Things to be Consider While Buying a Property

Things to be Consider While Buying a Property

Kumar Properties

Things To be consider While Investing in a property

Are you looking to invest in property? Don’t know how to buy a property? Need guide about property investment? Most of these queries having to the first-time buyers only, there are many things you may fear about property investment. Due to lack of experience or knowledge in buying or selling properties, So we are here to guide from first step to buy property. This article may help you to understand about property investment.

Some of the things you need to consider before purchasing a home are:
• Budget
• Commuting plans
• Type of property you are looking to purchase
• Additional facilities

The most important question to consider is: what is your budget for purchasing a home? This will help you in determining the type of residential property you are eligible for.

However, if you do not have a specific budget constraint, then you might want to decide what type of residential property is suitable for you and your family. This can be determined by other factors such as commuting plans and additional facilities, which may include neighborhood schools, if you have children, and the proximity of certain amenities such as shopping malls and sports complexes.

Financing Your Home

It is advisable to finance the purchasing of a home using a bank loan, especially if you have limited excess funds. For this, it is recommended that you decide first on the type of residential property you are looking for, and ensure that it is within your budget. If you have engaged a real estate agent or a solicitor to act on your behalf, check with them on all fees payable so as to prepare a more accurate estimate of your overall budget.

Banks will also charge an administrative fee for processing a mortgage, as well as an additional fee for valuing a property. When applying for a mortgage, the amount you will ultimately be allowed to borrow will depend on your own individual financial circumstances and the bank’s valuation of the property or the actual transaction price, whichever is lower. The bank will also take into consideration your ability to make the monthly instalments to repay the loan, as well as your credit history.

Singaporeans are usually allowed to borrow up to a maximum of 90 per cent of the property value, while foreigners may be granted a loan of up to 60 per cent to 70 per cent of the property value or purchase price. Some foreigners may be allowed to borrow up to a maximum of 80 per cent, depending on their credit standing and their ability to provide evidence of having established funds, but this approval is only granted on a case-by-case basis.

For resale flats, a loan of 90% of the resale price of 90% of the market value, whichever is lower is offered to qualifying parties.

If you are buying a Housing Development Board (HDB) flat, you may want to look into applying for a HDB loan. HDB offers concessionary loans to first-time home buyers and second-time home buyers, who are upgrading to another HDB flat. DBSS (Design, Build and Sell Scheme) and BTO (Built to Order) flats are also available and applicable to Singaporeans only.

There are various schemes offered by HDB to ease the process of paying for a HDB flat. Listed below are some of them;
• Additional CPF Housing Grant (AHG): This is meant to assist families with a steady income to purchase their first subsidized HDB flat. The AHG can be used for the purchase of new, resale and DBSS flats and it is an additional subsidy over and above the regular market subsidy and CPF Housing Grant that new and resale flat buyers respectively enjoy. This scheme was further enhanced in 2009 to make owning a home easier especially for lower income families. The maximum AHG amount has been increased from $30,000 to $40,000 and the income ceiling has been raised from $4,000 to $5,000. Continuous working period preceding the flat application is reduced from two years to one year.
• Special CPF Housing Grant (SHG): This scheme provides first-timer families who are earning up to $2,250 a month to buy a smaller flat from HDB that is well within their means.
• CPF Housing Grant for Families DBSS: The CPF Housing Grant is a housing subsidy (in the form of CPF monies) provided by the Government. The grant assists eligible first-timer family to buy a DBSS flat from the developer.
• CPF Housing Grant for Singles/Singles living with parents: This is to assist singles who are 35 years and older in purchasing a flat.
• The CPF Housing Top-Up Grant: This scheme is a housing subsidy for those who have taken a CPF Housing Grant for Singles previously in their purchase of a resale flat who marry a first-timer citizen spouse or another Singles Grant recipient or in the event where the non-citizen spouse or child have become a Singaporean Citizen or Singapore Permanent Resident.
• CPF Housing Grant for Family: The CPF Housing Grant is a housing subsidy (in the form of CPF monies) provided by the Government. The grant assists eligible first-timer family to buy an EC from the developer

As home purchase is a long-term financial commitment, therefore it is imperative for you to consider and plan your budget effectively before purchasing a flat.
These are some steps to take:
• Available cash savings
• CPF Monies
• Housing Loan (if required)
• CPF Housing Grant (if required)
Foreigners are allowed to purchase resale HDB flats and private residential property according to their financial abilities.

