The complete guide to buying a 2nd property in Singapore

The complete guide to buying a 2nd property in Singapore

Table of Contents

Introduction

Congrats, the fact that you have landed on this article could probably mean a few things.

You would have already purchased your first property and are well settled in, you may have even significantly paid down your existing home loan and have stashed up a warchest ready to be deployed.

Next, you would have realised that continuing on this mindless 9 to 5 grind will promise you and your family food on the table, but it will never take you out of this game.

It is heartening that you and many like minded real estate investors have started on this search to accumulate productive assets that can help us put our hard earned salary into better use.

Focus of the article

In this article, we will dive into everything you need to know with regards to purchasing a second property.

We will cover everything from eligibility criterias, additional buyer stamp duties, cost of purchase, to solutions on how to mitigate some of the challenges that will arise when purchasing a second property.

A little bit about ourselves

First, it could be reassuring for you to know the authors behind this article, this will ensure that you are not wasting your time reading some generic content generated solely to get your attention.

This article was put together by a team of real estate investors turned realtors. We walk the talk by first making our own real estate investments and operating our own investment properties, we are not on the mission to facilitate like minded people like you purchase your second property.

The article is a compilation of the latest insights in the market and experience accumulated from our own and client’s investment.

Rules on eligibility to buy a second property in Singapore

If you are currently owning a HDB flat 

If you are an existing HDB or BTO owner, you are only eligible to purchase a second property after you fulfil the 5 year minimum occupation period. 

Extract from current HDB regulation governing acquisition of private property.

“Before you and your spouse can acquire private residential property, you will first have to fulfil your flat’s minimum occupation period.”

Type of HDB FlatMOP Duration
BTO – Standard5 years
BTO – Plus10 years
BTO – Prime10 years
Resale HDB5 years
DBSS5 years
Executive Condo (EC)5 years

MOP duration is computed using the date of taking possession of your flat to the date on which options to purchase second private property is exercised or the date of signing sale and purchase agreement for the second private property. 

The second clause, date of signing sale and purchase agreement is specifically targeted at buyers purchasing new launch development as second property. There is no option to purchase involved in the new launch development purchase process. 

If you are currently owning a executive condo (EC)

Similar to HDB flats, new ECs when purchased directly from developers are considered government subsidised housing. Hence, a mandatory 5 year minimum occupation period needs to be fulfilled before you can purchase a second property or even consider plans such as decoupling property

If you are currently owning a resale executive condo

For resale EC, the rules are different. They are deemed a private property in the eyes of HDB. Hence, you are free to purchase a second property or pursue plans to decouple for a resale EC. 

As a side note, resale ECs are still subjected to the 3 year stamp duty rule. Selling the resale EC prematurely within 3 years of ownership will subject the EC to the following seller stamp duty charges. 

How long property has been heldSSD rate
Up to one year12%
More than one year and up to two years8%
More than 2 years and up to 3 years4%
More than 3 yearsNo SSD payable

A point to note, resale EC owners are not allowed to purchase a HDB flat as a second property. You are only allowed to purchase a private property as a second property.

If you are currently owning a private property 

Private property are free to purchase a second property without the need to fulfil any MOP. Similar to resale EC, the 3 year seller stamp duration is applicable. 

However, it is important to note that you are not allowed to purchase a HDB as a second property. You are only permitted to purchase another private property as a second property.

In order to purchase another HDB, private property owners would need to dispose of their current private property, serve out a 15 months cooling period to purchase a resale HDB or serve out a 30 months cooling period to purchase a BTO or new EC. 

If you are a Singapore PR 

If you are a Singaporean PR and is currently a owner of a HDB flat, you will not be eligible to purchase a second private property while holding on to your HDB flat. 

Owning HDB flat and a private condo as a second property remains only permissible for Singapore citizens. 

For more insights on owning HDB and a private property, refer to a dedicated article on “ can i own a hdb and condo “. 

But as a Singapore PR, you will be able to own 2 private property under seperate names. So if you are currently owning a HDB flat, you can consider selling it to purchase 2 private condo, also known as the sell one buy two strategy.

If you are currently own a private condo, you can consider decoupling it, freeing up one name to purchase a second property.

What can you buy as a second property ?

From a property type perspective, you will only be eligible to consider private property as your second property. Regardless of your citizenship, you will not be allowed to purchase a HDB flat or EC as your second property.

