We all know that residential properties are properties such as HDB flats, condominiums, landed properties, apartments etc.
Besides residential properties, there are also various types of properties such as commercial and industrial properties in Singapore.
Let us have a look at what are some of the differences between residential and industrial properties in Singapore in general.
Property Tax Rates
For residential properties, there are owner occupied and non owner occupied property tax rates. Owner occupied rates are usually also lower than non-owner occupied rates. If you own a property and rent it out for rental income, do note that it will be under non-owner occupied rates. There is only one type of property tax rates for industrial and commercial properties. Also, there is no differentiation between owner occupied and non-owner occupied tax rates for commercial and industrial properties. The property tax rates for all types of properties in Singapore would usually also depend on the annual value of the property.
Goods & Services Tax (GST)
In terms of residential properties in Singapore, GST may be something uncommon or sometimes unheard of. For industrial or commercial properties, GST may be applicable if the seller or the landlord is a GST registered company. However, it may be possible to claim back the GST amount paid for the purchase or for the lease if it is purchased or leased by a GST registered company. It is also possible to voluntarily be GST registered. However, it is always advisable to first consider the benefits and costs of voluntary GST registration and whether it is beneficial for your business.
Buyer Stamp Duty
For residential properties, the buyer stamp duty percentage have been revised for properties above one million Singapore dollars while the buyer stamp duty percentage for industrial and commercial properties remains the same even for properties above a million Singapore dollars.
Ownership by Individual or Company
For residential properties, most of the time, properties are purchased under personal or individual names. Mortgages are also usually under personal name. However, when it comes to industrial or commercial properties, it is common for businesses to purchase under company names and take up mortgages under company names. For residential properties, it is possible for a purchaser to use cpf funds, however cpf cannot be used for the purchase of commercial or industrial properties.
Condition of Units
When we talk about residential properties, units are usually either fully fitted with furniture or partially fitted or partially furnished with some furniture such as white goods.
In the case of industrial properties, units are commonly in original bare condition and fitted industrial units are usually not that common. This is due to the differences in terms of business operations and requirements of various businesses which is why reinstatement is usually necessary upon expiry of the lease.
Usage of Properties
For residential properties, it is quite straightforward as residential properties are usually only meant for residential use. Residential properties usually vary in terms of size, number of bedrooms, bathrooms, floor level, whether with balcony or without, unit facing, views from unit etc.
Industrial properties are meant for industrial use, however, there are various categories of industrial properties such as B1 & B2 industrial properties which differ in terms of allowable trades and nuisance buffers. Under B1 & B2 properties there are also flatted factory, ramp up factory, terrace factory, showroom units etc and can vary in terms of ceiling height, floor loading, power supply, vehicle accessibility etc. Change of use is sometimes also possible but would be subject to the review and approval of the relevant authorities.
There are also some differences between commercial and industrial properties.
Why it is Important to Know
Before purchasing or renting an industrial property or a residential property, it is important to note the differences and similarities so that you will make informed decisions be it an industrial space such as a warehouse / factory unit or a residential unit such as a hdb, condo, apartment or landed property for own use or for investment. Most of us are familiar with residential properties, however, industrial properties can be quite different in certain ways when compared to residential properties.