Foreigners looking to purchase private residential property or landed property are still required to seek approval from the Singapore Land Authority prior to purchasing. Do bear in mind that if the property you are buying has a limited lease, it may be more difficult to finance the purchase using a housing loan. Generally, the shorter the lease period, the higher the interest rate of the loan will be. If you are planning to use your Central Provident Fund (CPF) savings to finance part of your purchasing of a private residential property, you must familiarize yourself with the limits on the use of CPF savings for residential properties.

Buying an Uncompleted Private Residential Property

If you own a HDB apartment or an executive condominium, make sure that you have fulfilled your minimum occupation period. You cannot purchase a private residential property until you have done so. If you are a non-Singaporean citizen and you intend to purchase a landed residential property, you must first obtain approval from the Controller of Residential Property under the Singapore Land Authority. Non-Singaporean citizens include permanent residents.

If you are buying an uncompleted private residential property, it is essential that you check that the housing developer you are purchasing a residential unit from has a Sale License. Only housing developers with a Sale License are allowed to offer housing units for sale. When viewing a show flat, you should be aware that show flats may differ slightly from the actual units. In this case, you should check the specifications of the unit you are purchasing in the Sale and Purchase Agreement.

You should also be thorough and check with the housing developer if the housing project will be affected by any public schemes and special conditions stipulated by authorities. The sale and purchase of a private residential property is only deemed complete when the housing developer has transferred to you the legal title of the unit. One important thing to note is that HDB does not allow for the buyer, the spouse or anyone listed in the application form to have ownership or a vested interest in other property, be it in Singapore or overseas.

Applicants must not currently own or have disposed property within 30 months before the date of application and between the application date and the date of taking possession of the flat. HDB may grant an exemption but this is strictly on a case to case basis. If you are interested in seeking exemption, you must fill up a questionnaire and send it back to HDB.

Singaporean buyers may purchase the below mentioned housing units only twice:
• a flat from the HDB;
• a resale flat with the CPF Housing Grant*;
• a DBSS flat from developer;
• an EC unit from developer.

*Only applicable for first-timer applicants

If you have already bought two housing units, you will not be eligible to apply or be listed as an essential occupier in an application.

For more information regarding HDB eligibility.

Option to Purchase

If you wish to purchase a property, you must obtain an Option to Purchase from the seller. An Option to Purchase is essentially a right to a property and acts as a reservation. As the intending purchaser of the property, you will be required to make a payment known as the booking fee, or the option fee, as a deposit of good faith.

The option fee payable for a HDB unit is of an amount not exceeding SGD1,000 and the Option deposit does not exceed SGD5,000. This amount is inclusive of the option fee. Once an Option to Purchase has been granted, you or your representative should receive all necessary documents, including a duplicate of the Sale and Purchase Agreement, within 14 days from the date of the Option to Purchase. This 14 day includes Saturday, Sundays and any public holidays that may fall within the allocated period. If the buyer decides not to go through with the sale, he can simply allow the Option to expire. Only the Option Fee will be lost.

During the validity period of your Option the Purchase, the seller is not allowed to offer the property for sale to other interested parties. You should be aware that the Option to Purchase obtained from a housing developer is only valid for three weeks from the date of delivery to you or your representative, and if you do not exercise your Option to Purchase within its validity period, it will expire and the seller is entitled to keep 25 per cent of the option fee. You will be refunded the remaining 75 per cent of the booking fee and the seller may then offer the property to other prospective buyers.

All licensed housing developers are required to use the standard form of the Option to Purchase, which can be found on the Urban Redevelopment Authority’s (URA) website. Any amendments to be made to the Option to Purchase must be approved by the Controller of Housing.

Please note that the Option to Purchase is non-transferable. Therefore, all persons intending to buy a property together should be named as intending purchasers in the Option to Purchase.
Only those named as intending purchasers in the agreement may exercise the Option to Purchase. After an Option to Purchase has been granted, any name changes in the agreement must be approved by the Controller of Housing.

