to meet the Ethnic Integration Policy (EIP) or PR quota for the block or neighbourhood you are applying for when submitting the resale flat application. This is designed to create racially harmonious communities in Singapore’s residential zones.
  • You cannot own any private property in Singapore or abroad. Additionally, you must also not have disposed of any private residential properties within 30 months of your HFE letter application

There is also a one-time premium fee of S$10,000 when a household purchases a flat for the first time. This however, can be offset through the Citizen Top-Up Grant when you obtain Singapore citizenship or have a child who is a Singaporean citizen.

Fiance/Fiancee Scheme

The mechanics of this scheme are similar to HDB Public Scheme, except that you do not need to be married yet, hence its namesake. 

However, this comes with a caveat that requires you to solemnise your marriage within three months after completing your HDB flat purchase. If your would-be spouse is below 21 years old but older than 18, they will require written consent from their parents or guardians. Any younger than 18, and they will also need a special marriage license. 

Resale Flats

Singapore PRs are allowed to purchase resale HDB flats under the same two schemes. While the conditions are largely similar, there are several key differences to bear in mind:

  • You cannot buy 3Gen flats
  • There is no income ceiling to abide by, which does widen the pool of flats you are allowed to purchase
  • If there are no Singapore citizens in your household (i.e. all PRs), all PR occupants must have carried their statuses for at least three years
  • Unless you are buying a resale flat with CPF grants or housing loans from HDB, the non-private residence ownership window is shortened to 15 months prior to your HFE letter application.

HDB Public Scheme

When buying a resale flat under the HDB Public Scheme, you must form a family nucleus with your spouse and children (if any), or with your parents. If you are divorced or widowed, there must be at least one child under your custody.

If you are a divorcee and a co-parent, you will require written permission from the other parent in order to list your child as an occupant if they are below 21 years old.

PR siblings are also allowed to buy a HDB resale flat, provided that they are not applying, owning, or renting another flat separately. One of their deceased parents must be a Singapore citizen as well.

Fiance/Fiancee Scheme

Following the same requirements, the only difference is that you will need to officially get married in Singapore within three months of completing the purchase. If the marriage is held overseas, submit a copy of the marriage certificate to HDB. 

On the other hand, Work Pass holders generally do not qualify to buy HDB flats. The majority of Work Pass holders are not allowed to buy resale HDB flats and are restricted from purchasing new HDB flats entirely. However, there are some rare exceptions, such as when the Work Pass holder is married to a Singapore citizen. These individuals may then qualify to purchase a HDB flat if they meet specific conditions. However, the easiest way to own a HDB flat as a Work Pass holder is to eventually meet PR immigration requirements and have a more unfettered access to the HDB market. The desire to settle down and be able to purchase affordable public housing is often a driving factor for many work pass holders considering permanent residency in Singapore.

Private Condominiums

When it comes to buying a house in Singapore, private condominiums have fewer ownership restrictions compared to HDB flats and are open to foreigners, including Work Pass holders and PRs. Private condominiums are often favoured by expatriates and high-income residents due to the convenience and amenities they offer. Private condominium ownership does not have an MOP requirement, making these properties more flexible than HDB flats in terms of sale and leasing.

For PRs, purchasing a private condominium is generally straightforward, as they do not face restrictions on these properties. However, when it comes to Executive Condominiums (ECs), which are a type of hybrid public-private housing, there are additional conditions to be aware of. ECs must be at least five years old (post-MOP) to be resold to Singapore citizens and PRs. After ten years, ECs can then be sold to foreigners, including Work Pass holders, without restrictions.

For Work Pass holders, purchasing a private condominium is allowed, and there are no strict eligibility requirements. However, financing and affordability can be a significant consideration due to higher costs, including stamp duties. Work Pass holders also cannot purchase newly launched ECs or ECs within the MOP period.

Landed Properties

Generally speaking, non-Singaporean citizens, i.e. anyone, including expats and work pass holders can buy landed properties in Singapore, including bungalows, terrace houses, cluster houses, and semi-detached houses. However, these foreign applicants must complete the following processes:

  • Seek approval under the Residential Property Act (RPA)
  • Submit an online application to the Singapore Land Authority (SLA)
  • Wait for approval on a case-by-case basis

The criteria for each case-by-case assessment generally takes into consideration factors like duration of the applicant’s permanent residency, or the amount of economic contribution they have made to Singapore. 

In other words, while your status of residency is not a huge determining factor in your eligibility, applicants are required to demonstrate their ability to purchase a very expensive piece of property in Singapore. More often than not, these requirements will price out all but a wealthy and elite few when buying a house in this category.

Comparison Summary

To summarise, PRs have broader options in property eligibility compared to Work Pass holders when buying a house in Singapore. While both can purchase private condominiums, PRs have the added advantage of being able to purchase resale HDB flats under certain conditions

2.2. Cost of Owning a Home in Singapore

The cost of buying a house in Singapore can differ substantially between PRs and Work Pass holders due to differences in stamp duties, financing access, and eligibility for government grants. Here are some financial implications for each group.

Stamp Duty

Stamp duty represents a substantial part of the cost for foreign home buyers in Singapore. Singapore imposes three types of stamp duties on property buyers: Buyer’s Stamp Duty (BSD), Additional Buyer’s Stamp Duty (ABSD), and Seller’s Stamp Duty (SSD). ABSD is the primary point of difference between PRs and Work Pass holders.

