How to own 2 properties in Singapore ? – Practical Methods

how to own 2 properties in singapore

Table of Contents

Figuring out how to own 2 properties in Singapore ?

Owning 2 properties in Singapore is a significant milestone that many Singaporeans hope to achieve. It creates the ideal scenario where your property investment runs on a dual engine, with your homestay property serving your family lifestyle needs, while your 2nd investment property generates capital gain and rental income. 

In this article, we will be conducting in depth coverage of the most effectively and commonly adopted strategies that property investors in Singapore used to purchase their 2nd property. 

We will specifically highlight the pros and cons, funds requirement and discuss if the strategy best fits your financial and lifestyle circumstances. 

As a side note if you are wondering if it better to upgrade to a bigger property or purchase a second property, check out our recent discussion within article link inline.

Challenges that you will be facing when looking to own 2 properties in Singapore

Singapore is a great country to live in, but its housing policy is meant to promote affordable housing and does not necessarily promote real estate investing. 

So you first have to jump through a few hurdles to gain the edge of owning 2 properties in Singapore. 

Quickly elaborating on the last 3 points, mindful of staying focused on discussing strategies on how to own 2 properties in Singapore, we should not dwell too much on this topic. 

Case in point, aside from the hefty ABSD to be incurred, financing is a big challenge to be overcome when purchasing a 2nd property. 

Under MAS Loan to Value (LTV) regulation, you will be looking at a reduced maximum loan quantum of only 45% for your 2nd property and on top of that you would need to fork out a mandatory 25% cash deposit, instead of the usual 5% mandatory cash requirement. 

We discuss each of these challenges in dedicated articles within article links inline above. 

2 Category of strategies on how to own 2 properties without ABSD

Having worked with numerous readers on figuring ways to purchase 2nd properties without ABSD, we noticed that the strategies can be segmented in 2 categories. 

  1. Direct – strategy you can adopt to purchase 2nd property immediately
  2. Interim – transitional strategy that you take to prepare for the purchase of 2nd property later on

Direct Strategies 

Let’s discuss strategies that you can adopt immediately to purchase your 2nd property. These are strategies for property owners that have got the funds ready on hand to take action immediately. 

#1 – Decoupling property 

How does it work ?

Decoupling works by “freeing up” you or your spouse’s name in your current property that is jointly owned. It will require one party to buy up the share of ownership of the other party in the property through a process known as part purchase or part sale. 

This essentially allows the party that has relinquished his or her share of ownership in the current property to purchase the second property without ABSD, akin to a property owner with no property on hand. 

How to implement ?

To jumpstart the decoupling process you will first have to secure an experienced decoupling lawyer. With that in place, a sale and purchase document will be used to legitimise the entire process. 

The challenge lies in calculating the funds you need to buy over your spouse’s share, qualifying for the new loan for the existing property as a sole owner and having enough budget to purchase a 2nd property with good investment potential. 

We discuss all this at length in the article below. Feel free to dive deeper if this is a strategy that interests you. 

Cost of implementation 

Generally decoupling a property valued at $1.5mil would cost around $24,000, this excludes the buyer stamp duty incurred on purchasing the 2nd property. 

You will need to account for buyer stamp duty to be incurred on share to be transferred, legal fee and property valuation fee. 

Refer to the decoupling calculator to work out your cost.

Who is this strategy for ?

This strategy strictly meant owners currently owning a private property and a resale EC that have fulfilled its minimum occupancy period, as decoupling HDB is no longer permitted since 2016. 

This strategy is best for property owners looking to retain their current property, possibly due to the size of the property, its location, while taking steps to purchase a second property. 

It is also one of the most commonly adopted strategies as it involves less variables to manage, you get to continue living in your current property, while being able to focus financial resources and effort on sourcing the 2nd property. 

Quick intro – Decoupling Expertise

This could be the first time you are reading an article on Decoupling Expertise, allow us to quickly introduce ourselves.

We are a team of specialist realtors that specialise in decoupling property in Singapore.