If you wish to exercise your Option to Purchase, you must sign all copies of the Sale and Purchase Agreement and return them to the housing developer, and make a down payment, which may be between five per cent and 15 per cent of the purchase price, within the validity period.
However, the housing developer may also permit you to make the down payment within eight weeks from the date of the Option to Purchase. The standard down payment is 20 per cent of the purchase price, inclusive of the option fee.

Sale and Purchase Agreement

A Sale and Purchase Agreement is a contract for the sale and purchase of a property between a buyer and a seller. If you have been granted an Option to Purchase, you should have received a copy of the Sale and Purchase Agreement within 14 days from the date of the Option to Purchase.

All licensed housing developers are required to use the standard form of the Sale and Purchase Agreement, which can be found on the URA website. Any changes to be made to the Sale and Purchase Agreement must be approved by the Controller of Housing and when this has been done, the housing developer is required to list all amendments made in a separate schedule in the contract, commonly referred as the second schedule.
You should ensure that you make all necessary payments due to the housing developer on time in accordance with the payment schedule included in the Sale and Purchase Agreement, or you may be held liable for additional interest payments.

If you do not settle any payments due within 14 days, the housing developer may deem that you have repudiated the Sale and Purchase Agreement and take the necessary steps to annul the contract.
Once the contract has been annulled, you will be returned 20 per cent of the purchase price, but you will still be held liable for any outstanding interest owed to the housing developer.

In the event of a dispute between you and the seller, you may wish to engage the services of a professional mediator to resolve the situation, or seek legal advice if the need arises. You cannot request for the Controller of Housing to intervene as this is outside of the Controller’s jurisdiction.

Payments

Under the Standard Payment Scheme, you will make a total of 10 different payments.
1. The first payment to be made is the booking fee, which is typically between five per cent and 10 per cent of the purchase price.
2. After signing the Sale and Purchase Agreement, you will be required to make a down payment of 20 per cent of the purchase price, less the option fee.
3. Upon completion of the foundation work, you will be required to make a payment of 10 per cent of the purchase price.
4. You will have to make another payment of 10 per cent of the purchase price, following the completion of the unit’s reinforced concrete framework.
5. Once the brick walls of the unit have been completed, you are expected to make a payment of five per cent of the purchase price.
6. Another payment of five per cent is due upon completion of the unit’s roofing and ceiling.
7. After electrical wiring, internal plastering, plumbing and door and window frame installations have been completed, you will be required to make a payment of five per cent.
8. Following completion of the car park, roads and drains, you will have to make another payment of five per cent.
9. Upon receiving a Notice of Vacant Possession, you will be required to make a payment of 25 per cent of the purchase price.
10. On the completion date, you will have make payment on the remaining 15 per cent.
Besides the purchase price, there are other costs which you are likely to incur such as property taxes and maintenance charges. If you are a non-Singaporean citizen, do note that you will be taxed differently from that of a Singaporean citizen, in accordance with the Inland Revenue Authority of Singapore’s (IRAS) regulations. (Visit the IRAS website here.)

Notice of Vacant Possession

When the unit is ready to be handed over, the housing developer will issue you a Notice of Vacant Possession. The housing developer must also provide you with a copy of the Temporary Occupation Permit or Certificate of Statutory Completion as well as a copy of a certificate by an architect or a professional engineer, who can verify that all works have been completed in accordance with the approved plans and specifications.

Defects

There is a defects liability period of 12 months from the date you receive your Notice of Vacant Possession from the housing developer. During this period, the housing developer has an obligation to rectify any defects in the housing project which become apparent.

You should inspect your unit thoroughly as soon you take possession of it. If you discover a defect, inform the housing developer in writing and request that it be rectified. The housing developer is obliged to rectify any defect within one month of receiving notice.

If the housing developer is unable to rectify the defect within one month of receiving notice, you may notify the housing developer in writing that you intend to engage a third party to carry out the necessary repairs and provide the estimated costs of the repair works.

You should not include any defects in this notification that were not mentioned in the previous notice to the housing developer. If any new defects are found, you should inform the housing developer in writing first before allowing a one-month period for rectification works.

Following the second notification, you should allow the housing developer an additional period of 14 days to perform the necessary repairs. If the housing developer still fails to do this, you may proceed with the repair works and make a claim for the costs from the housing developer.

Buying a Private Residential Property through a Private Treaty

If you are buying a private residential property from an individual owner, it is advisable to engage the services of a solicitor. You will be required to obtain an Option to Purchase from the seller and in this case, you should be prepared to pay a booking fee of one per cent of the purchase price.

