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Overseas properties: Do your checks!

Guaranteed rental returns… Today-only discounts… Zero payments for two years… A dreamy loft overlooking glassy waters and spectacular beaches…

These are but just some of the attention-grabbing headlines in advertisements marketing properties outside Singapore.

Attractive as some deals may be, buying foreign properties is more complex and carries significantly higher uncertainties and risks than local property transactions.

So before signing on the dotted line, always be doubly sure of what your purchase entails. Just remember, when it appears too good to be true, it probably is!

Here are three commonly-asked questions on foreign property transactions.

  1. What are some of the things I should look out for before I buy foreign property?

    Always do your own research, read the fine print, and do a self assessment on the risks before making a decision. Some key factors you should take note of include:

    Background of developer

    • Get information on the developer’s track record.

    Costs and financing limits

    • Always check what the total financial commitment is. The initial down payment may appear low but progressive payments and other “hidden costs” may add up to a heavy commitment.

    Claims of high and guaranteed returns

    • Where there are claims of high guaranteed yields and irresistible promotions, it may be possible that such discounts and returns have already been factored into the price that you have to pay. Always ensure that promotions and discounts are indicated in the Sale & Purchase agreement.
    • Ask for evidence to substantiate claims of returns, and check the timeframe for which the yields are guaranteed.

    Rules and restrictions on foreign ownership

    • Find out if there are any restrictions on the types of properties, minimum price, or location of properties that foreigners can buy.
    • Check if foreigners are liable to pay additional taxes.

    Location of the property

    • Do not rely on sketch maps that may make the property look closer to amenities than it really is.
    • “Near” in the Singapore context could be quite different from that of other countries’.

    Transaction-related services

    • Find out if there is any service support from the developer after the sale is completed, and be aware of dispute resolution mechanisms in case the transaction does not proceed smoothly.

    For more consumer tips before buying an overseas property,

  2. Can I buy properties directly from the foreigner developer? Do they need to be licensed by the CEA?

    You can buy an overseas property directly from a foreign developer.

    Foreign developers and their staff can market their overseas property in Singapore and do not need to be licensed by the CEA. They are akin to individual property owners who are selling their own properties. They are not acting as intermediaries between buyers and sellers.

    These foreign developers can also partner a licensed local property agency to help with marketing activities in Singapore.

    Do note that in this instance, the agency and its agents are engaged by the developer, so they are representing the developer’s interests, not yours.

    As for foreign property agencies and property agents who are looking to market or sell overseas properties in Singapore, they will need to obtain a property agency licence and register as a property agent with the CEA.

    Foreign agencies who do not have a CEA licence can similarly partner a licensed local property agency.

    If you are working with a local property agency, always check CEA’s Public Register to confirm if the agency and agent is licensed or registered.

  3. Is it safer to buy foreign property via a local property agency than directly from a foreign property?

    Local property agencies and agents must adhere to a set of guidelines set out by the CEA, including performing several preparatory checks and providing pertinent information to potential investors.

    The agents should also undergo project specific training to ensure that they can provide buyers with accurate advice and information.

    Regardless whether you decide to buy foreign property from the developer directly or through a local agency, always exercise due diligence and never rely solely on the information provided by the sales representatives.

    CEA can take disciplinary action against errant agencies and agents.

    However, in the unfortunate event that a foreign property investment goes awry, CEA does not have any jurisdiction over foreign developers and overseas properties. Consumers will have to seek legal recourse to recover any monetary losses.