The Residential Property Act

 The Residential Property Act (Cap 274) (“the Act”) defines a “foreign person” as any person who is not a Singapore citizen, Permanent Resident or any foreign company or converted foreign company. With the exception of Sentosa Cove, a “foreign person” is totally restricted from owning landed property in Singapore which falls under the category of “restricted residential property” within the definition of the Act.

What is ‘Landed’ Property?

So what constitutes ‘landed’ property? ‘Landed’ property will include all detached houses, semi-detached houses, terrace houses (including linked house or townhouse) and landed property in strata    developments which are not approved ‘condominium’ developments under the Planning Act.

How can a Foreigner own Landed Property?

 Foreigners who wish to own landed property in Singapore may do so if they become Singapore citizens or if they  apply to be Singapore Permanent Residents (“PRs”).

In the case of PRs intending to acquire or purchase landed property in Singapore, they would need to obtain consent from the Minister of Law through the Land Dealings Approval Unit (“LDAU”) under the Singapore Land Authority (“SLA”).

The application process typically takes between 6 to 8 weeks. Every application for LDAU approval is considered on its own merits but the main criteria would rest on one’s economic contribution to Singapore.

In assessing one’s economic contribution, LDAU will consider whether one possesses professional and academic qualifications which are of value to Singapore, one’s expertise and working experience in relation to what Singapore requires, and one’s investments in the type of industry or service sector needed in Singapore.

Upon approval being granted, the applicant is required to sign an undertaking to not dispose of the landed property within 3 years from the date of purchase and to hold the landed property strictly for owner-occupation purpose and not for any investment or income-generating purposes.

Any breach of the undertaking constitutes an offence under the Act where the applicant shall be liable on conviction to a fine or imprisonment or both.

Sentosa Cove

As mentioned earlier, foreigners are eligible to purchase landed property at Sentosa Cove. So unique is this exclusive waterfront development that the SLA’s LDAU introduced a fast-track    approval process without the need to establish economic contribution by the applicant, to facilitate the purchase of landed properties at Sentosa Cove by foreigners.

This special arrangement is only accorded to Sentosa Cove, a wholly-owned subsidiary of  Sentosa Leisure Group which is the statutory board in charge of managing and promoting Sentosa island.

Why such an exception? The reason is Sentosa Cove is a unique world-class integrated waterfront development with complementary recreational facilities located on an offshore island and the Government intends to create a niche for the   international clientele wishing to buy into an    exclusive waterfront lifestyle experience to help Sentosa Cove develop its fullest potential as a world-class development.

New Rules in Store?

Following the recent property cooling measures introduced by the Government, new rules are also in store for foreign ownership of landed property in Singapore if a new Bill introduced in Parliament is passed. The Residential Property (Amendment) Bill 2010 (“the Bill”) was read the 1^st time in Parliament on 18 October 2010. The proposed changes seek to regulate foreign ownership of  restricted properties in Singapore by its enhanced penalty framework.

It is interesting to note that despite the significant increase in property prices over the years and the changes in rules on ownership of property in Singapore, the penalties under the Act have not been revised since 1974. Some proposed changes set out in the Bill are:

1. landed home owners must dispose of their landed property within 2 years if they lose their permanent residency or citizenship status and failure to do so could see them facing a fine of S$20,000 or to imprisonment for a term not exceeding 3 years or both;
2. enhanced penalties for certain offences and in some instances, the penalties are increased tenfold.

For example, under the Act, foreigners who purchase landed property are not allowed to rent it out and those caught doing so are  liable on conviction to a fine not exceeding S$5000 or to imprisonment for a term not  exceeding 3 years or both.

Under the proposed rules, those caught doing so will face a penalty of S$10,000 or up to 3 times the rental income collected during the period of breach, whichever is higher.