Friday, 25 October 2013

Exit plan: Selling or renting out your property in SG?

Hi everyone,

We've just received an Anonymous comment in this post. The commenter said:

"I am also in the process of migrating to Vic, Australia. Wondering which neighbourhood is safer. Will you be able to share?"

Unfortunately, if you were to ask us this very question about Singapore itself, or turn that question around and ask yourself this, could you give a very good answer? Apart from "avoiding certain Lorongs in Geylang". Maybe I'm slow, but I can't answer this question for Singapore. And by extension, I can't give a good answer for Victoria or Melbourne, as I haven't lived there before. I do have a friend with a lot of opinions and anecdotes on this, and would invite him to do a guest post if he's keen, but I don't feel that whatever I have gleaned from our conversations on this is definitive enough. All I can say is, take your time to recce for your 'permanent' home while you are renting - if your long-term plans are to buy. Remember that if a place is unusually cheap, there are often reasons. And whether for short-term or long-term residence, stay away from Housing Commission areas. Hope that helps.

The pleasures of Geylang... Image from

Now that comment is not the reason for this post. I'm posting because one of the questions we've frequently received as prospective emigres is: "So are you guys selling your place, or renting it out?" Usually, the asker wants to hear a certain answer, which almost invariably is the opposite of what we did.

Selling one's flat prior to emigrating is akin to burning the bridges and just a step below renouncing one's citizenship. It is a blatant vote of no-confidence in Singapore/PAP/Singapore Government/economy/one's personal decision to buy property in the past few months/not emigrate from Singapore... Etc. Anything which one wants to project onto our decision, they will. We can't stop them, and we don't care.

The view from our kitchen window...

Yes, we sold our HDB flat. We've mentioned it earlier in some posts which I don't deem relevant enough to dig up. But this is why:

1. Several months of attempting to rent out our property via online advertisements, with limited response.

2. Having to worry about and/or administer our rental arrangements back in Singapore remotely. Yes we could use an agent, but that eats into the revenue and can't completely eliminate the worry. Call us paranoid if you will.

3. Intel from reliable (to us, at least) sources that the world economy is going to shit, and by extension, Singapore's. Never mind who we elected as President, or that we have the world's highest paid Leeders. They will be among the first to tell us that the Singapore economy is very dependent on external factors, and they'd be exactly right this time. It makes no sense holding a Colonel Sanders lookalike to his election campaign mantra that he is fit to steer us through troubled waters, or that with the current team at the helm, Singapore will have smooth sailing throughout. 

In short, you are pretty much on your own, you have to fight for your own lunch, nobody owes you a living, dig the spurs into your own bloody hide, meritocracy, yadda yadda... Hey, they did warn us!

And in case it isn't clear enough, this can - independently of any cooling measures our brilliant Gahmen can think of - lead to point 4.

4a. Intel from various reliable sources that the Gahmen is throttling back sharply on the influx of foreigners, who have been the primary driver of housing prices. Then again, maybe this can't be considered 'intel', it's more like news.

4b. Intel from reliable sources that the housing market was at a peak, and was looking at the next year or two's downturn. It seems to be happening already... This would make matters worse whether you decide to hold and sell, or rent out your property for the next few years, especially if you plan to emigrate AND own a HDB (which you have to sell if you intend to take up Aussie citizenship or buy property in Oz. By right lah. Not sure how many overseas property owners who also own HDB flats are found out...)

If you own additional or private property, you don't have this situation. You can have your 'escape plan' back in Singapore. But we don't, which brings me neatly to my next point...

5. Generating capital and liquidity. We are inclined to buy a place in Australia, if that makes financial sense. Even if we don't, there are safe options for parking our money in Australia and earning half-decent interest along the way. Much better than doing CPF top ups or any pathetic banking options we can get in SG. We are bracing ourselves for potential unemployment in Oz, and the S$1400-$1800 a month that we could optimistically earn from renting out our 3R flat isn't going to do a whole lot for us in Oz. At best it will help us maintain a subsistence-level existence. At worst we may lose this income if we lose our tenant, and then have to fly back to SG to sell our flat at whatever pathetic price we can get due to point #4.

If you have tons of money, this wouldn't concern you. But then, you probably wouldn't be reading this blog. After all, Singapore is an excellent playground for the rich!

