Even though the government has implemented a number of measures to tamp down the property market in Singapore, people continue to buy properties. This is understandable because property is generally considered a good investment, one that can provide a secure passive income. Before going ahead it’s important that you know the rules regarding second property purchases in Singapore.

Eligibility Requirements

HDB, DBSS, and EC Owners

Singapore has laws governing the purchase of second properties if the house you currently own is an Housing Development Board (HDB) flat. These include HDB resale flats, Build-to-Order (BTO) flats, Executive Condominiums (ECs), and Design, Build and Sell Scheme (DBSS) flats.

To begin with, you need to be aware of HDB 5-year Minimum Occupation Period (MOP) eligibility requirement. Prior to buying, selling, or renting out your flat, you must live in it for at least five years, not counting the time you sublet it or didn’t actually reside there e.g. you are posted overseas and leave yout flat vacant. However, this rule would not apply if you bought a resale flat before 30 August 2010 without the help of the CPF Housing Grant.

Flat owners with at least one Singapore Citizen owner can rent out their flat even after they purchase a second residential property such as a private condominium unit. Meanwhile, Singapore Permanent Residents (SPRs) flat owners are required to inform HDB when they purchase another residential property, and they must vacate their flat within six months of purchasing the private property. SPRs are prohibited from leasing their flats out. This means they have no choice but to sell. 

These rules are only applicable to public housing. If you own private residential property, you do not need to abide by these restrictions.

Loan Eligibility

If you took out a loan to purchase your first home, your eligibility to borrow money for a second property may change. Here’s what you need to understand:

1. Loan-to-Value (LTV) Ratio

The LTV ratio is what determines how much you can borrow from a bank to buy a particular property. It is a percentage of the value of the property. When obtaining a loan with a tenure of up to 30 years for the purchase of a second home, the LTV ratio is 45%. Therefore, the down payment would be 55%, of which 25% needs to be in cash. The balance of 30% can either be in cash or from monies from your CPF Ordinary Account. Using CPF monies to buy additional properties is not as easy as it was when you used CPF savings to buy your first property.

There will be a decrease in your LTV ratio with each additional home loan. Thus, if you have existing loan on your first property, purchase of your second property will require a higher downpayment. To maintain your original LTV ratio, you must first pay your existing home loan off before you buy another residential property.

To learn more, read Loan-to-Value Ratio (LTV) for Mortgage Loans: Everything You Need To Know.

2. Total Debt Servicing Ratio (TDSR)

The TDSR indicates what percentage of your gross monthly income is available to service all of your loans each month. The government currently has set the TDSR at 55%. Therefore, all your loan payments, including home loans, home improvement loans, credit card loans, car loans, etc. must be paid each month using no more than 55% of your gross income for the month.

Higher Cost of Purchase due to Additional Buyer’s Stamp Duty (ABSD)

ABSD is one of the government’s measures to cool down the property market. This is an additional buyer’s tax on those purchasing residential property in Singapore. The rates increase with every additional purchase.

Here’s how ABSD is imposed and on whom:

• Singapore Citizens: ABSD is payable on the second property being bought, as well as all additional property purchases.
• Singapore Permanent Residents (PRs): ABSD is payable on all property purchases, but at a lower rate on the first property purchased.
• Foreigners and Entities: ABSD is payable at a similar rate on all property purchases, which includes the first purchase.

The current ABSD rates (with effect from 27 April 2023) from are stated in the following table: 

If you are currently owning a property jointly with your spouse, siblings, parents, or friends, you can consider Decoupling to Avoid Paying Additional Buyer’s Stamp Duty (ABSD). If you have loads of cash and have child(ren), you can also consider Buying & Holding Properties on Trust for Children to save on ABSD. 

The government has enacted a number of conditions for the purchase of second and subsequent properties. Although the idea of finding a way to generate passive income appeals to many Singaporeans, the cooling measures discussed here could result in you buying a property that eventually becomes unprofitable. Therefore, it is important that you consider these measures before you jump into buying a second home, and possibly more residential properties in Singapore.

There is an article on Property no longer the best retirement investment in S'pore: DBS report published in October 2021 which we feel is very spot on. You can also consider alternative investment to property such as Real Estate Investment Trust. Read our article on REITs vs. Physical Properties in Singapore: Which Is the Smarter Investment?

Disclaimer: The information provided in this article does not constitute legal advice. We recommend that you get the specific legal advice you need from an experienced attorney prior to taking any legal action. While we try our best to make sure that the information provided on our website is accurate, you take a risk by relying on it.

At Pinnacle Estate Agency, we strongly believe in sharing our real estate knowledge to the public.⁠ For more content like this article, check out our Singapore Property Guides.