The validity period of an Option to Purchase from an individual seller is considerably shorter than that of a housing developer’s. You only have 14 days to decide whether or not to exercise your Option to Purchase. If you decide not to exercise your Option to Purchase, you will forfeit the booking fee.
If you decide to exercise your Option to Purchase, you should be prepared to make another payment of four per cent or nine per cent of the purchase price, as agreed between yourself and the seller.

Once this is done, you can allow your solicitor to help you complete the purchase of the property. This will probably take eight to 10 weeks, during which, you will be required to make the remaining payment of 90 per cent of the purchase price. Your solicitor will need to coordinate with the necessary financial institutions to finance the purchase, prepare the contracts and lodge a caveat on the property, among other things.

You will also be required to pay a stamp fee to IRAS, which will be three per cent of the purchase price less $5,400, within 14 days of exercising your Option to Purchase.

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6,000 HDB flats to be built in Greater Southern Waterfront, first BTO project within 3 years

6,000 HDB flats to be built in Greater Southern Waterfront, first BTO project within 3 years

Kumar Properties

6,000 HDB flats to be built in Greater Southern Waterfront, first BTO project within 3 years

Around 6,000 Housing Board flats will be built on the Keppel Club site in the Greater Southern Waterfront (GSW), with the first Build-To-Order (BTO) project to be launched for sale within three years. These units are part of the 9,000 homes that will be built on the 48ha site, which will offer unique waterfront living that is close to nature, announced National Development Minister Desmond Lee on Tuesday (April 12).

The remaining 3,000 units are expected to be private housing. A mix of public and private housing developments will be progressively scheduled for launch in the next three to five years, said the Urban Redevelopment Authority (URA). The 48ha site at Keppel Club – about half the size of Bidadari estate – comes under the mature town of Bukit Merah and is bounded by Telok Blangah Road, Berlayer Creek and Bukit Chermin. It has been earmarked for residential use in the URA Master Plan since 2014.

Mr Lee said: “Given its central location and the two MRT stations nearby, we will seek to keep the estate car-lite and enable residents to get around easily by walking or cycling.”

Future residents will be served by Labrador Park and Telok Blangah MRT stations on the Circle Line, which will be connected to the estate via walking trails. Within the site, close to 10ha – about 20 per cent of the site area and the size of about 18 football fields – will be set aside as parks and open land. This includes four green corridors that will run through the estate and serve as recreational spaces – the Central corridor, Berlayer Corridor, Henderson Corridor and the Northern Corridor.

Mr Lee said the plans are guided by recommendations from an environmental impact study (EIS) and feedback from nature groups. These may be fine-tuned after public consultation on the EIS report. Housing blocks will be designed with staggered building heights which step down towards the green spaces, to give residents the view of greenery at their doorstep, HDB said. They will also feature skyrise greenery and landscaped terraces.

Green roofs on lower-rise blocks will serve as additional habitats for butterflies and smaller urban bird species such as the locally endangered blue-crowned hanging parrot and oriental magpie-robin. “As the site is quite close to the city centre, we will bring homes closer to jobs. This is part of our effort to move towards having more housing options and mixed-use development in our central region,” said Mr Lee.

All development works will be confined within the brownfield site of Keppel Club, he added. Brownfield sites are land that had previous developments on them.

When the lease of the golf course runs out, the authorities will redevelop the land for housing, said Mr Lee. A Singapore Land Authority spokesman said the lease for the existing golf course site expires June 30. The existing clubhouse has until March 31 next year to clear and reinstate the site.

Mr Lee added that there are also plans to transform the former Pasir Panjang Power Station buildings into a distinctive and vibrant mixed-use district characterised by its unique industrial heritage and waterfront location. On whether the BTO projects in the Keppel Club site will fall under the prime location public housing (PLH) model, HDB said the model will be applied to selected public housing projects in prime and central locations such as the city centre and surrounding areas, including the GSW. These are areas that have very high market values and would require significant additional subsidies to keep flats affordable, said HDB.

While the Keppel Club site is within the GSW, the authorities will consider a range of factors – such as the project’s location, attributes and market values – before deciding whether to apply the PLH model, it added. Owners of flats under the PLH model are subject to stricter buyer and selling conditions, including a 10-year minimum occupation period and having the additional subsidy clawed back by the Government should they sell the units.