As a side note, if you currently own a private property and is looking to purchase a resale HDB. You would need to dispose of your private property and fulfil a 15 months cooling period from the date of disposal of your private property, and a 30 months cooling period if you are looking to purchase a BTO or EC.

Transactional cost involved in purchasing second property

Having considered eligibility let’s move on to consider the cost involved in purchasing a second property.

In this section, we will consider the full cost involved in purchasing a second property without factoring in any actions to mitigate any of this cost. In later sections, we will move on to discuss strategies which can be taken for cost reduction.

Stamp Duties

Stamp duties are levied by IRAS, they are incurred when you are looking to stamp or officialise a formal legal document used to facilitate a property ownership transfer.

In the context of purchasing a second property, we would be looking at both the Additional Buyer Stamp Duty (ABSD) and the Buyer Stamp Duty (BSD)

Additional Buyer Stamp Duty (ABSD)

First introduced in 2011, the ABSD rates have since been revised upwards 4 times, including the latest April 2023 ABSD hike.

The latest ABSD levied on 2nd property will be as follow.

Profile of BuyerABSD (%)
Singapore Citizen buying 2nd property20%
Singapore Citizen buying 3rd property and more30%
--
Singapore PR buying 2nd property 30%
Singapore PR buying 3rd property and more35%
--
Foreigner buying any no of property60%

To put things into perspective, let’s assume you are a Singapore citizen, looking to purchase a second property valued at $1.5 million.

You will be looking at 20% on $1.5 million, amounting to $300,000.

Buyer Stamp Duty (BSD)

Buyer stamp duty is a duty levied on all property purchase transaction in Singapore.

The latest buyer stamp duty rates will be as follow.

To put things into perspective, using the same example of purchasing a $1.5 million second property. Buyer stamp duties will amount to $44,600.

To easily calculate both additional buyer stamp duty and buyer stamp duty levied on your 2nd property head over to the 2nd property stamp duty calculator.

Property Tax

Property tax is a recurring cost element that we are not foreign to, as we are currently required to pay an annual owner occupied property tax on our current property.

However, as we progress towards owning our second property, we will need to get accustomed to paying non-owner occupied property tax and rental income tax that will be levied on our second property.

Non owner occupied property tax

As a pretext, property tax is calculated as a percentage of a property’s annual value.

Annual value is determined by the estimated gross annual rental income of a property less expenses such as furnishing and maintenance fee.

Case in point, as you acquire your second property, assuming you were to continue living in your current property as your primary residence. You would be taxed based on the non-owner occupied property tax.

Annual Value ($)Effective 1 Jan 2024Property Tax Payable
First 30,00012%$3,600
Next $15,00020%$3,000
Next $15,00028%$4,200
Above $60,00036%-
Annual Value ($)Effective 1 Jan 2024Property Tax Payable
First $8,0000%$0
Next $22,0004%$880
Next $10,0006%$600
Next $15,00010%$1,500
Next $15,00014%$2,100
Next $15,00020%$3,000
Next $15,00026%$3,900
Above $100,00032%-

To put things into perspective, assuming you were to purchase a $1.5 million property with a hypothetical annual value of $66,000. (base on $5,500 rental per month)

You will be looking at a non-owner occupied income tax of $12,960 per year, as compared to a owner occupied tax of $4,520 if you were to be residing in the property. You would be looking at a tax increment of $8,440.

Rental income tax

Assuming you were to rent your second property out and receive rental income on top of your monthly salary, you would be taxed a rental income tax on top of your non-owner occupied property tax as well.

It will be calculated by adding annual rental income less expenses to your overall annual salary and taxed based on the different income brackets.

Assuming your second property were to bring in annual rental income of $66,000 and you are currently earning an annual salary of $120,000, you will be taxed accordingly based on an annual wage of $186,000.

Legal Fee

No major cost component, but putting it out there to ensure the list captures all the costs involved. The standard legal fee for property purchase transactions ranges from $1800 to $2500.

Maintenance Fee

Given that the second property purchase is a private condo, there will be a monthly recurring condo maintenance fee averaging between $250 to $450.

As a side note, larger condo developments with more units to share maintenance cost tend to have a lower monthly maintenance fee, while smaller boutique condos tend to have higher maintenance fee.

Agent Commission

At current state, as a common practice there will not be any agent commission to be accounted for. Agents will be receiving their commission as part of their co-broke arrangement with the seller of property or developer.

Cost of financing the property itself

Last but not least the cost of property, let’s tackle this cost component by breaking it down into two parts.