6. A symbolic gesture of burning the bridge. This is a minor issue, subordinate to all the other reasons listed, and in itself insufficient cause to sell our flat. But it is a bonus that we have this means to demonstrate our resolve. I have no doubt that some people we know (I wouldn't describe them as friends) were not so much concerned for our welfare as emigrants, than for their own need to feel good with their own decisions - or indecision wrt migration. We do know people who are genuinely happy to stay in Singapore. Ironically, it is these people who do not seem to feel that our decision to sell prior to migration erodes their belief in this country, or in their decision to stay. Then, there are those who openly confess to being interested in migration, but have their own reasons for staying - I respect this group as well, and we have lots of healthy discussions. The worst are those who condemn our decision or get extremely defensive about their own choices, you guys should really wake up and smell a good cuppa of Australian coffee!

7. Rental income (if any) from SG is taxable in Australia. It's not so much that we refuse to pay the Aussie taxman, but it adds needless complexity to our financial affairs. All for what? S$1.4k a month? (bearing in mind that having this income means we do not get the lump sum from selling our flat)

Now that we've discussed our reasons for selling, who do I think should rent out their property instead of selling, and why?

a. If you have tons of cash and don't need to generate liquidity.

b. If your property is private, thus no ownership restrictions and you can freely buy Aussie property.

c. If your property in Singapore generates a good rental yield (whatever you define it as). You would of course need - and already have - a good tax accountant to sort out all your affairs in this regard because you are rich and have better things to do with your time...

d.  You have an emotional attachment to Singapore, and see yourself potentially coming back in future. This could work especially if the property in question is not HDB. Then you truly know that you love SG and come back because of that, rather than being squeezed by the balls/tits/ovaries due to HDB regulations and unable to buy the Aussie dream house.

I still can't believe...

The problem with this post is that if you've only just read it, you've probably missed the boat. But if you are really keen on migration, now is the time to get yourself qualified. Take a course, brush up on your English. Do something useful to that end. Catch the next 'upturn' in the housing prices, because even a pessimist like me knows that's going to happen. In fact, I'm so sure that prices will eventually rise in the long term that I wouldn't want kids even if the baby bonus were $100k!

I know there could be some who disagree with us, but it's ok. The intel that we've got about the world economy might be false, that's ok too. Even if the property market skyrockets unexpectedly, good for those of you with property! I'd sure be kind of sore that I was wrong and cashed out at a wrong time, but at least there's some money to start a new life with, and really, that's all that matters for us.

- S


  1. This is a hot topic of discussion with my partner lately, to sell away or rent out our condo?
    Migration is a commitment not a transit.
    If not rich, burn the bridge, sell it to buy property in down under.
    Not to forget that whatever you take out from your CPF will have to go back to your CPF after selling it, so you may end up with not much left unless you clear out all your CPF 4 years later after becoming a proud Australian.
    Remember property price may be low in down under depending on location but home loan interest rate is extremely high as compared to the banks in SG.

  2. Good point there... My assumption was that most people would have a tidy sum of cash to take back, but this might not be the case for everyone.

    We got our place cheap... so...

    As for whether to buy or rent, that could warrant a new series of posts. We are totally out of our league here. The challenges you mentioned are very real (interest rates)

    Offhand, our goal is to do around 70% down payment and 5 year loan if we do buy over there. It seems doable, since we are willing to compromise. To frog-in-the-well-Singaporeans like us, it's still a freehold landed property (or "BUNGALOW") even though it won't be very pretty, new, big, or near the city centre.

    We'll make do :)

    - S

    1. *as for whether to buy or rent in Australia

  3. Pls join us in Facebook when you come over to Melb:

  4. This is a Facebook group for Sinkies yet to move to Oz:

  5. Hi there!

    Excellent blog you have here! This blog post was just what we needed at this moment.

    My partner and I are planning to move to Australia. However, we are also due to collect our BTO in a year's time. Tentatively, the plan is to move in 2 years time. We understand that we cannot sell the flat within five years thus the only option is to rent our flat out.

    Can you please further elaborate on the taxation of our rental income by Australia pls?


    1. Hi Rizman,

      Sorry for the delayed reply. Just got back from our dive holiday :)

      You cannot have your cake and eat it, not legally at least. So how do you plan to clock the five years residency for your BTO?

      You know, if a family member stays at your place and rents out their own... Ahem. ;)

      Basically, you are taxed based on what you declare. I assume that you don't have tons of money (how much can a HDB flat be rented for anyway?) involved in that, so it won't attract any attention.

