Buying a Private Property in Singapore: A Step-by-Step Conveyancing Guide
Buying a private property in Singapore is a significant financial commitment. Whether you are purchasing your first condominium, upgrading from an HDB flat or acquiring another property for investment, the transaction involves considerably more than agreeing on a price and signing an Option to Purchase.
Once you commit to the purchase, there are legal deadlines, stamp duties, financing arrangements, CPF requirements, property searches and conveyancing formalities that must be completed before the property can legally be transferred to you.
This guide explains the typical conveyancing process for buying a completed private residential property in Singapore, from making an offer to collecting the keys on completion.
What Is Conveyancing?
Conveyancing is the legal process by which ownership of a property is transferred from the seller to the buyer.
Your conveyancing lawyer will generally handle the legal aspects of the transaction, including reviewing the title to the property, exercising the Option to Purchase, conducting the necessary searches and legal requisitions, dealing with your bank and CPF Board where applicable, paying the relevant stamp duties and arranging for the transfer of ownership to be completed.
IRAS also notes that a purchaser's lawyer will ordinarily conduct legal requisitions on the property as part of the conveyancing process.
Step 1: Check Your Eligibility and Finances Before Making an Offer
Before committing to a property purchase, establish whether you are eligible to purchase the particular property and how you intend to finance it.
Some of the matters you should consider include:
your citizenship and residency status;
whether you currently own any residential properties;
whether you are subject to any HDB Minimum Occupation Period;
the amount of CPF Ordinary Account savings available;
your eligibility for bank financing;
the cash required for the purchase;
Buyer's Stamp Duty (“BSD”);
Additional Buyer's Stamp Duty (“ABSD”), if applicable; and
legal and other transaction costs.
URA recommends that buyers establish their eligibility and finances before committing to a private property purchase. If you presently own an HDB flat, DBSS flat or Executive Condominium, you should also check whether the applicable Minimum Occupation Period has been fulfilled before purchasing private residential property.
If you require a housing loan, it is prudent to obtain an In-Principle Approval (“IPA”) from your bank before committing to the purchase.
Do not assume that the bank will necessarily lend you the amount you require simply because you have agreed on a purchase price.
Step 2: Check the Property Before You Commit
Your due diligence should not be limited to viewing the condition of the unit.
Depending on the property, you may also need to consider matters such as:
the legal ownership of the property;
whether the property is subject to a mortgage;
the remaining tenure of the property;
approved use;
unauthorised alterations or additions;
existing tenancies;
planning or road proposals affecting the property; and
whether there are restrictions affecting the intended use of the property.
URA specifically advises purchasers to check whether a private residential property contains unauthorised works or extensions before purchasing it. Once you take over the property, you may become responsible for dealing with such issues.
For landed properties in particular, additional investigations may be appropriate.
Step 3: The Seller Issues an Option to Purchase
For a typical resale private property transaction, the seller grants the buyer an Option to Purchase (“OTP”).
The OTP is an important legal document. It ordinarily specifies matters such as:
the property;
the purchase price;
the option fee;
the deadline for exercising the option;
the amount payable upon exercise;
the completion date;
whether the property is sold with vacant possession or subject to a tenancy; and
other conditions governing the transaction.
Once an option fee has been paid and the OTP granted, the buyer generally has a specified period within which to decide whether to exercise it.
Do Not Treat the OTP as a Mere Booking Form
The OTP governs important rights and obligations between the buyer and seller.
You should therefore send the OTP to your conveyancing lawyer as early as possible, particularly before exercising it.
If there are unusual terms, existing tenancies, agreed renovations, furniture to be included, extensions of completion or other special arrangements, these should be identified and properly documented.
Step 4: Appoint a Conveyancing Lawyer
Once you intend to proceed with the purchase, appoint a conveyancing lawyer promptly.
Your lawyer will review the transaction and advise you on the steps required to complete the purchase.
Depending on the transaction, your lawyer may also liaise with:
the seller's solicitors;
your bank;
CPF Board;
the managing agent;
government authorities; and
other relevant parties.
Your lawyer should also establish how the purchase is being funded so that the necessary CPF and bank documentation can be prepared in time.
Step 5: Exercise the Option to Purchase
If you decide to proceed, the OTP must be exercised in accordance with its terms and within the stipulated deadline.
The balance of the deposit required upon exercise will usually have to be paid at this stage.
Once the OTP has been validly exercised, a binding contract for the sale and purchase of the property is generally formed.
This is an important dividing line.
Before exercise, the buyer may ordinarily decide not to proceed, subject to losing the option fee and the particular terms of the OTP.
After exercise, the buyer generally cannot simply change his or her mind without potentially facing legal and financial consequences.
You should therefore ensure that your financing and intended purchase structure have been properly considered before exercising the OTP.
Step 6: Pay Buyer's Stamp Duty
A purchaser of Singapore property is generally required to pay Buyer's Stamp Duty (“BSD”).
BSD is calculated based on the higher of:
the purchase price; or
the market value of the property.
Stamp duty generally has to be paid within 14 days after the relevant agreement is signed in Singapore.