Having experienced the pain of finding the optimal way to avoid paying ABSD when purchasing our second properties. We decided to build an entire service suite targeted at helping savvy homeowners devise the best approach towards purchasing their 2nd property.

Drop us a message if you like, get a second opinion to reaffirm your plans for decoupling property.

#2 – Sell One Buy Two 

How does it work ?

The sell one buy two strategy requires you to sell your current property and redeploy funds to purchase two properties, each held under the sole ownership of you and your spouse. 

It works particularly well for couples that are sitting on a property that has appreciated significantly in value. The sale of the property unlocked its capital gain, and provides opportunity to redeploy it into two private properties. 

How to implement it ?

Selling the property at an optimal price marks the first step to success. It will be helpful to engage a competent realtor that is able to assist you in setting the optimal selling price for your property and market it to the right buyers. 

Having realised the capital gain from sale, the next component to success lies in identifying the right property for your own stay and for investment. Ideally, one resale condo for my own stay and one new launch condo for investment. 

On the extreme spectrum of things, we have seen couples purchasing two new launch properties, both for investment, while bunking in with their parents for 3 years. 

Cost of implementation 

Buyer stamp duty aside, the cost of implementation is minimal, mainly accounting for the 2% agent fee incurred when selling your property and legal conveyancing fees. 

The purchase of both the new properties are free from agency fee, as agents will be extracting commission from seller or developer in the case of new launch. 

Who is this strategy for ?

This strategy is most suited for dual income families, where both couples earn a decent income. This will ensure healthy loan eligibility for the purchase of both properties.

From a property type perspective, this strategy is often adopted by first time EC owners or BTO owners that property has appreciated significantly. 

This strategy is not suitable for families with plans of eventually having one spouse to stay for the kids in the near future or families that are adverse in taking on more mortgage. 

#3 – Buying property using your child’s name 

How does it work ?

There are two ways you can do this and it is dependent on your child’s age. If your child is below 21 years old, you can purchase the property under trust and if your child is 21 years or older you can purchase it directly under his name. 

We discuss at length the pros and cons of both this approach in the article “ Can i buy a house under my child’s name “. 

Generally the purchase of property under trust will not be accessible to most readers, due to the high cash upfront requirement to pay 65% ABSD in cash and the requirement to fund the entire property in full cash. 

How to implement it ?

The key hurdles to overcome when purchasing a property under your child’s name, assuming he is 21 years old or older, lies in his loan eligibility. 

Given your child could be young and have minimal income, his maximum loan eligibility could be low. A way to overcome this is to pledge funds by transferring funds into his account during the loan application stage to enhance the loan quantum to be taken.

Cost of implementation 

The downside to this strategy is that there is a significant cash requirement. Assuming your child has minimal income and minimal CPF savings, you will need to cover bulk of your purchase price in cash. 

Who is this strategy for ?

Priority is to always consider the sell one buy two and decoupling property as strategy first before considering this strategy. 

This strategy would be optimal for families looking to purchase their 3rd property. As both husband and wife’s names are already tagged to a property, using the child’s name remains as the next best option. 

Interim Strategies

These are strategies you can consider if you are not ready to take the immediate next steps to purchase your 2nd property. 

You could be looking to take an interim step to restructure your property ownership structure or change the property type under your ownership to get ready to purchase your 2nd property in the future. 

#1 – Selling current HDB. Purchasing another HDB using essential occupier scheme

How does it work ?

Understand that there are some property owners out there that are sworn towards owning at least one HDB flat, due to its affordability and high rental yield. 

As a side note for more insights on owning both a HDB and a private property refer to the article inline. 

But the challenge for most HDB owners is that both names are locked into the existing flat and with decoupling out of the picture there isn’t a way to purchase a second private property without ABSD. 

The only way to go about doing this is to first sell off the current HDB flat, and repurchase a younger HDB flat with upside potential. But this time round using the essential occupier scheme and listing only one spouse as owner, the other as occupier. 

