Introduction

The Residential Property Act (“RPA”) restricts the purchase of certain residential property to only Singaporeans. Foreigners (Permanent Residents (“PRs”) and non-Singaporean entities included) who wish to purchase such property will require further approval from the Land Dealings Approval Unit (“LDAU”).

In particular, section 3 of the RPA restricts unauthorised acquisition of interest in restricted properties by a foreigner, whether it be by inheritance, purchase, or as a beneficiary through a trust.

Section 25 of the RPA states that such approval is at the discretion of the Minister, who may choose to grant (or not) such approval, and to impose conditions (or none) for the same.

What are the restricted properties

Such restricted properties include vacant residential land, landed property (eg terrace, bungalows, semi-detached), strata landed houses not within an approved condominium development, and residential shophouses.

Non-restricted properties are set out in section 4(1) of the RPA, and include any condominium unit, any flat unit, and any unit under the executive condominium scheme. However, such properties become restricted if said foreigner purchases all the units in a particular development, pursuant to section 4(2) of the RPA.

Who can buy

In general, Singaporeans are not restricted from buying landed property in Singapore. Foreigners, including PRs, will require approval from LDAU. Apart from fulfilling the criteria for approval, further conditions will be imposed on the successful applicants.

How can foreign persons acquire interest

The prevailing LDAU requirements for buying restricted property on mainland Singapore are:-

• The applicant has to be a PR in Singapore for at least 5 years, and
• The applicant has to have made exceptional economic contribution to Singapore

Once approval is granted, the property cannot be used for any other purpose except for the applicant and his/her family to live in. The property also cannot be disposed of within 5 years, nor can the property be subdivided without prior approval.

The requirements are less stringent for similar properties in Sentosa. At the time of writing, the applicant does not have to be a PR. However, the property cannot be larger than 1,800 m². Further, the conditions post-approval do not include the restriction on the disposal of the property within 5 years of acquisition.

In general, PRs are only allowed to buy restricted residential properties not exceeding 15,000ft² and are outside the good class bungalow area. More stringent criteria will be applied for applicants who wish to purchase such properties.

Should the applicant already own restricted property, then after the approval of acquisition for the new restricted property, the applicant is expected to dispose of the existing restricted property.

In the event that the acquisition of interest is through a trust instrument, and both trustee and beneficiary of the said trust are foreigners, then separate approvals are required for each party.

In principle approval and specific approval

In the event that a foreigner is interested in acquiring landed property in Singapore, but has not yet decided on the specific property, he/she can first make an application for in-principle approval from LDAU. Once this approval is obtained, said foreigner has 1 year to decide on the specific property to be purchased and to submit the details to LDAU. No extension of validity of in-principle approval will be granted.

If however, the specific property has been decided on, then specific approval can be sought.

It generally takes 1 month for LDAU to process the application from the date of receipt of all relevant information and documents, though some applications may take more time to process. The final decision shall be at the Minister’s discretion.

In the event that the applicant does not obtain a favourable answer, he/she may attempt to appeal further to the Minister, should there be further information or documents that have come about after the submission of the initial application.

Conclusion

The purpose of the RPA is to ensure that the residential land in Singapore is primarily reserved for Singaporeans. Foreigners seeking to purchase the same in Singapore will face various restrictions, and the process is not entirely straight-forward. It is likely that such criteria may become more stringent as the amount of available residential land diminishes with time.

In any event, should a foreigner seek to purchase property in Singapore, it is best to consult a legal professional at the outset, even before the issuance of the Option to Purchase.

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.