Investing in overseas properties can be an exciting and potentially lucrative venture. It offers the opportunity to diversify your investment portfolio, gain exposure to international markets, and even enjoy a vacation home in your favourite destination. However, investing in properties abroad comes with unique challenges and considerations.

This article serves as a comprehensive guide to help you navigate the world of overseas property investment.

1. Know the Relevant Laws of the Country

Restrictions for Property Purchases by Foreigners

Many countries have restrictions on the purchase of residential properties by non-residents. As an overseas investor, it’s important to know whether you’re allowed to purchase property in a specific country.

In the United Kingdom and Japan, there are no restrictions on foreigners owning residential properties or land. Nevertheless, most countries have some form of restriction or require prior approval from the relevant authorities. Some also impose a minimum purchase price for foreign buyers.

In Australia, foreigners can only buy new residential builds, but not resale or established properties. Approval from the Foreign Investment Review Board (FIRB) is required before purchase.

In New Zealand, foreigners (except for citizens of Australia and Singapore) are generally not allowed to purchase residential land or landed titles unless they obtain permission from the Overseas Investment Office (OIO). Alternatively, they may purchase new build properties with an Overseas Investment Act (OIA) exemption certificate. These are usually off-the-plan apartments located in Auckland and Queenstown, and with a quota of up to 60% of the total units. These certificates expire once the project is completed.

In Thailand, foreigners are prohibited from owning land but can purchase condominium units. However, foreign ownership within any given condominium project must not exceed 49% of the total floor area. A recent proposal to increase this limit to 75% was met with uproar, hence foreign ownership of properties in Thailand will remain restricted.

In Malaysia, foreigners need state approval to purchase residential property. Each state has its own minimum price threshold — commonly RM 1 million in Kuala Lumpur, Selangor, and Johor (exceptions may apply in special economic zones). Foreigners can purchase both landed and non-landed residential properties.

In Indonesia, foreigners must meet minimum purchase values — IDR 5 Billion for landed property in Bali and Java, and IDR 2-3 Billion for apartments. However, foreigners are limited to leasehold titles with “Right to Use” or Hak Pakai (HP) titles, or “Right of Ownership over Stacked Unit’s Land Titles” or Hak Milik Atas Satuan Rumah Susun (HMSRS).  Freehold titles with “Right to Own” or Hak Milik (HM) titles are reserved only for Indonesian citizens.

Buyer Protection

When purchasing an uncompleted property, the initial deposit can be risky — especially in countries where funds are allowed to be paid directly to the developer. If the developer becomes insolvent, you could lose your deposit.

Some countries mitigate this risk by requiring funds to be held in trust or conveyancing accounts.

In Australia and New Zealand, deposits are typically held in trust accounts (often managed by lawyers) and cannot be accessed by the developer until the project is completed and titled. If construction is delayed beyond a certain period stated in the sales contract (the “Sunset Clause”), buyers can cancel the contracts and recover their deposits.

Working with a Local Solicitor

Engaging a local lawyer is essential. They are familiar with the legal landscape, can review the sales contract, and perform title searches to ensure there are no encumbrances or restrictions on the land title.

In federations like Australia and Malaysia, where each state has its own property laws, you have to engage a lawyer licensed in the state where the property is located.

2. Understand the Property Market You are Buying Into

Housing Market Trends

Before investing overseas, assess how the housing market has been performing. While property prices generally rise over time due to inflation and wage growth, they can fall during financial crises or high interest rate environments.

While Singapore’s property market remains resilient, with property prices still increasing despite a slew of government cooling measures, other property markets in the United Kingdom, Australia and New Zealand saw house prices drop following interest rate hikes. Even so, with increased migration and housing demand, certain parts of Australia and New Zealand are seeing house prices stabilize and even start to increase, with many signs pointing to a market recovery. To many investors, this is usually a good time to enter the market, since house prices have softened (which translates to better value), and there is a lot more room for prices to increase. Additionally, many of the central banks have reduced interest rates, resulting in an upward trend for house prices.

Home Ownership Rates and Tenant Pool

Understanding home ownership culture is also critical. For instance, Singapore has a high home ownership rate of 90.8% (2024), so investors should be mindful that their tenants would likely be non-citizens, with smaller proportion of local residents.

In contrast, home ownership rates are lower in New Zealand 66% (2023), Australia 66% (2020), and the United Kingdom 63% (2020). This means about one-third of the population are renters, providing a large tenant pool for investment properties. In many of these countries, young adults tend to move out of their family homes early, and rely on renting until they are ready to settle down and start a family. By understanding the potential tenant profile, overseas investors can select properties which appeal to the local population of renters, and ensure higher demand and lower vacancies for their properties.

3. Identify Your Investment Goals and Choosing the Right Property to Match Your Goals

These are a few different reasons why people would choose to purchase an overseas residential property:

For Own Stay  — Home Owner Mindset:

• Planning to migrate to that country for work or to raise a family there
• Planning to retire in that country
• Supporting a child studying overseas
• Buying a holiday home

For Investment — Investor Mindset:

• Want to build wealth via property investment (Seeking Capital Gains)
• Seeking for passive income from rental property (Seeking Good Rental Yield)
• Investment portfolio diversification

It is important to identify which mindset you have, as it helps to filter out the types of property that will suit your aims and budget.

If the intention is to buy for your own stay, either as a vacation home or a retirement home, the environment has to be one that is considered desirable. However, this usually translates to somewhere possibly with a lower population density, further away from amenities, which may not see a high capital gain or high rentability in the long run. Additionally, such desirable locations will mean paying a higher premium for it. The best example would be buying in Queenstown, New Zealand, or in Niseko, Japan. These are popular tourist destinations and for holiday homes, with peak periods of high demand, but with a lull period during the off-peak seasons.

