Do prohibitive ‘foreigner fees’ really keep expats out? Singapore slapped a 35 per cent stamp duty on overseas property investors – Bali, Canada, Thailand and New Zealand all blocked international buyers
- Expats may be flocking to the Little Red Dot for work opportunities, but they’re being shut out of the property market by a new 35 per cent stamp duty – will it work?
- The alternative? Thailand and Bali don’t allow non-residents to buy freehold properties, New Zealand blocked foreign buyers since 2018 – now Canada has put in place a two-year ban
If a foreigner wants to buy a home in Singapore today, they have to pay a hefty 35 per cent premium for the privilege.
The city state is far from alone in imposing a stamp duty surcharge on foreigners, but its latest increase makes it among the highest anywhere. In contrast, the UK’s stamp duty land tax, introduced in April 2021, is only 2 per cent.
The increase sends a very strong message that the government is protecting the market for local buyers, as it should do – they were very nervous about the strong growth we saw last year
In addition to higher fees, a number of jurisdictions limit the type and number of properties sold to foreigners. Some, like Thailand and Bali, don’t allow non-residents to buy freehold properties at all – only leasehold.
Now, Canada has made its move, locking out foreign buyers altogether for two years in an attempt to cool a runaway housing market.
The Canadian government’s rationale for its decision, announced in April, is data from the Canadian Real Estate Association that showed average house prices nationwide had jumped by fully 50 per cent in two years, to C$869,300 (HK$5.33 million).
But it is debatable whether such market interventions have the desired effect.
Victoria Garrett, head of residential, Asia-Pacific at Knight Frank, believes Singapore’s high taxes would have deterred a number of potential purchases by foreign investors even before the latest hike in stamp duties introduced in December 2021 (up from 24 per cent previously).
“The increase sends a very strong message that the government is protecting the market for local buyers, as it should do – they were very nervous about the strong growth we saw last year getting out of hand,” said Garrett.