Given that many of us cannot indefinitely own a home in Singapore (hello, 99-year leasehold HDB flats), would it then make more sense to rent a place and make it our own? Yes, freehold properties still do exist, but they tend to cost a lot more, no?
Well, the answer to your rent-or-buy dilemma depends on your own unique circumstances.
You can buy a HDB flat, sell it after five years and upgrade to a condo. But don’t forget that buying a home not only involves a lot of paperwork but is a major financial commitment as well. And what if there’s a chance you need to migrate overseas for work in the near future (or return to your home country)?
Or perhaps you desperately want to move out of your parents’ home, but you’re nowhere near getting married, and 35 years old is a decade away. Should you just stick it out for the moment or dedicate a portion of your salary to finally fly solo?
Ah, so many questions… But you’ve come to the right place. Here at PropertyGuru, we may just be able to provide some answers to ease your dilemma.
Renting vs buying in Singapore
Here’s a quick overview of the key differences between renting and buying a property in Singapore.
Financial commitment
Short-term, as short as 3 months
Long-term, usually 25- to 30-year home loan that you may need to refinance/reprice every few years
Affordability (downpayment + monthly payments)
Depends on property type. No downpayment, and monthly rent payments may be cheaper in the short run.
Depends on property type. Requires downpayment, although you may be able to use your CPF monies to cover part of it
Payment schedule
Monthly (or otherwise, depending on negotiations with landlord)
Monthly mortgage repayments, entire home loan duration depends on tenure (usually 25 to 30 years)
Availability
Immediate; many rentals are in “move-in ready” condition
Depends. May need to wait up to 5 years for new properties (new condos, HDB BTO flats), but there are “move-in ready” homes on the resale market
Ownership
No, owned by landlord
Yes, but depends on your lease
Flexibility
Yes, can find another place easily
No, takes time and effort to sell and buy another property
Maintenance
Depends on rental contract. Typically included in rent (landlord usually handles the maintenance)
As the owner, you are responsible for all maintenance (unless it’s a HDB issue like cracked tiles, etc)
Able to use CPF monies?
Yes, if eligible
Furnishings
Depends, check with your landlord or property agent if the place is fully furnished or a blank slate
Usually none, unless it’s built-in furniture done by the previous owner; you might be able to buy a private property that is fully furnished but it will be costlier
Renovations
Modifications usually not allowed, check with your landlord if urgent renovations are required
You’re free to renovate and make modifications, as long as you adhere to authority guidelines
Asset or liability?
Liability, because you don’t own the property
Asset, because you will “own” the property after fully repaying your mortgage
Renting a home in Singapore
Further to the table above, let’s break down the points into pros and cons:
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Renting Pros
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Renting Cons
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Short-term financial commitment (> 3 months)
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Property is owned by landlord
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Renting a condo unit may actually be much cheaper than buying one (downpayment + monthly mortgage)
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Many rentals are in “move-in ready” condition
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You can’t use CPF to pay rent
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Once your rental contract ends, you are free to move to another rental — flexible
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Modifications/renovations not allowed, check with your landlord if urgent
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Your landlord usually handles maintenance
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Liability, because you don’t own the property
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You can move into a fully furnished home
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Renter beware, the landlord may evict you if you flout their rules or if they decide they want to stay in their own home after all
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It looks more or less balanced, so it really boils down to your own needs.
Who should consider renting?
- Singles: If you’re a singleton with a stable, well-paying job who just wants to experience independence and living on your own; or if you desire to move out of your parents’ place for any reason, renting could be for you.
- Short-term needs: Maybe you need a temporary abode while your own home undergoes renovations (and you don’t want to book a hotel or serviced apartment — which actually, is kind of like renting).
- Couples who aren’t ready to settle down: Or you want to experience living with your partner or spouse-to-be (you haven’t decided if you want to get married or if you even want to buy a house together) but without the background nagging of your parents or noisy siblings to disturb your “couple time”.
- Overseas work commitments: You might even be considering migrating overseas for work permanently, so you aim to sell your current home, move into a rental and take it from there. Or you could be in Singapore temporarily (i.e. an expatriate), so you don’t want to be tied down with a huge purchase.
- Nomadic free spirit: Maybe you just want to stay somewhere, anywhere, without strings attached; or be a home-hopping nomad who just wants a place close to work (and you change jobs every few years). You’re just a free spirit, and we respect that.
Buying a home in Singapore
Now it’s time to break down the points for buying a home into pros and cons:
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Buying Pros
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Buying Cons
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You may be able to use your CPF monies to pay for your property, if eligible
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Long-term financial commitment, usually 25- to 30-year home loan that you may need to refinance/reprice every few years
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Minimal cash outlay if buyer’s CPF monies is able to cover most of the downpayment + monthly mortgage
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Inflexible/illiquid, takes time and effort to sell and buy another property
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You “own” the house for the duration of its lease (usually 99 years if not freehold)
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As the owner, you are responsible for most (if not all) maintenance issues
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May need to wait up to 5 years for new developments (HDB BTO or new condos) and months for the handover — although there are “move-in ready” homes on the resale market
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Asset, because you will “own” the property after fully repaying your mortgage
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Even if you buy a “freehold”, it may not be really be forever — if an expressway needs to be built where it stands, or a new developer wants to “en-bloc” you, you still gotta go!
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You’re free to renovate and make modifications, as long as you adhere to the authority’s guidelines
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You probably need to pay for your own renovation costs, especially if buying a totally new HDB BTO flat
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Usually no furnishings, unless it’s built-in furniture done by the previous owner; you might be able to buy a private property that is fully furnished but it will be costlier. This can either be a pro or a con, depending on your needs. (No furnishings = free reign on decor; fully furnished = saves time and effort)
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Again, the pros and cons are quite balanced as well. So yes, the next step is to see what suits your own needs.
Who should consider buying?
- Families (and families-to-be): If you’re looking to get married and start a family, you probably want to buy a home to call your own. Staying put in one place for the long-term is also less disruptive for your (future) children. Those who aren’t in a hurry to find a place can probably opt to wait for the completion of their HDB BTO or condominium.
- The CPF-rich: Perhaps you have enough CPF monies and you’ve done the math; buying a HDB flat, minus all the grants, costs practically nothing because there’s no cash outlay on your end. Besides, once the minimum occupancy period (5 years) is over, you are free to sell (and upgrade) or rent out your entire flat.
- Future upgrader: Buying a home can be a valuable asset. Maybe you want to buy an executive condominium, which is eligible for government subsidies yet can become a private property asset in the future?
- Asset collector: Property tends to be an appreciating asset, and even if you’re not looking to sell, HDB has this thing called the Lease Buyback Scheme that allows seniors to monetise their flat to get retirement income.
- Mr/Ms Personalisation: And if you’re the sort who like to personalise everything you own, the constraints of not being able to renovate your home (if you rent) might drive you up the wall. By buying your own place, you can be the master in designing the space.
Conclusion: Should you buy or rent a home in Singapore?
We can’t help you make your decision, but some of the key factors that affect your decision, as outlined above, include:
- Term of stay
- Affordability
- Level of commitment
- Purchase intention (a home or an investment, or both)
- Future plans
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This article was written by Mary Wu, who hopes to share what she’s learnt from her home-buying and renovation journey with PropertyGuru readers. When she’s not writing, she’s usually baking up a storm or checking out a new cafe in town.
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