A landed property is one where the erected house is on land that is also owned by the house owner. Only 5% of resident households in Singapore live in this type of residence, thus ensuring its spot in many Singaporeans’ wish lists.
If you are new to this, here are a few things to know about who can actually purchase landed property.
1. Singapore citizens and select foreign persons
According to the Singapore Land Authority (SLA), a foreign person is any person who is not a:
- Singapore citizen;
- Singapore company;
- Singapore limited liability partnership; or
- Singapore society
The SLA has FAQs here on the Clearance Certificate needed by firms and societies for their purchase of landed residential property.
Each applicant will be assessed on a case-by-case basis, taking into consideration, but not limited to, the following factors:
- Should be a Singapore permanent resident for at least five years; and
- Must have made exceptional economic contributions to Singapore. This is assessed taking into consideration factors such as employment income assessable for tax in Singapore.
Some types of property for which a foreign person must seek approval to purchase:
A terrace house is a dwelling house with its own land title that forms part of a row of at least 3 dwelling houses abutting the common boundary party walls.
A semi-detached house is one half of a pair of two houses, each with its own land title, separated by a common party wall along one side of the premises.
A bungalow is a detached landed house with its own land title.
Strata landed house which is not within an approved condominium development under the Planning Act (e.g., townhouse or cluster house);
Shophouse (for non-commercial use).
2. Those whose TDSR is 60% and below
In Singapore, property buyers must have a total debt servicing ratio (TDSR) of less than or equal to 60%.
The maximum threshold of this debt-to-income ratio is set by the Monetary Authority of Singapore and applies to not only individuals but also certain companies. The ratio must be calculated for any loan to purchase a property, any loan secured by a property, as well as the refinancing of these loans.
Financial institutions may still grant property loans to borrowers whose TDSR exceeds the threshold on an exceptional basis, subject to enhanced credit evaluation.
While the TDSR is a MAS rule, buyers of landed properties must also be aware that bank’s have their own loan limits.
What affects loan amount and tenure?
The maximum housing loan borrowers can take usually depends on their age, loan duration and property type, and whether they have existing housing loans. Joint borrowers are assessed using an income-weighted average age.
In Singapore, the maximum home loan tenure for non-Housing Development Board properties is capped at 35 years.
How much can one borrow?
Currently, the loan-to-value (LTV) limit is 75%; or 55% if the loan tenure is more than 30 years or extends past age 65. LTV refers to the loan amount as a percentage of the property’s value and its limit determines the maximum amount an individual can borrow from a financial institution for a housing loan.
For example, if an individual borrows $800,000 to purchase a property valued at $1,000,000, the LTV is 80%.
Other factors that can lower LTV include:
- Remaining lease on the property
- Location and state of the property
- Your credit score
And so, if you are a Singaporean, a Singapore firm with the required clearance certificate or a foreign person with the government’s approval to purchase, a landed property could be in your future if you so desire, provided your total debt servicing ratio is 60% or below. These are the first hurdles to overcome at least.
Interested in owning a landed property? Book a callback from our Relationship Managers.