Mr Lee said HDB is building more homes to cater to the strong demand for housing from echo boomers – children of the baby boomer generation – and the increasing societal trend of having smaller households.

When launched, the BTO project will kick-start the transformation of the GSW into a mega waterfront development along Singapore’s southern coast. It is expected to draw strong interest, based on previous BTO launches in the area.

The Telok Blangah Beacon BTO project launched in May 2021 saw more than 23.3 applicants vying for each available unit – one of the highest rates in recent years. First announced in 2013, the the GSW comprises 30km of coastline stretching from the Gardens by the Bay East area to Pasir Panjang. It contains 2,000ha of land – six times the size of Marina Bay and twice the size of Punggol.

This is the news article from The Straits times

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How attractive is Singapore property on a global stage?

How attractive is Singapore property on a global stage?

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How attractive is Singapore property on a global stage?

There is every chance that property buyers, both local and foreign, will be keeping an eye on Singapore as an investment destination for homes. Since the onset of the pandemic, Singapore has been a beacon of stability.

The nation’s pandemic response earned high praise from the World Health Organisation and the International Monetary Fund due to its robust economic policy framework that enabled the authorities to mount a coordinated and comprehensive policy response, with fiscal policy acting as a first line of defence.

Long seen as a safe haven, Singapore’s properties have remained resilient through the pandemic with the Urban Redevelopment Authority’s benchmark overall private home price index rising 13 per cent over the past 2 years. However, housing prices in other key financial hubs around the world have outshone Singapore in the past 5 years as well as for the whole of last year.

Singapore underperforms

Private residential property price increases in key cities

Table with 3 columns and 8 rows. Currently displaying rows 1 to 8.
5-YEAR TOTAL INCREASE
(2016-2021)
2021 GROWTH
Singapore26.5%10.6%
Sydney30.3%23.7%
Hong Kong27.6%2.9%
Tokyo28.9%11.5%
Seoul36.8%18.0%
New York31.5%15.8%
London10.3%5.1%

According to Knight Frank Research’s comparison of Singapore with the other key gateway markets of New York, London, Tokyo, Hong Kong, Seoul and Sydney, Singapore’s property prices rose by a total of 26.5 per cent during the 5-year period between 2016 and 2021, surpassing only London, where property prices grew by 10.3 per cent over the same period due to the fallout from Brexit.

Even for 2021, despite Singapore achieving the highest full-year private home price growth in 11 years, it was still behind most of the competition, outperforming only Hong Kong (2.9 per cent) and London (5.1 per cent).

One major factor for the underwhelming performance could be due the slew of cooling measures implemented by the authorities.

Singapore is probably the most regulated housing market among its global peers. Had the cooling measures been absent, the city state could have easily attracted much more capital and the appreciation in private home prices would have been more pronounced. With cooling measures firmly in place, the question is whether Singapore’s housing market is still attractive.

Based on our house view, Singapore will remain one of the world’s most attractive cities for businesses and investors in the post-pandemic world and this will continue to underpin housing demand over the medium to long term.

The Covid-19 pandemic has magnified geopolitical uncertainties such as the rivalry between the United States and China, disrupted global supply chains and fuelled trade protectionism among countries which are focused only on the short-term results.

Singapore ascends

The evolving pandemic has thus re-defined attitudes towards risk, particularly among the ultra-high net worth individuals. As a result, wealth flew in; so did wealthy entrepreneurs and global talent. The continued promotion of the variable capital company (VCC) has increased the profile of Singapore as a default go-to location for global funds to be set up here as the island rises as a wealth and asset management hub.

The introduction of the Tech.Pass scheme highlights the new growth strategy of luring high-potential companies in high tech domains that are seeing exponential growth. The capabilities sought will involve expertise in cutting-edge technologies including artificial intelligence, blockchain, cloud computing, data analytics, and birthing unicorns and companies at the pre-unicorn stage.

Despite its small size, Singapore is a regional manufacturing powerhouse. Manufacturing represents a sizeable component of Singapore’s gross domestic product at around 20 per cent, differing from other global financial hubs which tend to be services-led.

