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Humanising Finance
December 2017
Overseas Property Investments: What You Should Look Out For

Overseas Property Investments: What You Should Look Out For

As Singaporeans become more well-travelled, their appetite for owning a beautiful home in cities like Melbourne, Sydney and London sans the corresponding high costs of home ownership is growing.

Singaporeans are not alone in their fascination with overseas property investments. Many reports indicate that foreign non-residents make up between 10% to 25% of residential transactions in such popular global cities.

There are however several elements to consider before jumping onto the overseas property bandwagon.
Reviewing your financial obligations
Don't get carried away by the headline purchase price attraction.

It is important to review rental income opportunities, local tax laws, currency fluctuations and the disposability of your asset. Many foreign governments impose these financial obligations to better regulate and moderate excessive transactions.
Scoping out the market: Australia vs London
Not every city will present an attractive investment opportunity, so always do your research before embarking on your investment journey.

For example, in Sydney, foreign buyers are restricted to purchasing only newly-built housing. Some governments have also introduced higher buyer and seller stamp duties to dampen the euphoria of foreign buyers. Besides an income tax on your property rental income, there are also differing stamp duties and fees between the Australian states.

It is imperative to engage a good local tax consultant to advise and mitigate your rental and income tax commitments through mortgage loan interests and other expense write-offs.
The allure of historic and majestic London is tempting but investors have to take note of various forms of taxes: Stamp Duty Land Tax, Council Tax a.k.a. Property Tax, Rental Income Tax, Capital Gains Tax and the lesser known Inheritance Tax.
Selecting the loan that works best for you
In the case of London, upon securing a choice unit, buyers can select a mortgage loan with either a UK-based or Singapore-based bank. Singapore-based banks generally offer a choice of SGD-denominated or GBP-denominated loans, whereas their UK counterparts offer only GBP-denominated packages.

Mortgage pricing is generally higher in these foreign cities vis-à-vis Singapore's Home Loan market. Hence, do calibrate your monthly expenses via Total Debt Servicing Ratio (TDSR) practices for a more prudent financial endeavour. Overseas property loans taken with Singapore-based banks have to fulfill standard TDSR obligation of 60%.
Our advice is to always do your homework and to choose a reliable real estate agency with deep expertise and a good track record of marketing the city you have selected. A competent mortgage financier is also crucial to see you through yet another major investment decision. Speak to our Mortgage Specialists for a overseas property loan package to cater to your overseas property investment needs or find out more here.
Always wanted to find out more about a finance-related issue? Email us at: corporateaffairs@maybank.com.sg
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