  • For PRs: PRs enjoy a reduced ABSD rate of 5% on their first property purchase and 15% on subsequent properties. This comparatively lower ABSD helps PRs reduce the upfront costs associated with buying property in Singapore, making it easier for them to own multiple properties if desired.
  • For Work Pass Holders: Foreigners, including Work Pass holders, pay a 60% ABSD on any property purchase in Singapore. This high ABSD rate can make it financially challenging for Work Pass holders to invest in Singapore’s property market, especially for those looking to purchase properties as long-term investments. The ABSD for foreigners was increased substantially to discourage speculation and preserve property availability for locals and PRs.

Financing Options

Financing options for permanent residents also differ from those of Work Pass holders, which also affect the cost of ownership and access to suitable properties.

  • For PRs: Banks are typically more willing to lend to PRs than to Work Pass holders, as PRs are viewed as having more stability in Singapore. PRs can access housing loans with up to 75% financing from banks, allowing them to minimise the initial financial burden when buying a house in Singapore. Additionally, PRs can use their CPF Ordinary Account (OA) savings to fund down payments and mortgage repayments, further reducing out-of-pocket expenses.
  • For Work Pass Holders: Although Work Pass holders can access bank loans, they often face stricter eligibility criteria and shorter loan tenures due to the temporary nature of their residency. Interest rates are also typically higher for foreigners than for PRs and Singaporeans. Unlike PRs, Work Pass holders cannot use CPF savings for property purchases, making it necessary to rely entirely on cash or financing, which raises the overall cost of ownership.

Eligibility for Grants and Schemes

PRs benefit from various grants and schemes that are unavailable to Work Pass holders. For example, PRs purchasing HDB flats can qualify for grants that reduce the effective purchase price of the property. Additionally, PRs can use CPF housing grants to help fund their down payment, which further eases the financial burden. These grants make homeownership more affordable for PRs and allow them to invest in higher-quality housing options.

Work Pass holders are generally ineligible for government grants and schemes, limiting their ability to take advantage of financial support offered to PRs and Singaporean citizens when buying a house in Singapore. As a result, the cost of ownership is typically higher for Work Pass holders, as they are required to pay the full property price without subsidies.

PART 3 – Buying an HDB Flat in Singapore: A Guide for PRs

A close-up shot of hanging keys

For PRs interested in buying an HDB flat, there is a structured process to ensure compliance with government regulations and facilitate a smooth transaction. Here are the essential steps for PRs to take in order to buy a resale HDB flat in Singapore.

3.1. Step-by-Step Guide to Buying a Resale HDB Flat

1. Apply for the HDB Flat Eligibility (HFE) Letter: This letter informs PRs of their eligibility to buy an HDB flat, receive CPF housing grants, and obtain an HDB loan. The HFE Letter is mandatory and should be the first step in the property-buying process.

2. Obtain In-Principle Approval (IPA): PRs should secure pre-approval for a housing loan from a bank or financial institution. Alternatively, eligible PRs can apply for a HDB loan, which typically offers lower interest rates than private bank loans. Having an IPA helps PRs understand their financial capacity and expedite the purchase process.

3. Find a Suitable Flat: Using the HDB Resale Portal and other real estate websites, you can search for flats based on criteria like location, price, and size. It is essential to view properties in person and confirm that they meet your specific needs and preferences.

4. Submit an Offer to Purchase: To formalise their interest in a property, PRs can submit an Offer to Purchase through the HDB Resale Portal or directly to the seller. After signing the Sale and Purchase Agreement (SPA) with the seller, PRs will be required to pay an option fee, exercise fees, and the relevant BSD rates.

5. Complete the Property Transfer: The final step involves attending a resale completion appointment with HDB to finalise the property transfer and receive the keys to the new home.

3.2 Other Legal and Regulatory Considerations

Beyond the purchase process, there are several legal and regulatory aspects that PRs must understand:

  • Conveyancing Process: Engaging a qualified conveyancing lawyer is highly recommended to manage the legal components of property transactions. A conveyancing lawyer is responsible for ensuring that the property is free from legal issues, and preparing the necessary documents, including the Sale and Purchase Agreement.
  • Property Tax: Property tax rates are based on the value of the property rather than residency status, meaning that PRs, like all property owners, must pay annual property taxes.
  • Ethnic Integration Policy (EIP) and SPR Quota: HDB flats are subject to the Ethnic Integration Policy (EIP) and SPR quotas, which are intended to maintain diversity within public housing estates. PRs must ensure that they meet these criteria, as failing to do so may render them ineligible to buy certain resale flats.

3.3 Frequently Asked Questions about Buying a House in Singapore for PRs

1. Can I use CPF savings to finance my property as a PR?

Yes, PRs can use their CPF Ordinary Account (OA) savings to finance their property purchase when buying a house in Singapore, including the down payment and mortgage repayments.

2. What happens if I lose my PR status?

If PR status is revoked, PRs may be required to sell their HDB flats within a stipulated period, depending on HDB’s rules.

3. Can I purchase more than one property in Singapore?

While PRs can own multiple private properties, they cannot own both an HDB flat and a private property simultaneously.

4. What is the timeline for completing a property purchase?

The timeline depends on property type and financing, with resale HDB flats taking approximately 8-12 weeks after exercising the Option to Purchase.

For expatriates considering long-term residence on our sunny island, the decision to buy a house in Singapore is a significant step towards that goal. For these expatriates, obtaining permanent residency will prove extremely helpful in opening up the housing market for them, allowing them to purchase, more importantly, affordable HDB flats. To expedite and pave the road towards that, consider consulting with an experienced immigration consultancy like Prime Immigration, whose years of experience liaising with foreigners could prove useful in helping expats understand what is needed to launch a successful permanent residency application. 

Even if you are at the start of your journey, Prime Immigration can also assist with employment pass applications to help you make your first step towards a fruitful and prosperous life in Singapore.

For more information about our services, please contact us today.

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