Your conveyancing lawyer will ordinarily arrange for the stamping of the relevant document and payment of the duty on your behalf.
Step 7: Determine Whether Additional Buyer's Stamp Duty Applies
Depending on your circumstances, you may also have to pay Additional Buyer's Stamp Duty (“ABSD”).
ABSD liability depends principally on the buyer's profile at the date of acquisition, including:
whether the buyer is an individual or entity;
citizenship or residency status; and
the number of residential properties already owned.
For example, under the rates presently applicable:
a Singapore Citizen purchasing his or her first residential property generally does not pay ABSD;
a Singapore Citizen purchasing a second residential property is generally subject to 20% ABSD;
a Singapore Citizen purchasing a third or subsequent residential property is generally subject to 30% ABSD;
a Singapore Permanent Resident purchasing a first residential property is generally subject to 5% ABSD; and
a foreign individual purchasing residential property is generally subject to 60% ABSD.
These rates can change, and applicable remissions or treaty treatment may affect particular purchasers. Your position should therefore be checked based on the rules applicable at the time you purchase.
For a multimillion-dollar property, ABSD can be one of the largest transaction costs. It should be calculated before, not after, you commit to the purchase.
Step 8: Apply to Use CPF, If Applicable
Singaporeans and Permanent Residents may be able to use CPF Ordinary Account savings towards the purchase of private residential property, subject to CPF's prevailing requirements and withdrawal limits.
CPF OA savings may potentially be used towards matters including:
the purchase price;
downpayment;
repayment of an eligible housing loan;
BSD and ABSD; and
certain legal and transaction fees.
However, there are limits on how much CPF can be used.
The amount available can depend on matters including the property's purchase price, valuation, remaining lease and the type of housing loan.
Where CPF savings are being used to purchase private property, the required CPF procedures and legal documentation must also be completed.
Accordingly, tell your lawyer at the outset if you intend to use CPF rather than waiting until shortly before completion.
Step 9: Valuation of the Property
A valuation may be required for financing, CPF or stamp duty purposes.
CPF Board requires a valuation report when CPF savings are being used for a private property purchase. For private properties, the valuation must be carried out by a licensed valuer and satisfy CPF's applicable requirements.
A valuation is also important where the agreed purchase price differs materially from the property's market value because stamp duty is generally calculated using the higher of the purchase price or market value.
Step 10: Your Lawyer Conducts Title Searches and Legal Requisitions
During the conveyancing period, your lawyer will conduct the necessary investigations relating to the property.
These investigations are intended to identify legal issues which may affect the property or your acquisition.
Depending on the transaction, this may include:
checking the registered ownership;
reviewing the title;
identifying registered mortgages or other encumbrances;
conducting bankruptcy or insolvency searches where relevant;
making legal requisitions to the relevant authorities; and
checking other matters affecting the property.
This is one of the principal reasons conveyancing is more than simply preparing a transfer document.
The objective is to ensure that you receive the property with the title and interest that the seller has contracted to give you.
Step 11: Finalise Your Bank Loan
If you are financing the purchase through a bank, your lawyer will ordinarily work with the bank's solicitors or act for the bank where permitted.
The mortgage documentation must be prepared and executed, and the bank's conditions for disbursement must be satisfied before completion.
Do not leave financing until the last minute.
If your loan monies are not available when completion falls due, the fact that your bank is responsible for the delay does not necessarily relieve you of your contractual obligations to the seller.
Step 12: Sign the Conveyancing Documents
Before completion, you will be required to sign the necessary legal documents.
Depending on the transaction, these may include documents relating to:
the transfer of the property;
CPF usage;
the mortgage;
declarations relating to stamp duty;
manner of holding the property; and
other completion matters.
Your lawyer should explain the documents requiring your signature and arrange for them to be executed in sufficient time for completion.
Step 13: Decide How You Will Hold the Property
Where there is more than one purchaser, the buyers will generally need to decide how they wish to hold the property.
Two common forms are:
Joint Tenancy
Under a joint tenancy, the owners hold the property jointly and the right of survivorship generally applies.
If one joint tenant dies, his or her interest passes to the surviving joint tenant or tenants rather than forming part of the deceased's estate.
Tenancy-in-Common
Under a tenancy-in-common, each owner holds a defined share of the property, for example:
50:50;
70:30; or
another agreed proportion.
Unlike a joint tenancy, there is generally no right of survivorship over the deceased owner's share. That share forms part of the deceased's estate and is dealt with according to the applicable succession arrangements.
The appropriate structure depends on your circumstances and should be considered carefully, particularly for couples purchasing high-value property together.
Step 14: Prepare for Completion
As the completion date approaches, your lawyer will calculate the amounts required to complete the purchase.
The purchase monies may come from a combination of:
Cash + CPF + Bank Loan
Your lawyer will coordinate the receipt and disbursement of the necessary funds.
The seller's lawyer will similarly arrange matters on the seller's side, including redemption of the seller's existing mortgage where applicable.
Step 15: Completion Day
Completion is the point at which the conveyancing transaction is completed and ownership is transferred.
