{"id":45798,"date":"2021-11-24T10:05:51","date_gmt":"2021-11-24T02:05:51","guid":{"rendered":"https:\/\/www.99.co\/singapore\/insider\/?p=45798"},"modified":"2022-07-05T01:50:45","modified_gmt":"2022-07-04T17:50:45","slug":"buy-or-rent-home-singapore","status":"publish","type":"post","link":"https:\/\/www.99.co\/singapore\/insider\/buy-or-rent-home-singapore\/","title":{"rendered":"Should you buy or rent a home in Singapore?"},"content":{"rendered":"
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At a certain point in our lives, there comes a time where living in the homes we grew up in just doesn’t cut it any longer. We start looking to spread our wings and leave the nest, in search of having a space to call our own.<\/span><\/p>\n\n\n\n

This then begs the question \u2013 should you buy or rent a home?<\/strong> While renting<\/a> may be the norm for most millennials in other major cities, our situation is unique as here in Singapore, we have access to more affordable housing options when becoming a homeowner, such as government-subsidised HDB flats.<\/span><\/p>\n\n\n\n

Many people subscribe to the idea that renting means you’re helping someone else pay off their mortgage instead of putting the money into your own property, and that owning your own property is infinitely better.<\/span><\/p>\n\n\n\n

A quick Google search will show you that while there is no one size fits all answer, many financial experts seem to agree that renting is the better option \u2013 but only if you\u2019re considering staying in the same place for less than 5 years. <\/span><\/p>\n\n\n\n

With this in mind, the duration of your stay plays a major role in determining which option is best suited for you from a financial standpoint.<\/span><\/p>\n\n\n\n

This also puts to bed the common misconception that owning is always better than renting. <\/span><\/p>\n\n\n

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\"HDB
Is owning or renting a property better? It depends on how long you are looking to stay put in that property.<\/figcaption><\/figure><\/div>\n\n\n

Costs when acquiring a property<\/strong><\/h2>\n\n\n\n

There are various costs to consider when acquiring a property to live in. <\/span><\/p>\n\n\n\n

Rent\/Mortgage<\/b><\/h3>\n\n\n\n

Paying your rent or mortgage will likely be the biggest monthly expense for most working adults. For a property valued at S$1 million, one can expect to shell out between S$2,600 to S$3,000 every month for the mortgage payments (based on a 75% loan at 2% interest). <\/span><\/p>\n\n\n\n

In contrast, renters may enjoy living in the same million-dollar property for a few hundred dollars less. This is subject to the market conditions and current interest rates.<\/span><\/p>\n\n\n\n

For example, a 1-bedroom unit at Sky Vue condo in Bishan is marketed at S$1 million. Based on the mortgage calculator, the monthly payments would amount to S$2,772. <\/span><\/p>\n\n\n\n

A similar unit in the same development is listed for rental at only S$2,600. Do bear in mind that the listed amount usually has room for negotiation, which means that the unit can be leased for as low as S$2,400, which means a renter will have S$372 in savings every month, or $4,464 per year.<\/span><\/p>\n\n\n\n

Upfront costs<\/b><\/h3>\n\n\n\n

Looking beyond the savings in terms of monthly rental payments, renters only bear a much smaller upfront payment compared to those buying a property. <\/span><\/p>\n\n\n\n

A renter only needs to pay an upfront deposit amounting to 3 months of the monthly rental. This goes towards covering the first month\u2019s rent, with the remaining 2 months being used as a refundable security deposit which will be returned at the end of your tenancy agreement. <\/span><\/p>\n\n\n\n

Based on the example above, this amounts to S$7,200. On top of this, we will add another S$230 (0.4% of the total rent for the lease period) in compulsory stamp duty that has to be<\/span> paid to the IRAS<\/span><\/a>. This brings the total upfront cost for renting to S$7430.<\/span><\/p>\n\n\n\n

Expense type<\/b><\/td>Amount<\/b><\/td><\/tr>
First month rent<\/span><\/td>S$2,400<\/span><\/td><\/tr>
Security deposit (2 months rent)<\/span><\/td>S$4,800<\/span><\/td><\/tr>
Stamp duty (0.4% of the total rent for the lease period)<\/span><\/td>S$230<\/span><\/td><\/tr>
Legal\/Conveyancing fees<\/span><\/td>NA<\/span><\/td><\/tr>
Agent\u2019s commission (amounting to one month rent)<\/span><\/td>S$2,400<\/span><\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

If you were to buy the exact same property, you would have to cough up over a quarter of a million dollars to cover various expenses, such as:<\/span><\/p>\n\n\n\n