Here is a guide to buying a resale private property in Singapore. There seems to be some differences from different sources. This is what I’ve gone through.
1) Prepare 1% (Option Fees) of the purchase price in exchange for the Option to Purchase (OTP) from the seller. At the same time, it is recommended that you also endorsed on the inventory list.
2) The OTP is prepared by the seller’s property agent.
3) You are given 14 days to decide whether to proceed with the purchase and/or to secure the loan from your preferred bank. During this period, the seller is not allowed to offer the property to another buyer.
4) If you decide to proceed, you will exercise the OTP through your lawer. At this time, you will pay another 4% of the Purchase price, together with the Stamp Duty payable to Inland Revenue Authority of Singapore (IRAS) within 14 days after exercising the OTP (3% of purchase price - $5,400), plus $500 for the lawyer’s fees (the bank will subsidize up to $2,000, depending on your loan amount).
If you do not exercise the Option within the stated period, the Option will expire and the seller is entitled to keep the 1% option money and sell the property to any other buyer.
5) Completion takes place usually 8 – 12 weeks after the exercise (averaging 10 weeks). Your lawyer will do the necessary steps to complete the sale:
- lodage a caveat on the property
- coordinate with the bank/CPF board for the mortgage
- prepare the contract
6) A couple of weeks before the legal completion date, you will need to pay another 15% of the purchase price. (Can be 5% cash + 15% CPF or all in cash)
7) On the legal completion date, the seller must hand over the property as agreed. The property can be sold with existing tenants or vacant possession.
Inspection before taking over property
The ‘Option to Purchase’ should clearly state a permission to inspect the property before completion of the sale. The buyer should check everything that the seller has agreed to sell with the property – especially all the fixtures and fittings, e.g. air conditioning, kitchen appliances, etc. If there are any problems, you can ask the seller to fix them before you sign the Sales and Purchase Agreement.
Fees and Commission
There are various fees that come on top of the purchase price when the sale is completed, and you should therefore reserve money to pay for them. Fortunately, some of them are borne by the seller. These are summarised below:
Agent's Commission - For private property, the agent’s commission is paid by the seller - unless you have specifically appointed an agent as a representative. The seller typically pays 1-2% commission on the sale. For HDB apartment, the buyer pays typically 1% commission.
Solicitor's Fee - For the buyer, the solicitor’s fees are typically 0.3-0.6% of the transaction value. In addition, there are extra legal fees if CPF is used to pay for the apartment. If the property is in the range of $800+K, the fee is around $2,500. If you take a loan from the bank, it will be subsidized by the bank up to $2,000. The seller pays typically 0.15% of the transaction value to his/her solicitor.
Mortgage Fee - The banks typically charge an administration fee and valuation fee for the mortgage. These together are somewhere between S$200-300. In addition, you need to take out on insurance on the property for the bank to give out the mortgage, but the 1st year is usually given free by the bank.
Stamp Fee - The 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 properties above S$300,000, stamp fee payable will be 3% of the purchase price minus S$5,400. The mortgage stamp fee is up to S$500, which is the amount payable for most mortgages.
CPF
If you are buying your second property (be it HDB or private), in order to utilise your CPF for the second property, you'll have to maintain 50% of the minimum sum. Only amount above the 50% minimum sum can be used towards your 2nd property purchase. In 1st July 2009, the minimum sum is $117,000.