Who is to Pay for Property Tax?
- All Owners, including joint owners.
- Power of Attorney.
- Trustee.
- A lessee who has taken more than 3 years lease with the government or any public authority.
Anyone whose name is on the Valuation List is defined as the owner.
The property tax bill will be issued to the owner who is listed first in the Notice of Transfer filed by the seller’s lawyer.
The payment arrangement on the property tax payable is a private matter to be settled among the property owners. IRAS does not issue separate bills.
Conclusion
If you have gone through the whole guide, by now, you would have a better understanding of how to calculate and pay your property tax.
So the next time when you are buying a property, you will know how much property tax you need to pay beforehand and can better prepare your budget.
If you are looking to purchase a new Penrose condo, be sure to check out this guide.
Readmore: When to Pay Property Tax?
How Does En Bloc Work In Singapore
When we talk about gaining substantial wealth and switching into a luxurious life instantly, most of you may associate that with striking the lottery or jackpot.
But these ways are entirely reliant on the element of luck, which is not the topic for today.
Fortunately, there are some proven ways to make a lot of money in Singapore – primarily through the sale of a property.
If you live in Singapore, you might have heard of people becoming overnight millionaires from an ‘en bloc’ sales.
However, is it truly that easy to become an “en bloc millionaire”? After all, if it were that simple, most of us would be millionaires.
So, what does en bloc entail for you?
How does it work?
What is the process like?
Could you potentially become the overnight millionaire that most Singaporeans desire to be?
Let’s find out in the sections below where we discuss the things you need to know about en bloc in Singapore!
What Does ‘En Bloc’ Mean?
To provide some background, ‘en bloc’ is a French term that means “all together” or “collectively.”
But, in Singapore, ‘en bloc’ is often referred to as a collective sale of extensive housing development to a buyer.
En bloc happens when most of the homeowners in the same development are interested in selling their property to a buyer at the same time.
The buyer may be a property developer or the government.
How Do En Bloc Sales Differ From Normal Resale Property?
For starters, en bloc sales are different in terms of who is buying and selling, and the amount of money you’re getting compared to the typical sale of Penrose by CDL
There are a few simple differences;
In the case of a typical resale, we are talking about selling or buying only one unit.
However, in the case of an en bloc sales, it’s about selling an entire development.
The typical resale transaction involves two parties; the owner of the unit and another individual.
But, for an en bloc sales, it involves a large number of transactions between the group of development owners and a property developer or the government.
A typical resale of a property takes little time to process. The deal can be completed as soon as both buyer and seller agree to a specific price.
On the other hand, an en bloc sales take a longer time (usually up to two years) to attain closure.
This is because it’s not easy to get everybody to compromise as some of the owners may not feel like selling.
Last but not least, for a typical resale, the owner may or may not be profiting as his property is subjected to prevailing market value – and is highly depending on the time of entry.
But, in the case of an en bloc sales, these development owners are almost guaranteed to make a profit as these properties are often sold at a much higher price compared to normal market value. (Reasons will be discussed below)
Readmore: Things You Need to Know About Property Auctions in Singapore
Is retirement planning through property possible?
Retirement planning is something that everyone should do but no one does.
Especially when Singapore is ranked as the world’s most expensive city for the fifth year in a row, based on a report by The Economist Intelligence Unit.
The Government is also worried about the retirement of Singaporeans and that is why they came up with the CPF LIFE (Lifelong Income For The Elderly) Scheme.
However, not everyone will be able to meet the BRS* (Basic Retirement Sum) requirement.
For those who do meet the BRS, the monthly payout may not be sufficient to sustain your desired retirement lifestyle.
*BRS is $90,500 if you are turning 55 in 2020 and it increases every year.
Now imagine that you are 35 years old, does it matter which choice you make?
Conclusion
For most Singaporeans, the biggest asset we have is our home.
Knowing that a home might not just be a roof over your head but also an appreciating asset is something possible.
Should you decide to do something with your Penrose condo, it is advisable to speak to a professional real estate agent to know what you can afford.
It is essential to know what you can afford to avoid over-leverage by purchasing a property that’s way beyond your financial means.
Are you a first time home buyer? Then this comprehensive guide is for you!
Are you looking for a real estate agent? Contact me @ 9762 1726 or email to leo@privatehome.sg
Frequently Asked Questions (FAQ)
1. When can I sell my flat?
You can only sell your flat upon reaching the MOP.
MOP (Minimum Occupation Period) refers to the 5 years period that you are not allowed to sell your HDB flat.
MOP is calculated from the date that you collected your keys to your flat.
