Real Estate Terms and Definitions | Singapore Property Glossary

Don’t Get Fooled by Tricky Terms When Purchasing Singapore Real Estate

Introduction: Unravelling the Language of Property Transactions

Buying a property in Singapore is one of the biggest financial decisions most people will ever make. Beyond the high costs involved, the process is filled with legal jargon and industry-specific terms that can easily confuse first-time buyers and even seasoned investors. Understanding these terms is essential to making informed decisions and avoiding costly mistakes.

Here are some of the key terms you’ll encounter when purchasing property in Singapore—broken down into simple explanations.

Leasehold vs Freehold

Leasehold: Most commonly 99 years (with some rare cases of 999 years). At the end of the lease, the property reverts back to the state. Leasehold properties are often more affordable and may still offer strong returns, depending on location and market conditions.

Freehold: Owned indefinitely, freehold properties usually command a premium due to their perpetual ownership. However, higher prices may not always translate into higher returns.

💡 Tip: Consider your investment horizon and budget when deciding between leasehold and freehold properties.

Total Debt Servicing Ratio (TDSR)

The TDSR framework, introduced by the Monetary Authority of Singapore (MAS), limits the proportion of your gross monthly income that can go towards loan repayments.

Cap: 55% of gross monthly income
Includes: All loans—mortgages, car loans, credit cards, personal loans

Understanding your TDSR ensures you borrow responsibly and prevents overstretching your finances.

Option to Purchase (OTP)

An OTP is a legal contract that grants you the exclusive right to purchase a property within a set timeframe, usually 14 days.

Booking fee: Typically 1% of the purchase price (non-refundable if you decide not to proceed)
Next step: To exercise the OTP, you’ll pay an additional option exercise fee, bringing the total deposit to 4%–5% of the property price

💡 Always review the OTP terms carefully with your lawyer before committing.

Seller’s Stamp Duty (SSD)

SSD applies when a residential property is sold within three years of purchase.

Within 1 year: 12%
Within 2 years: 8%
Within 3 years: 4%
After 3 years: No SSD

Even though this tax is paid by the seller, buyers should be aware of SSD if they plan to “flip” a property quickly, as it can significantly affect resale prospects.

Additional Buyer’s Stamp Duty (ABSD)

The ABSD is one of the most significant costs to factor into your budget when buying property in Singapore.

Rates: Range from 17% to 65%
Depends on: Buyer’s citizenship (Singaporean, Permanent Resident, or foreigner) and the number of properties already owned

💡 Always calculate the ABSD alongside the Buyer’s Stamp Duty (BSD) to know your true upfront costs.

Conclusion: Mastering the Language of Property Purchases

Buying property in Singapore is a major milestone, but it comes with its fair share of technicalities. By familiarising yourself with terms like leasehold vs freehold, TDSR, OTP, SSD, and ABSD, you’ll be better equipped to make confident and informed decisions.

When in doubt, seek advice from a professional property consultant or lawyer. Armed with the right knowledge and expert guidance, you can navigate the complexities of Singapore’s real estate market with ease—and avoid being tripped up by tricky terms.