Singapore makes 4 out of the world’s top 10 drugs and is the seventh largest exporter of petrochemicals. Singapore is also a key node in the global supply chain for products ranging from storage and memory products, to microelectromechanical systems.

With this backdrop, Singapore’s diversified economic base has paid off during the Covid-19 pandemic. Biomedical activity and advanced manufacturing are seen as gaining considerable traction in Singapore in 2022 and beyond.

Singapore is also unique in its offerings as a global wealth management hub and financial hub anchored in political stability, low corruption rates and transparent public institutions. Singapore will remain a perfect base for businesses and investors seeking to capture the upside of the huge growth potential in Asia in the coming decade.

As economies recover from the pandemic-led crisis, the property cooling measures in Singapore have kept private home prices from escalating out of control – compared with other gateway cities.

There is every chance that property buyers, both local and foreign, will be keeping an eye on Singapore as an investment destination for homes. As such, luxury homes in Singapore are expected to continue to receive keen interest from foreign investors despite the increased additional buyer’s stamp duty (ABSD) rates.

The Republic’s recent announcement of further easing of border curbs should draw some of the globally mobile wealthy who are still prepared to pay the 30 per cent ABSD for entry into Singapore’s stable prime residential market.

Consumer attitudes

Singaporeans themselves, if given a choice, would prefer to purchase in the local residential market than to venture overseas, according to the Attitudes Survey in Knight Frank’s Wealth Report 2022.

However, the latest round of cooling measures announced on the night of Dec 15, 2021 might compel some to look at prospects overseas, with the United Kingdom, United States, Australia and France mentioned as popular destinations for Singaporeans looking beyond domestic borders in the same survey.

With the recent hike in ABSD rates, overseas markets with lower barriers to entry may appeal to property investors looking to diversify their portfolios and in search of higher returns – both from recurring income as well as capital appreciation.

Gateway cities in the UK, Australia and US have always been popular among Singaporean property buyers, as these are mature, highly transparent markets with a strong rule of law and enjoy blue-chip status similar to Singapore. A common motivation for purchasing a residential property in these markets is to provide accommodation for their children pursuing higher education.

Those seeking global mobility also gravitate to these markets for the lifestyle they offer.

Nevertheless, investing overseas, whether in mature or emerging markets, inherently comes with risks and challenges. First and foremost, it is important for buyers to educate themselves on the markets they may be interested in by keeping abreast of the latest regulations, news and market insights through a variety of reputable research reports.

As well, they should obtain professional advice from a licensed property consultant, legal representative, banker and tax professional.

The power and ability to leverage is one of the reasons property is attractive, and in mature markets such as the UK, US and Australia, there generally are more financing options available from local banks, as well as from Singapore banks.

However, this is not always the case in all overseas markets, especially emerging ones. This is something potential buyers should be aware of before they decide to purchase an overseas property. It is recommended that buyers speak to a bank to obtain a loan approval or at least an in-principal nod before deciding to purchase.

Singaporeans may not be familiar with overseas developers; therefore, buyers should also look into the reputation and the track record of the developer they intend to buy a property from.

And finally, at project completion, overseas landlords are going to need assistance with leasing and property management. Buyers should appoint a professional property manager ahead of completion, providing them with the peace of mind that their investment will be well taken care of.

This is the news article from business times

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How to Avoid the Common Mistakes done by Property Owners and Buyers?

How to Avoid the Common Mistakes done by Property Owners and Buyers?

Kumar Properties

How to avoid the common mistakes of Property owners and buyers?

Over the years, I have met many property buyers and owners who made many common mistakes when it comes to property. Therefore, I would like to take this opportunity to share my insights with you. At the end of the day, my objective is to help everyone to avoid making costly mistakes which can sometimes amount to hundreds of thousand dollars.

The above is one of the most common mistakes which I have witnessed in my real estate career.  Most people follow the herd mentality and rush to buy when everyone is buying. On the opposite, when market is quiet, people then to hold back.
 
Let’s wait for the market to drop further before we decide to go in. Does this sound familiar to you? Do we buy the property based on emotion or logic?
 
As for me, I always look at property based on research instead of hearing from others. I observe the facts and figures before making any decision. I am sure that you agree with me too. Property purchase is a big-ticket item, we should never rely on emotion buying.
 
