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One of the major decisions you make in life is that of buying a house. This is because it carries a lot of financial and psychological burden. Whether you are buying your first house, moving up to your dream house, or downsizing your house or your life after the kids have gone, it is important to understand the ground rules for success in making this decision.

There are some basic ground rules when it comes to buying a house in Singapore. These are:

1. UNDERSTAND GOVERNMENT POLICIES

The government has in place various policies which you will need to be updated with first before spending money to buy a house. You can get information from the Housing and Development Board and the Singapore Land Authority.

This will prevent you from making any decision that is against the laws of the country. There are various laws for citizens and non citizens. Foreign persons (including natural persons, foreign companies and societies) are restricted from purchasing:

• Vacant land
• Landed residential property, such as bungalows, terrace houses, semi-detached houses
• Residential property in a building of less than 6 levels

Other restricted properties include:

• A HDB Shophouse
• A HDB flat purchased directly from HDB
• A resale HDB flat where HDB has consented to the sale
• Executive Condominium bought under the Executive Condominium Housing Scheme Act, 1996

2. GET A SOURCE OF FINANCING

There are few things in life as disappointing as missing out on the house of your dreams because of the inability to secure funding. While the desire to get out there in search of that great house is understandable, it is vital to understand the various financing options you will need. Getting the right financing options and approvals has a number of important advantages. This includes knowing what it would cost you to buy the house of your choice and developing the right relationships with listing agents.

You should get an approval in principle from a bank before going house hunting.

3. ASSESS VARIOUS HOUSING OPTIONS

Your choice of the type of house you want to buy may be influenced by various factors such as location, price, etc. There are various housing options such as: the HDB flats, Executive or Private Condominium and your choice will be based on price and location that is suitable for you.

4. HAVE THE PROPER DOCUMENTATION IN PLACE

          Option to Purchase

You have decided to purchase a property. Prepare 1% of the purchase price (as a consideration) in exchange for the Option to Purchase from the seller. Option to Purchase is usually prepared by the seller’s (vendor) solicitor or property agent. You are usually given 14 days to decide whether to proceed with the purchase. If you decide to proceed, exercise the option by signing in your solicitor’s office and forward it to the seller’s solicitor together with another 4% or 9% (agreement between the vendor and purchaser) of the purchase price.

Offer to Purchase

Alternatively, you can ask your realtor to prepare the Offer to Purchase and attention to the seller. Clearly stating the price, sales completion date and others. Terms and conditions can be drafted by your solicitor or your realtor.

Completion of Sale

From then on, leave it to your solicitor for the completion of the sale, which will be completed in around 8 to 10 weeks time (agreement between the vendor and purchaser). Your solicitor will lodge a caveat on the property, coordinate with the financial institution, CPF board (if applicable), prepare the mortgagor/mortgagee documents.

Stamp fee will be payable to Inland Revenue Authority of Singapore within 14 days upon exercising the Option to Purchase or signing the Sales and Purchase Agreement when you buy from a property developer. For stamp fee payable, refer to the ‘Buyer’s Stamp Duty (BSD)‘ and ‘Additional Buyer’s Stamp Duty (ABSD)‘ sections above.

For HDB flats, there is also an option period of 21 days for the buyer to consider over the intended purchase, to check his eligibility, financing aspects and other issues such as whether the flat is affected by redevelopment/upgrading, the liability to pay upgrading cost/levy etc. If the buyer does not wish to buy the resale flat, he can let the Option expire and loses only the option fee. To ensure a standardised practice, HDB has the following guidelines for the Option Fee, Deposit and Option Period:

Option Fee – An amount not exceeding $1,000
Deposit – An amount not exceeding $5,000 (including the Option Fee)
Option Period – 14 calendar days