You can check your HDB flat MOP date by logging into My HDBPage using your SingPass, followed by > My Flat > Purchased Flat > Flat Details.
Below is an example of how it looks like:
2. How do I calculate the sales proceeds of my HDB flat?
First, you need to find out what is the estimated selling price of your HDB flat.
Secondly, you need to know what is your outstanding HDB/Bank loan.
Thirdly, you need to check how much CPF principal you and your spouse have used for your flat plus accrued interest.
Next, you will need to include legal fee and any agent fee if you have engaged a real estate agent to assist in the sales of your house.
Take the estimated selling price and deduct the outstanding loan, CPF principal + accrued interest, legal fee and agent fee if there is any.
The remaining amount will be your cash proceed.
Readmore: Is HDB BTO flat just a roof over your head for your family?
Is HDB BTO flat just a roof over your head for your family?
Is HDB BTO flat just a roof over your head or an opportunity to reinvent your family’s future?
According to the latest 2019 statistics, 78.6% of Singapore’s populations live in Penrose condo and the other 21.4% stay in private properties.
Compared to just ten years ago in 2009 whereby 83.6% of Singapore’s populations were living in HDB flats and only 16.4% of the population was staying in private properties.
That is a considerable increase of 5% in just ten years.
Why are more Singaporeans upgrading to private properties and how are they able to do it?
Read on to find out more!
A BTO (Build To Order) flat is an HDB (Housing and Development Board) public housing allocation system that offers flexibility in timing and location for Singaporeans buying new HDB flats in Singapore.
One of the advantages of the BTO system is that HDB can build according to real demand.
This system allows HDB to increase or reduce its supply of flats according to demand.
How are some Singaporeans able to upgrade from HDB to Condo upon the sale of their HDB flats?
HDB flats are subsidized and eligible first-timer applicants can receive housing subsidy from HDB.
Therefore, most homeowners can see a profit upon the sale of their flat especially upon reaching MOP (Minimum Occupation Period).
They can pay for the 5% (Cash Only) downpayment for private Condo from the cash proceed.
A working couple will also have more CPF inside their Ordinary Account after 5 years or more.
Combined with their returned CPF (Principal Amount Withdrawn + Accrued Interest) from the sales proceed, they are then able to pay for the remaining 20% using their CPF.
However, not everyone can upgrade to private Condo as it is also dependant on both of the husband’s and wife’s combined income.
At PrivateHome, we strongly do not advise anyone to overstretch their financials. It is important to buy a home within your budget, needs, and requirements.
If you are considering to upgrade but is unsure if your finance ability would allow you to do.
Is your HDB flat an appreciating or depreciating asset?
Let’s look at how HDB flats prices have moved from 2013 to 2019.
On average, HDB flats prices in the whole of Singapore dropped by 11.32% from $469 psf in 2013 to $416 psf in 2019.
At the same period of time, condo prices have increased by 16.69% from an average of S$1,378 psf in 2013 to $1,608 psf in 2019.
A comparison between the average psf of HDB flats and Condo from 2013 to 2019 side by side:
For about seven years now since the peak of HDB Resale Price Index in Q2, 2013, HDB flats prices have been struggling.
The average price of a resale flat island-wide was about S$475,709 in 2013 during the peak. But in 2019, it dropped to about S$431,453.
This trend is expected to continue given that a record-breaking number of about 50,000 flats will be reaching their MOP in 2020 and 2021, which is in stark contrast to the estimated 9,000 flats that reached MOP in 2013-14.
As we know that prices increase or decrease based on supply and demand.
Having that many flats reaching MOP all around the same time could drastically increase the supply of resale flats in the open market causing downward pressure on the prices.
Why doesn’t HDB flats appreciate as much as private properties?
HDB flats are public housing and the Government will have to ensure that it remains affordable for the majority of Singaporeans and the younger generations.
Ensuring that HDB flats remain affordable has always been a key pillar of the Government’s policy.
Some of the ways that the Government regulates HDB prices to ensure that it remains affordable are through:
1) HDB Valuation
When a buyer has been granted an OTP (Option to Purchase) by the seller of the flat, the next step is to submit a Request for Value. In granting the OTP, the seller agrees to the valuation of the flat, if required by HDB.
Both the HDB and bank loans amount are based on HDB valuation. If there is a difference between the agreed price and the HDB valuation, the buyer will have to pay COV (Cash Over Valuation).
The COV cannot be obtained from the loan amount and it has to be paid in cash only.
2) 30% MSR (Mortgage Servicing Ratio)
MSR is a ruling imposed by MAS for housing loan when you want to purchase an HDB flat or EC (Executive Condominium).