If you have an investor mindset, then you need to choose a property of good value, that is easy to rent out and provides good yield, and preferably a property that is easy to sell when you decide to exit the market. Smaller one- to two-bedroom apartments in the city center such as in Melbourne and Auckland, near universities and work places are highly-favoured by investors, as these have a larger tenant pool and are usually lower in quantum.

Even as an investor, choosing between a property that gives a good rental yield as a form of passive income, or banking on a capital gain in the long run means going for different property types:

• Larger, family-style homes with three to four bedrooms may offer long-term capital gains but have higher upkeep and lower rental yields.
• Smaller units like one- to two-bedroom apartments offer higher rental yields, are easier to maintain, but may have limited capital appreciation.

For buyers with children studying overseas, proximity to schools and public transport is essential. A two-bedroom apartment offers flexibility for parents visiting or for renting out the spare room.

If you’re unsure about your goals, choosing the right property can become overwhelming. Clarifying your intentions will streamline the decision-making process.

Read more: Why Invest in Australia: 5 Key Reasons to Consider Australian Property

4. Financing Options

For investors based in Singapore, some major banks offer loans for overseas properties. These are usually restricted to certain locations, such as London Zone 1, or in major cities such as Tokyo, Melbourne, Sydney and Kuala Lumpur. At the same, these loans are subjected to Total Debt Servicing Ratio (TDSR) restrictions, which may limit your eligibility if you have existing Singapore property loans.

In some countries like Australia and Thailand, their major banks do not lend to foreigners. Nevertheless, there may be selected banks or non-bank lenders that offer mortgage loans. Thus, it is important to work with a local mortgage broker with access to these lenders, who can source for the best loan package suited to the foreign investor’s needs.

Alternatively, you can also consider utilising the equity in your Singapore private properties to finance your investment overseas. However, the interests from these Singapore-based loans may not be tax-deductible in that country.

5. Tax Implications and Obligations as a Property Owner

Stamp Duty Treatment for Foreigners

In most countries, there will be stamp duty levied on the purchase of residential or even non-residential properties. Additionally, foreigners will usually attract a higher amount of stamp duty.

In Australia, foreigners who have already obtained FIRB approval will have to pay a Foreigner’s Surcharge or Levy of 7% to 9% of the property price, in addition to a Buyer’s Stamp Duty (sometimes referred to as a Transfer Duty) which varies between states. In most states, with the exception of New South Wales, the stamp duties are payable once the property is completed, which may be months or even a couple of years after the deposit is first paid.

In United Kingdom, there is Stamp Duty Land Tax (SDLT) imposed, with additional 2% of the purchase price for foreigners, and another 5% if the property is not your first property worldwide. While Singapore’s ABSD takes into account your nationality as well as the number of properties you already own in Singapore, the SDLT in the United Kingdom takes into account the number of properties you already own in all countries. The SDLT is only payable once the property is completed.

In contrast, there are no stamp duties applicable in New Zealand to both their local and foreign buyers, which makes it an attractive place to consider for investments.

Read more: The Singaporean Advantage in Buying New Zealand Properties

Capital Gains Tax and Inheritance Tax

Unlike Singapore, most countries have some form of tax applied on the profit that you make from selling your property. Some countries like Malaysia charge foreigners 30% of the net profit (if the property is sold within the first five years) or 10% of the net profit (if sold from the sixth year onwards), while countries like Australia and New Zealand consider the net profit as part of your taxable income, thus the tax rate will follow the relevant tax bracket, based on the amount to be taxed.

Also, should the unfortunate happens and the property owner passes away, countries like Japan and the United Kingdom have an inheritance tax which needs to be paid first, before the property can be transferred to the beneficiary.

Income Tax Treatment for Non-Residents

If you stay in the country for over 183 days, you’re usually taxed as a resident. Otherwise, rental income are taxed at higher non-resident rate, at a flat rate of 24% in Singapore, 30% in Malaysia, and starting from 30% in Australia.

In New Zealand, an offshore investor who owns a property in the country will be taxed at the same rate as their residents, and income tax starts from 10.5%.

In any case, it is always prudent to speak to a tax professional based in the country you are buying into, to ensure you understand the tax implications, and to maximise your tax savings, since many property-related expenses can be deducted against your rental income to reduce your tax liability.

6. Exit Strategy

To sell your property, you’ll need a local real estate agent. Overseas agent commissions are typically higher than in Singapore – ranging from 3% to 5% of the sale price. You will also need to be aware of any withholding tax imposed on the gains, as well as capital gain tax, if applicable.

In Australia, since foreigners cannot buy resale properties, you will likely be selling to their local population, which includes their citizens and permanent residents. Likewise for New Zealand, your property can only be sold to Kiwis, Australians and Singapore Citizens. To make it easier to exit, it is therefore prudent to choose a property that will appeal to locals as owner-occupiers, or as investment properties.

If you are intending to pass the property onto your beneficiaries, it is best to prepare a will. Due to the common law practiced in Australia, New Zealand and Singapore, a will that is done in Singapore should be recognised in these countries. Nonetheless, having a will prepared by the local solicitor may make the process much smoother. As mentioned earlier, you must also be aware of possible inheritance tax imposed on the properties, especially in some countries like Japan and the United Kingdom. In Australia, foreigners who do not have residency visa are not allowed to inherit residential properties, which means your non-resident beneficiaries may have to sell the property instead.

Conclusion

Investing in overseas property can be highly rewarding — financially and personally. But it requires due diligence, clear goals, and the right local partners. Understand the legal and tax environment, study the local property market, and align your investment choices with your long-term strategy.

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