On completion, the balance purchase price is paid or released in accordance with the transaction documents and the relevant completion documents are exchanged or lodged.
For a resale property being purchased with vacant possession, arrangements will ordinarily also be made for the buyer to receive the keys.
You are now the property's owner.
Your lawyer will attend to the necessary post-completion lodgments and other formalities.
How Long Does the Conveyancing Process Take?
There is no universal completion period.
The timeline depends on the terms of the OTP and the circumstances of the transaction. The completion date should therefore always be checked against the actual contractual documents.
Transactions may also require more time where, for example:
the parties agree to an extended completion;
there are title issues;
financing is delayed;
CPF documentation is incomplete;
the seller has an existing mortgage which must be redeemed;
approvals are required; or
the transaction contains unusual conditions.
Do not assume that every private property purchase follows precisely the same timetable.
How Much Cash Do I Need to Buy a Private Property?
This is another area where buyers sometimes focus too heavily on the purchase price.
Before committing, budget for more than just the deposit.
Depending on your circumstances, you may need funds for:
the option fee;
exercise fee or deposit;
portion of the purchase price not covered by CPF or financing;
BSD;
ABSD;
valuation fees;
conveyancing fees;
mortgage-related fees;
property tax adjustments;
maintenance contributions or adjustments; and
renovation and moving expenses after completion.
The amount required can vary substantially depending on your citizenship, existing property ownership, CPF balance and financing arrangements.
Common Mistakes Buyers Should Avoid
1. Exercising the OTP Before Confirming Financing
An IPA is not the same thing as a final loan disbursement, but committing to a purchase without first understanding your financing position creates unnecessary risk.
2. Forgetting About ABSD
For buyers who already own residential property, ABSD can be substantial.
Always calculate it before committing.
3. Assuming All CPF Savings Can Be Used
CPF housing withdrawal limits apply. Having money in your OA does not necessarily mean every dollar can be used for the property.
4. Not Checking How the Property Will Be Held
Joint tenancy and tenancy-in-common have different succession consequences.
Think about ownership structure before completion rather than treating it as an administrative detail.
5. Failing to Highlight Special Agreements
If the seller has promised to leave furniture, rectify defects, allow early possession or provide some other concession, tell your lawyer.
Important arrangements should not simply be left to informal WhatsApp messages between the buyer and seller or their agents.
6. Assuming a Property Agent Replaces a Conveyancing Lawyer
Property agents and conveyancing lawyers perform different roles.
Your lawyer deals with the legal transfer of ownership, title, contractual documentation, stamp duty, CPF documentation, mortgage documentation and completion of the conveyancing transaction.
What Does Your Conveyancing Lawyer Do?
In a typical private property purchase, your conveyancing lawyer's role may include:
reviewing the OTP;
advising on the legal aspects of the purchase;
conducting title searches;
conducting legal requisitions;
arranging for payment of stamp duty;
handling CPF documentation;
liaising with your bank;
preparing and reviewing conveyancing documents;
advising on the manner of holding;
calculating completion monies;
coordinating completion with the seller's lawyers;
attending to the transfer of title; and
completing the necessary post-completion formalities.
A conveyancing lawyer therefore becomes involved well before the day the keys are handed over.
Buying a Private Property? Speak to a Conveyancing Lawyer Early
The safest time to seek conveyancing advice is before you become legally committed to the purchase.
Once an OTP has been exercised, your contractual obligations may already have crystallised and your options for changing the transaction can be significantly more limited.
At YY Lee & Associates LLC, our conveyancing team assists purchasers with private residential property transactions in Singapore, including the purchase of condominiums and landed properties, CPF usage, bank financing and completion of the transfer.
If you are purchasing a private property and require assistance with the conveyancing process, contact YY Lee & Associates LLC to speak with our conveyancing team.
Frequently Asked Questions
When should I appoint a conveyancing lawyer?
Preferably before exercising the Option to Purchase. This gives your lawyer an opportunity to review the transaction and identify legal issues before you become contractually bound.
Do I have to pay ABSD on my first private property?
A Singapore Citizen purchasing his or her first residential property generally does not pay ABSD. Different rules apply to Permanent Residents, foreigners, entities and buyers who already own residential property.
Can I use CPF to buy a private condominium?
Subject to CPF's prevailing requirements and limits, CPF Ordinary Account savings can be used towards the purchase of private residential property.
Can I use CPF to pay legal fees and stamp duty?
CPF OA savings may be used for certain property-related legal fees and BSD/ABSD, subject to CPF's requirements and procedures. In some situations, the stamp duty may first have to be paid in cash and subsequently reimbursed from CPF.
Should I obtain a bank loan before exercising the OTP?
You should establish your financing position as early as possible. URA recommends checking bank financing eligibility before paying an upfront deposit or committing to a purchase.
What happens if I exercise the OTP and later change my mind?
Once the OTP has been validly exercised, a binding contract is generally formed. A buyer who subsequently fails to complete may face contractual and financial consequences. You should obtain legal advice immediately if you are unable to proceed.