MSR is capped at 30% which means that not more than 30% of your gross monthly income can be used to pay for your housing loan.
Whereas the TDSR (Total Debt Servicing Ratio) rule is used for the purchase of private property. The TDSR ratio is 60% of your gross monthly income instead of just 30% for MSR.
3) Supply-side and demand-side policies
In a free-market economy, price increases or decreases based on the law of supply and demand.
However, HDB prices are regulated by the Government to ensure that it remains affordable.
On the supply side, the Government provides subsidies via the concessionary pricing scheme for new BTO flats. The level of subsidies is pegged to the flat type and monthly income.
Since 2011, the Government moved another significant step to stabilize new BTO prices by delinking them from resale flat prices.
HDB then sets new flat prices based on a cost-plus basis.
This approach allows HDB to better protect BTO flat buyers against price spillovers from the resale markets and their volatilities.
By doing so, HDB can keep BTO flat prices affordable.
As a result, BTO prices will generally be a benchmark to the resale prices within the area.
What is the opportunity cost of not upgrading early when you can?
The property market is cyclical. The property prices follow a long cycle pattern of ups and downs.
If you look at this chart that shows the history of private residential property prices and cooling measures since Dec 1994, you will be able to notice a distinct pattern.
You can see that from Dec 1998 onwards, there are four times the cycle bottom out.
The next bottom out of the cycle is always higher than the previous one.
You can also see that since Dec 1998, there are three times the cycle reached a peak.
The next peak of the cycle is always higher than the previous one.
Now, what does this tells us?
It tells us that in the long run, the private residential property prices in Singapore is increasing steadily.
According to this article, our Minister of National Development Lawrence Wong said that private residential property prices would have increased by up to 15% in 2018 without the latest round of cooling measures.
In the article, Lawrence Wong also said that and I quote, “the Government’s aim is not to bring prices down, but to steady the cycle and to stabilise the market, so that prices can move broadly in line with income growth.”
In 2019, Singapore residents real income growth is 2.2 per cent.
Based on what our Minister of National Development Lawrence Wong said and assuming that the real income growth stays at 2.2 per cent for the next 10 years, this would mean that private residential property prices will increase 22 per cent by 2030.
If you could upgrade now but you didn’t and the above becomes a reality, you would have lost the opportunity to upgrade at a lower quantum and lower capital outlay.
When is the best time to sell your flat?
There is no best time but an ideal time will be upon reaching MOP for various reasons;
1) Supply & Demand:
According to a BusinessTimes article, there will be more than 70,000 flats reaching their MOP period between 2019 and 2021.
These flats will be eligible for resale on the open market. Potential buyers will have more choices when choosing a resale flat and potential sellers will have more competitions when trying to sell their BTO flats.
2) CPF Accrued Interest:
Most if not all Singaporeans are unable to purchase our first BTO flat without using our CPF. But not many are aware of how CPF accrued interest works and how it can affect your ability to upgrade in the future.
CPF accrued interest is the interest amount that you would have earned if your CPF savings had not been withdrawn for housing.
You will have to refund the principal CPF amount which you have withdrawn plus the accrued interest (2.5% per annum, compounded yearly).
Many of you will be thinking that the return of CPF monies (Principal Amount Withdrawn + Accrued Interest) is not a bad thing after all as it is still your money, but it might be a point of no return to exit from the HDB mechanism.
Selling your BTO flat upon reaching MOP means that you can free up cash that can be used as a leverage to upgrade from HDB to Condo.
However, selling your BTO flat after a long period of time means that more of your CPF monies will have to be paid back into your CPF account, thus reducing the amount of cash you will get from the sales proceed of your BTO flat.
*Did you know that If you have used $100,000 of your CPF to finance your HDB flat, and assuming you sell it 29 years later. By that time, you would have accumulated $104,640 in accrued interest!
3) New factor
It is human nature that we tend to prefer newer stuff. The same can be said for BTO flats that just reached MOP as it is the earliest time that anyone can buy a resale flat.
Hence buyers will be more willing to pay a premium for an estate with a newer facade.
4) Decaying lease
BTO flats have a 99 years lease from HDB. The value of your flat will be affected as the lease start to decay.
Buyers that are looking to purchase a resale flat will consider the remaining lease as they might be looking to sell in the future.
Since 10 May 2019, the rules on CPF usage and HDB housing loans has been updated. The HDB flat remaining lease must cover the youngest buyer till the age of 95 for the buyers to be granted maximum HDB loan and CPF usage.
Readmore: Penrose Condo @ Sims Drive, Aljunied
