Buying a new home? Don’t overlook these hidden costs when budgeting your cashflow.

When it comes to the finances involved in a home purchase, there are many things to consider: the purchase price, the loan amount, interest rates and so on.

Beyond the property purchase price, there are other costs involved. These “hidden” costs may be upfront or recurring in nature. They may not show up in big numbers, but it pays not to overlook them — the little things all add up, as you’ll find out when you’re budgeting your cashflow.

Here are costs that you should look out for.

1. Buyer’s Stamp duty

With every home purchase and sale, upfront fees are due in the form of stamp duty. This is basically a form of tax you have to pay to IRAS on the documents that are prepared and signed when you buy or sell your property (as “Buyer’s Stamp Duty” and “Seller’s Stamp Duty” respectively).

The amount payable is based on the higher of the actual price stated on the OTP/ Sales & Purchase Agreement, or market price of the property. You will incur Buyer’s Stamp Duty (BSD) as follows:

Property Value	Marginal BSD Rate
First $180,000	1%
Next $180,000	2%
Next $640,000	3%
Next $500,000	4%
Next $1.5 million	5%
In excess of $3 million	6%

You can compute BSD based on the property value as follows:

Property Value (PV)	Total BSD
Up to $1.0 million	3% x PV less $5,400
Up to $1.5 million	4% x PV less $15,400
Up to $3.0 million	5% x PV less $30,400
Above $3.0 million	6% x PV less $60,400

Additional Buyer’s Stamp Duty (ABSD) is also payable from 27 April 2023 as follows:

Additional Buyer’s Stamp Duty (ABSD)	1st Property Purchase	2nd Property Purchase	3rd Property Purchase
Singapore citizens	0%	20%	30%
Singapore PRs	5%	30%	35%
Foreigners	60%	60%	60%
Corporate Entities	65%	65%	65%

Total Stamp Duty on S$1m Property
Singapore citizens	$24,600	$224,600	$324,600
Singapore PRs	$74,600	$324,600	$374,600
Foreigners	$624,600	$624,600	$624,600

In the case of a joint purchase, the additional buyer stamp duty to be paid will be based on the highest amount of all applicants — note that married couples can apply for a remission on this amount.

Buyer’s Stamp Duty is due pretty early on. You have to pay within 14 days from the date of the Sale & Purchase Agreement or the date of acceptance of the Option to Purchase (OTP). You will need to use cash to pay the stamp duty first. Consequently, you can apply for a one-time reimbursement from your CPF account together with your application to use your CPF savings to buy a property.

(If the contract, agreement or transfer is signed overseas, it is payable within 30 days of the receipt of such documents in Singapore.)

2. Legal fees

Legal fees is payable for legal advice that you seek as a home buyer on your rights and obligations with regards to the contracts you are entering into.

Typically, legal fees cover the work done on the purchase, mortgage documentation, and CPF withdrawal, if any. Additional charges from the bank’s solicitors (if your lawyer is not on the bank’s panel) or CPF Board’s solicitor (if you withdraw CPF funds) may be applicable. Legal fee (excluding GST) can be paid with CPF funds.

Do note that most banks require a lawyer from their panel to handle the loan documentation.

3. Valuation fee

Valuation fee is simply the amount you pay to receive a valuation report on the value of the property that you wish to purchase, as required by the bank or Central Provident Fund (CPF) Board. Valuation fee is payable in cash.

The amount also depends on the property type. For Building-Under-Construction desk-top valuation, you can expect to pay anywhere between $50 to a few hundred dollars. For a completed property, the amount ranges from $300 to a few thousand dollar depending on the property value.

Valuation fees are due upon getting the valuation report, and some banks may require you to pay the valuation fees as part of their administrative fees.

You can get more information from the Singapore Institute of Surveyors and Valuers (SISV).

4. Sales agent fee

Sales agent fee refers to the fee payable for the services of a Real Estate Agent or salesperson in your property transaction, based on the selling price of the property transacted.

The amount payable is directly negotiable with your sales agent. In the case of private properties, commission is usually paid by the seller from 2% onwards. It is also advisable to clarify whether any GST payable is included in the commission amount as stated in your agreement.

You can find a list of registered sales agents at the Council of Estate Agencies (CEA).

5. Recurring costs

In addition to the above-mentioned costs, there are certain recurring costs that you should accommodate in your budget and cash flow. These include property tax and maintenance fees.

Property tax in Singapore is based on the applicable tax rate on the Annual Value (AV) of the property. The AV is the estimated gross annual rent of the property if it were to be rented out, excluding the costs of furniture, furnishings and maintenance fees as determined by IRAS. Do note that these rates differ depending on whether the property was owner-occupied or non-owner-occupied. The tax on a non-owner-occupied property is higher than an owner-occupied property, and the tax rate scales up based on the AV. Owner-occupier tax rates can only be granted to one property that is owned and occupied while subsequent properties are taxed at non-owner-occupier tax rates even if you are occupying it as a second home.

Home owners must file their property tax on an annual basis upon gaining ownership of their property, payable by 31 January. At the end of the year, you will receive a property tax bill for the following year. Any changes arising from adjustments on the NAV of your property will be sent to you during the year.

Last but not least, you will also have to consider the maintenance fees on your property.

Condo owners will have to pay maintenance fees, which vary from condo to condo. These fees cover security, facilities, parking, services, and the “contingency fee”. By law, every condo is also required to set aside a contingency fund to cover any special costs incurred as part of building upkeep (such as a new roof, or repairs to heating and plumbing equipment).

Looking to minimise your “hidden” costs? Here are 2 ways:

Use Self-Service Platforms. There are an increasing number of platforms dedicated to facilitating transactions between home buyers and sellers. If you are familiar enough with the process, you have the option of performing the sales transaction yourself — and thereby reducing intermediary fees. Reduce your legal fees. Instead of hiring multiple lawyers to act for you, the bank, and the CPF board, hire a single lawyer to do all three. Do note that most banks require a lawyer from their own panel to represent them.

Article was originally published on 14 December 2017.