      Personally, I don't want to take risks, and I don't want to have to deal with such hassle. So we sold our place. If you want to do it properly, it might be quite troublesome to provide all the documentation of your rental income. You'd also want to deduct off any expenditure to maintain your BTO flat in SG as a tax relief.

      So how? Only you can decide ;)

      - S

  6. Hi.
    To the poster asking about neighbourhoods to avoid in Melbourne: I studied in Aus; Footscray is one neighbourhood to avoid due to the crime rate. St Kilda's is a red light district and can be unpleasant.

    1. That is a place that I've been warned about as well. They have cute nicknames for the place, like Footcrazy, Footscary... Haha...

      That's probably why it's rather cheap despite being close to Melbourne city centre.

      I've been warned away from the western suburbs by some, but can't rule that out given our limited budget. In any case, all things considered, I rather stay in a place which has less infrastructure but is also less populated. The commute to city centre (if we work there) will be less congested.

      - S

      It's a bit like SG's east vs west. Property costs more in the East of SG, and more people live there. West is rather industrial, air slightly worse, but if you compare the commute to city (by car or otherwise), it's always better to stay in the west for SG at least. Unless you know damn well you will work only in the east (if you are working in an airline or at the airport for instance).

  7. If I move to oz, and then later on sell my hdb. will the capital gain be taxable?

  8. Good article! Me and my wife have been planning for the possibility of a migration to either Oz or Nz in about a couple years from now. We got our Balanced flat and our MOP will be up soon next year.

    I have spoken to a few friends whom they are all saying to keep my flat and rent it out as income. The thing is, precisely what you say is true - the hassle of taking small monthly rental payouts(after agent and tax deductions) and considering we don't have huge lump sum sitting around in the bank.

    The best option for us is to sell the Flat for a huge cash payout (even after deducting what goes back into CPF and interests. We got the house at a much cheaper rate as compared to the open market value back then right before the property market skyrocketed). Take the once in a lifetime opportunity(cash in hand) and down for a nice cosy property in either Oz or Nz. Secure a decent job and pay full for a car(which are cheap) there, for transportation. The rest of the cash balance will be kept as savings and invested and fund us as we build our foundations for the first few years of our stay there.

    My believe is, if you want to make the jump. Don't look back. 10 to 20 years ago, to keep your hdb would be a more sensible option because Sg is more stable and happier back then. Now, everything is getting expensive and crowded. And things will not be getting any cheaper.

    Another factor that we considered was for our children. We want them to have a stress-free childhood and a more relax education. We want them to grow up, not just successful, but happy as well. Even though grades play an important role, happiness and life matters most.

    As such, after weighing the pros and cons.... we have decided to sell, take the profit and migrate when the time comes. It is now or never. At least for the typical average Singaporean like us.

    Thanks again for sharing your life decision. Pretty much appreciated!

    1. RyeCullen, thanks for your sharing, sounds like you guys have your heads screwed on, reckon you'll do just fine here :)


  9. Hi there Neurotic Couple,

    not sure if you're still checking up on this blog, but yes thanks a lot for the mine of info that you have shared.

    I'm a Singaporean guy married to an Australian lady, and I've just been granted permanent partner visa (subclass 100), so lucky me, first hurdle cleared. Next up is the moving to Australia.

    We bought our resale HDB flat 3 years ago and unfortunately have 2 years left before we can sell it off. That is, the powers that be don't change the regulations. The plan that we had was to rent out the flat for the remaining two years while we are in Australia. But I just found out on your blog that any rent we collect in SG is taxable in AU. Is there any way around this, as in not declaring any rental income? Will that be severely illegal in AU, or they will not really bother taxing the monthly rental income of a 4-room flat which would most probably be around SGD$1.5K?

    Also, since I'm the owner of the HDB flat, technically I'm not allowed to purchase a house in AU right? But my PR wife, who's an Australian citizen, and who's only listed as an occupier not co-owner, means she's free to buy a house in AU? supposing we somehow have that much spare cash to buy a house :)

    I'm also looking at Melbourne since the majority of shipping firms are based there. Not saying that I'm only limiting my options by only looking at shipping jobs, but after reading various blogs like yours as well as asingaporeanson, I'm preparing myself mentally to jump out of my comfort zone and be a tradie if need be.

    Would be great if you can share some FB groups or connections that would really be useful in our imminent move down under.

    The Singlish Bloke