Generally, the cost of the second property can be broken into two sub components.

  • Downpayment to be funded by Cash and CPF
  • Remaining portion to be funded by Bank loan

Under the normal course of event, when purchasing a second property you will have to work within MAS stipulated loan to valuation limits (LTV).

This would restrict your loan financing from the usual 75%, to a lower limit of 45%.

For more insights on 2nd property loan LTV, refer to dedicated on article in line.

In addition to that, you would be looking at a mandatory cash requirement of 25%, instead of a lower cash requirement of 5%.

Using the purchase of a $1.5 million condo as an example.

You are looking at funding each of the cost components as follows.

Downpayment required for buying 2nd property in Singapore

Downpayment – 55% of Property Value (eg. $1.5 million)

  • 25% of $1.5 million – mandatory cash
  • Amounting to $375,000
  • 30% of $1.5 million – cash or cpf
  • Amounting to $450,000

Maximum loan for 2nd property in Singapore

Loan – 45% of Property Value (eg. $1.5 million)

  • Amounting to $675,000
  • Eligibility subjected to TDSR, will be discussed in later section.

Can CPF be used for 2nd property

At this point one lingering question in your mind would be whether CPF can be used to fund your second property.

We have created a dedicated article to discuss the usage of cpf on second property, in this section we will provide a quick overview of the topic.

In short, yes, CPF can be used to fund your second property purchase as long as you have fulfilled the Basic Retirement Sum (BRS) stipulated by the CPF board.

The Basic Retirement Sum, as the name suggests, is the targeted amount of funds that one needs to have in his CPF account to provide for his eventual retirement. It takes reference from the living expenditure of a lower middle income retiree household, with assumption that the property that he owns can cover him till 95 years of age.

The amount of funds you will be required to have as your basic retirement sum depends on when you turn 55, the younger you are, the greater the amount you need to set aside as basic retirement sum.

One factor to take note of. If the property you currently own and the second property that you are looking to purchase, both have a short lease that cannot cover you till the age of 95 years old.

You would have to meet the Full Retirement Sum (FRS) instead of the basic retirement sum, in order to use your CPF to fund the second property. The FRS amount is twice that of the basic retirement sum.

Financing challenges to be encountered when purchasing 2nd property

Referring back to our discussion on the cost of purchasing a second property, the common challenges faced by most of our clients are the following.

Additional buyer stamp duty

Purchasing the second property without applying any strategies to avoid ABSD, would require you to fork out a 20% ABSD upfront. For a $1.5 million property purchase, this easily amounts to a hefty $300,000.

In short, this eats into the profitability of the second property and in most circumstances it is hardly worthwhile to pay ABSD on your second property

High cash and cpf required to fund the second property

Using the purchase of a $1.5 mil property as an example, excluding the cost of ABSD. Due to the restricted LTV limits of 45%, we will be looking to fund the entire purchase with 55% cash and cpf, with a mandatory requirement of 25% cash.

This comes up to $825,000 worth of cash and CPF required to fund the purchase, which presents a significant problem to most.

Challenges with securing second property loan due to TDSR requirement

On the loan side of things, many real estate owners supporting an existing mortgage would have challenges securing the second property loan due to TDSR requirement.

TDSR, total debt servicing ratio is a measure put in place by MAS to prevent property owners from over leveraging. It accounts for the total monthly debt obligation that one has as a percentage of your total monthly income and stipulates that its total monthly debt obligation should not exceed 55% of total monthly income.

Given that you are tied to servicing the mortgage of your existing property, coupled with other recurring loan obligations like car loan, there is a chance that the addition of the second property loan would result in you exceeding the 55% TDSR threshold.

Methods to overcome financing and ABSD challenges

Having laid out the 3 major challenges you would face when financing your second property purchase. We will run through effective strategies that we have implemented together with our clients to purchase their second property without ABSD and with optimal loan financing.

Till date, we have helped over 107 clients acquire their second property using the strategies below. Feel free to contact us if you would like a non obligatory consultation to explore the most suitable options for your personal circumstances

Method #1 – Decoupling

Decoupling is an effective strategy that has a proven track record of helping property owners purchase their second property, without incurring ABSD while allowing for maximum 75% loan financing.

What is decoupling ?

When a couple purchases a property in Singapore, the property is normally held under a 50/50 joint ownership. Decoupling seeks to “free up” one party’s name from the joint ownership by way of an internal buy and sell process from one owner to the other. This is implemented via a formal property conveyancing process with the signing of sale and purchase agreement.