Today’s market has changed. Despite the current endemic situation, prices of properties in Singapore are still very resilient. Why is it so? Does this means good or bad if you are reading this article now?

If you can afford the property today and are willing to hold for long term, there will not be any big drop in prices even when the market adjusts in future. The main reason why the prices are holding so strong is because of the effective government cooling measures that were put in place. The intention of the government is very clear – they aiming for gradual growth in the property market instead of crashing the market. This is something good for all homeowners and investors out there to take note.
 
Hence, if you are trying to time the market, there is no point in doing so. Once you observe the market, you will realise that many new plots of lands (government land sales) and en-bloc are setting new record prices. As a result, prices will eventually go higher in the future too. Refer to the chart below. With the new land bids, Ang Mo Kio/ Lentor development are expected to sell at minimum $2000psf and above in the future.

Many buyers usually end up paying more because they realised they could not afford to wait further as the prices have gone up. Just look at the chart below. For a 1,200 – 1,500sqft unit at the Outside Core Central Region (outskirt properties), the buyer only pay $693,000 in 2005. Today, they need to pay an average of $2 million dollar for the same unit.
 
Can you see how fast the prices have gone up?  This is the problem of waiting game, and how people pay more by waiting. Do not fall into this trap anymore as waiting is not the right move. It is crucial for you to learn how to look at facts to make the right decision.

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Is It Better To Buy a Freehold (FH) or Leasehold (LH) Property in Today’s Market?

Is It Better To Buy a Freehold (FH) or Leasehold (LH) Property in Today’s Market?

Kumar Properties

Is it better to buy a Freehold (FH) or Leasehold (LH) property in today’s market?

Many people always ask me – Is it better to buy a freehold property or leasehold property in today’s market? Therefore, I decided to write this article to share my thoughts with you so that you can have a better understanding when it comes to selecting your choice Singapore property.

If given a choice, I believe most people will prefer for a freehold property, but does it mean that all the freehold property will definitely make profit at the end of the day? We have witnessed many leasehold properties which made good profit margin too. Hence, it is always good to know how to determine the right property.

Do not always assume that freehold property will make profit. For me, I have never believed in emotion purchase. I prefer to do research and use that to make the right judgement when comes to buying a property.

At the end of the day, it is all about the entry price when it comes to deciding a FH or LH property to purchase.

I would like to share with you 3 important factors when choosing a freehold property and they are:

a. Legacy
b. Location
c. School

Why Legacy?

Here’s the scenario – A buyer took a 20 years loan, paid a 25% down payment and subsequently rented the property out. The tenant continued to pay for the rental and mortgage. Even as the buyer topped up the shortfall in the mortgage, the amount paid by the tenant will still reduce the principal at the end day.
 
I always take this approach as a form of forced saving into the property. Just looking at the chart below. After 20 years, all the rental proceed that you have collected will go to the next generation. This is why so many savvy investors choose to buy a freehold property as they are leaving it as a legacy for their children.

Location, Location, Location 

The second point will be location. If you can find a Singapore property that is freehold and near to MRT, it will be a super plus point as there are only 13% of such properties in the whole of Singapore. Using the law of demand vs supply, freehold property near MRT always hold its value and appreciate more too.

Near to Good/ Renowned school 

If you are a parent, will you also prefer to buy a Singapore property that is near to the good schools? I am sure that you will reply “YES” because we want the best for our children. Now, imagine if there is this freehold property that is near to good schools, isn’t that a bonus?
 
As a general rule of thumb, the profit margin of freehold which is near good schools is very high. Take a look at the chart below and you will realise that one of the owners actually made about $800,000 in profit. Do you ever wish that you own this Singapore property?

Hope you have enjoyed this article that I have prepared for you.
 
I did not create a long article on purpose as I am unsure if you will be keen to read more. In fact, I have another article which is extremely crucial where I will be sharing a case study on how I analyze whether the property is priced right. I have used one of the most important fundamental principles on how to determine the potential upside of the asset, similar as the Singapore property mentioned above.
 
I have seen people choosing the wrong asset and making very little profit. Therefore, it is important to do research to ensure that your purchase will be a safe one (as you can see from the chart below). Of course, there is no promise in making your desired profit, but we can minimise your risk to the lowest possible.

Do not wait anymore. If you are keen to have the next article, please register below! You should not miss this. See you soon.

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