This would allow the other spouse to purchase the 2nd property after the new 5 year MOP has been fulfilled. 

How to implement it ?

Exit current HDB via a profitable sale and redeploy capital into a new HDB flat under the essential occupier scheme. 

Cost of implementation 

While there are no significant tangible costs involved in executing this approach. The downside of this strategy comes in the time utilised to wait out another 5 year MOP before purchasing the 2nd property. 

5 years is a significant time, and the price of the ideal second property could have appreciated significantly as well. 

Another important point to note would be the fact that any changes in government policy to clamp down on this scheme would potentially foil the entire plan. 

Who is this strategy for ?

As mentioned earlier, this strategy is best for property owners bent on owning at least one HDB flat in their portfolio. 

And it is also suitable for property owners looking to buy time, waiting for their income to progress and savings to accumulate during the 5 year MOP period. 

#2 – Sell current property. Buy another private property and structure 99-1 tenancy in common

How does it work ?

You would have noticed, the interim strategies mention mostly comprises of a sale of existing property and taking a interim step to restructure towards a new ownership structure to facilitate future plans of getting a 2nd property.

In this case, you will be looking at selling off your current property. Purchase another private condo and adopt of a 99-1 share split instead of the usual 50-50 share ownership.

Why 99-1 tenancy in common ?

If you recall, one of the most effective strategies to purchase a 2nd property is decoupling.

And the major cost component in decoupling is the buyer stamp duty levied on the value of the usual 50% ownership to be transferred. 

By adopting a 99-1 share split, the future cost of buyer stamp duty will only be levied on value of the 1% share, resulting in significant cost saving 

This is also known as the decoupling 99-1 strategy. 

Insert internal link – https://decouplingexpertise.sg/decoupling-99-1-how-does-it-work-and-is-it-legal/

Who is this strategy for ?

This strategy would be optimal for property owner looking to purchase a private condo, while reserving the option to decouple in the future.

#3 – Sell current property. Buy new property with 1 name first

How does it work ?

The last strategy is an extension of the previous strategy.

If you are financially able to handle the mortgage of the next property purchase by yourself without the cpf contribution of your spouse.

You can always consider purchasing the next property with 1 name. But note, this can only be done for private property. For HDB, you will have to list your spouse name as an occupier if you are married.

Who is this strategy for ?

This strategy is best for families with strong financial capabilities, with the ability to shoulder one property using one name.

Yet would like to wait out for the right opportunity to purchase the 2nd investment property.

It could be due to the need for time to accumulate savings, awaiting the launch of an ideal new launch condo or waiting for a change in life’s circumstances.

How to own 2 properties in Singapore ? – Next Steps

Having committed the last 10 mins to reading, let’s take the research to the next steps. 

Drop us a text to share what’s on your mind and gather some 2nd opinions and ideals on whether your plan is the best way to purchase the 2nd property without ABSD.

More relevant reads with regards to purchasing a 2nd property in Singapore

Author

  • Jue Wen

    Jue Wen is the content marketing lead. This means he spend his waking hours researching and writing all things real estate. He believes life is a hustle and there is no joy in grinding away daily in our little rat races. He believes making wise moves in real estate investment can be a game changer. Aside from writing all things real estate, you can find him in your nearest bouldering gym.

Looking to purchase your second property?

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Jue Wen

Author

Jue Wen is the property analyst and content marketing lead at decoupling expertise.
He specialises in helping clients overcome the complexities involved in owning their second private property in Singapore.
He had over 10 years of experience in real estate investing and have written over 40 detail guides on decoupling and minimising ABSD. He is a licensed real estate consultant and holds a Bachelor degree in Business Management from the Nanyang Technological University.

Kenji

Co-Author

Kenji is the Group Division Director of ERA Realty Network.
He have got over 20 years of experience in real estate and have successfully helped over 50 couples purchased their second property. He specialises in helping client achieve the best approach towards acquiring their ideal investment properties while minimising ABSD.