Avoiding ABSD on the second property purchase

In the eye of IRAS, the party that has just decoupled is now deem a first time property owner and can now proceed to purchase the second property without ABSD

Maximum 75% loan to valuation ratio on the second property purchase

As part of the decoupling process, there will be a restructuring of the existing home mortgage. The spouse that is looking to take over the existing share in the property, would also be taking over the entire home mortgage, solely under his or her name.

Under such a situation, the party that has decoupled from the current property is now deemed to have no outstanding mortgage under his or her name and is eligible for the full 75% private bank loan instead of the previous 45% LTV for second property.

Meeting TDSR requirement

Inline with not having the existing home loan under your name, the monthly debt obligation of the existing property will also be exempted from TDSR calculation. Hence, in this new arrangement, only the recurring mortgage of the second property will be taken into TDSR consideration, making it easier to stay within the 55% TDSR threshold

If this is a strategy that you are interested in pursuing further refer to our complete guide to decoupling property Singapore

Method #2 – Sell One Buy Two

The second method to consider would be “Sell One Buy Two”, as the name suggests involves the sale of your current property and subsequently purchasing two private properties held separately under each spouse’s name.

Benefits of Sell One Buy Two

The core benefits of sell one buy two is similar to that of decoupling, it addresses the three major challenges of avoiding ABSD, achieving maximum 75% loan financing and facilitates the passing of the TDSR requirement.

Key difference between Sell One Buy Two and Decoupling

Sell one buy two, requires you to sell your existing property, while decoupling requires you to retain your existing property while making the second property purchase.

The requirement to sell your existing property is a double edged sword, some owners may prefer it while others prefer to hold on to their existing property.

Selling of your current property allows you to unlock the existing capital gain and the sales proceeds can be then used to fund your two new property purchases. This works particularly well for BTO owners that are sitting on significant capital gain and are looking to upgrade to purchase two private condos.

As a side note, due to the tightening of HDB share transfer regulations 2016, HDB decoupling is no longer permissible for owners of BTO or resale HDB flats. Hence, selling one buy two also serves as an alternative method to many HDB flat owners.

For a deeper dive on the topic of Sell one buy two, refer to our comprehensive guide on sell one buy two strategy.

Method #3 – HDB essential occupier scheme

This method is mainly applicable for those of you that are looking to purchase your first or next HDB flat, but are looking to plan ahead to purchase your second property.

You can consider structuring your HDB owning in the manner in which, one spouse is to be titled the official owner of the HDB flat, while the other spouse is listed as an essential occupier instead of a joint owner.

After both of you fulfil the required minimum occupation period (MOP), the essential HDB occupier can buy private property without ABSD.

But note, the downside to this is that, the party that is listed as essential occupier cannot use CPF to fund the purchase or monthly mortgage of the HDB flat.

Risk of having two properties

As we laid out the path towards how to acquire our second property, it is also important to consider the risk involved and the methods towards managing these risks.

Managing two sets of home loan

Having an additional property means that you will need to shoulder the additional financial burden that comes with a new home mortgage. You will need to factor this into your current monthly debt obligation, ensuring that you leave enough breathing space for unforeseen expenditure.

The general rule of thumb is to be prudent, seek to maintain a 40% monthly debt to income ratio. That means, cutting back on some of these credit card expenditures, making plans to pay down your renovation loan.

Fluctuating interest rate

For those of you that have been used to supporting a HDB loan, the variable interest component that comes with a private bank loan could be new to you.

Your interest rate will no longer be fixed at 2.6%, instead it will move up and down according to the apt and flow of the economy.

This serves as a double edged sword, exposing you to higher interest payment when interest rate trends up and lower interest payment in a low rate environment.

The way to manage this is to work with a competent mortgage consultant, locking in a fixed interest rate loan when the general interest rate is low and adopting a variable interest rate loan package when interest rate is falling.

Unforeseen life circumstances

What happens if you lose your job? Can you still support both properties while looking out for the next job?

Supporting two properties meant that you have less financial leeway to cater for unforeseen events in life. It will be important to create a contingency fund, stashing aside at least 6 months worth of income to keep everything going, long enough for you to resolve the issue on hand.

Benefits of having two properties

As we laid out the cost and risk involved in purchasing a second property, let’s dwell into the benefits of having a duo property portfolio.

Ability to maximise and realise capital gain at any point of time

You may not realise this, despite the significant capital gain that you have been seating on for your current property. You would hardly ever get to actually enjoy the actual profits from the property till you make some decision to downgrade to a smaller unit or a unit in a poorer location.

