Introduction 

In our Conveyancing article last month, we wrote about the restrictions that applied to foreigners purchasing landed property in Singapore. In this month’s article, we go further to see what would happen to a Singaporean if he/she purchased a landed property on trust for a foreigner in an attempt to circumvent the Residential Property Act 1976 (the “RPA”). Landed property is one of the residential properties that foreigners are restricted from purchasing under the RPA.

Singapore has long maintained strict regulations on property ownership, especially for foreigners, to maintain housing affordability for its citizens and to safeguard residential land for its citizens. The RPA is one of the key legislative tools used to manage foreign ownership of residential properties in the country.

The RPA 

Under the RPA, foreigners are restricted from owning certain types of residential properties, such as landed houses, without prior approval from the Singapore Land Authority (“Restricted Residential Property”) (SLA). This measure helps safeguard residential land for Singaporeans and ensures that Singaporeans have access to affordable housing. Approval from the Land Dealings (Approval) Unit (the “LDAU”) is required before foreigners, whether they are Singapore Permanent Residents or full foreigners, can legitimately purchase Restricted Residential Property.

The Case 

In a recent case, a Singaporean woman has been penalised for her involvement in purchasing landed properties on behalf of three foreigners, which violated the RPA. The woman admitted to flouting regulations and was sentenced to a two-week jail term.
The woman facilitated the purchase of a S$3.4 million cluster house for one foreigner and acquired landed properties under her name for two other foreigners. Such actions are strictly prohibited under section 3 of the RPA. Offenders can face a fine of up to $100,000, imprisonment of up to three years, or both.

The woman claimed that she was deceived by the foreigners involved, asserting that she was unaware of their intentions to violate the law. According to her, she was led to believe that the purchases were legitimate and that the properties were meant for her own use. Her defense argued that she was an unwitting victim of a scam orchestrated by the foreigners, exploiting her trust and goodwill.

Despite her plea of being scammed, the court found the Singaporean woman guilty of breaking the law. The judiciary emphasised the importance of adhering to Singapore’s stringent property ownership regulations to safeguard the integrity of the property market and prevent potential abuses.

As regards the foreigner, on behalf of whom the S$3.4 million cluster house was purchased, he was fined for appointing the woman to acquire restricted residential property on his behalf. This sentencing sends a clear message about the seriousness with which Singapore approaches property market regulations and demonstrates that ignorance of the law is not a defense.

The cases raised concerns about the potential impact of such illegal transactions on the property market in Singapore. Illegitimate purchases can artificially inflate property prices and distort market dynamics. To maintain a balanced and stable property market, the authorities need to be vigilant in detecting and prosecuting violations.

In response to this and similar cases, the Singaporean government has taken proactive steps to address potential loopholes that scammers may exploit. The Minister for Law, K. Shanmugam, highlighted in a written answer to Parliament that such cases were not isolated incidents. The government has assured the public that it is actively investigating similar instances and is committed to preserving the transparency and integrity of the property market.

As part of their efforts, the authorities are strengthening measures to detect and prevent illegal property transactions. This includes enhancing surveillance and data analytics to identify suspicious patterns, as well as conducting targeted investigations into potential offenders.

Even more recently, LDAU announced that land that is zoned “Commercial and Residential” are now also considered Restricted Residential Property to ensure that local property prices are not unduly affected by foreign speculation.

Conclusion 

This matter serves as a cautionary tale for both Singaporeans and foreigners engaging in property transactions in the country. It underscores the importance of exercising due diligence and verifying the legality of any property deals.

While the Singaporean woman claimed to be an unwitting victim of a scam, individuals must be vigilant and verify the authenticity of any transaction they are involved in. Seeking legal advice and consulting with relevant authorities can help prevent inadvertent violations and protect one’s interests.

Our experienced conveyancing team have a wealth of experience and knowledge in property related matters. This allows us to provide you with sound and practical advice on your queries. Should you have any question pertaining to your property or other conveyancing matters, please reach out to our lawyers or Business Development team.