In the normal sequence of event, if you were to continue on the single property track, you will be exiting your current property and redeploying these profits into another pricier purchase. The only time you will ever get to enjoy the fruits of your harvest is the day you decide to retire and downgrade to a smaller property.

Things change when you purchase your second property, with your homestay needs taken care of by your current property. Your second property can serve as a product asset that you can sell at any point of time to maximise profits and repeatedly redeploy again into any other property.

At any point of time, if you decide that you had enough and like a change in lifestyle. You can exit the game entirely and take away with you your initial capital, along with your 300k to 400k profits.

Generating passive rental income

While capital gain may be attractive to many of us, some investors are interested in creating a recurring source of passive income.

Purchasing a second property at the right price point gives us an opportunity to rent the property out for monthly rental income.

Having said that, the rental yield for private property is not fantastic. It ranges between 2% to 3%.

But with right property selection and prudent management of leverage, we will still be able to generate positive monthly cash flow as the property appreciates in value.

Plan for retirement

From a lifestyle perspective, having a second property could also provide more options in view of future retirement plans.

The current property that is bigger in size, eg. a 3 bedder condo currently used to house the family with children. As the children grows up and start their own family, you and your spouse can downsize into the smaller, 2 bedder second property and rent out or sell the 3 bedder condo.

Should I upgrade to a bigger property or should I buy a second property ?

One of the frequent dilemma that property owner faced is whether it is more worthwhile focusing financial resources and effort in upgrading to a bigger property or purchasing a second property ?

If that a area of concern for you then feel free to hop over to a recent article that we wrote detailing the pros and cons of upgrading vs purchasing a second property.

How to select the second property ?

There are several factors that you would need to consider when it comes to selecting your second property.

New launch condo or resale condo

The first factor to consider would be will you purchase a new launch condo over a resale condo. Each would have its specific strengths and weaknesses.

A resale condo being fully built provides you the opportunity to rent it out immediately for rental income. A resale condo would tend to come with a lower price per square feet compared to a new launch condo and the overall purchase quantum tends to be more affordable.

A new launch condo brings with it the benefit of progressive interest payment, which helps minimise your interest expense during the first three years of its construction.

And due to it being brand new in facade and lease life, it also comes with an opportunity to exit for significant capital gain as it achieves its completion status after three years of construction.

Property with the right fundamentals

Down to evaluating a unit within a specific development.

You will be looking at the following factors that will have a impact on the property’s capital appreciation and rentability

  • Upcoming URA transformation plan for the location of property
  • Proximity to MRT
  • Proximity to reputable school, within 1km and 2km radius
  • Proximity to international school
  • Proximity to expat’s place of work
  • Surrounding area supply of competing property
  • Potential demand from surrounding HDB upgraders

We have wrote extensively about what makes a condo a good investment property,  and which is the best condo size for investment, refer to article inline to find out more.

As a sidenote, if you are interested in investing in properties within 1km of the most sought after primary school in Singapore. Check out our mini series on review of best condo near popular primary schools.

Rules governing the rental of property after you own your second property

Can you rent out your current HDB after you purchase a second private property ? 

Yes you will be able to rent out your entire HDB unit and live in the second private property. To do that you would have to seek approval from HDB. 

HDB Approval application link as follows

More reads on buying 2nd property in Singapore

Avoiding ABSD when purchasing 2nd property

2nd Property Financing

2nd Property Near Reputable School – Research

New Launch Condo or Resale Condo as 2nd Property – Research

2nd Property for rental income – Research

Unit Size to Consider for 2nd Property

Commercial or Industrial Property as 2nd property

Freehold or Leasehold condo as 2nd property

FAQ

If I plan to purchase a 2nd property for upgrading purposes, can I rent out my HDB ?

Yes, you can rent out your HDB flat when it has passed its Minimum Occupancy Period (MOP). You will be required to obtain HDB approval first before renting out your flat. 

Do I need to notify HDB when purchasing a 2nd property ?

For owners of HDB who are Singaporean Citizens.
You do not need to notify HDB. But you will must continue to stay in your flats until approval is acquired from HDB to rent the entire flat out

Are there risks in getting a 1 bedder or studio apartment as the second investment property ?

Yes, you will need to consider the risk that you will be looking at a smaller segment of eventual buyers for your property. A family with children will not be able to consider such small units. 

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.