How to Start Real Estate Business in Singapore
The Property Market or Real Estate in Singapore
It’s a known fact that Singapore’s real estate market and its economy have remained healthy and robust despite the recent slowdown too. Many builders and developers have been purchasing land at all-time high prices, and the sale of land has gone up by 29% as compared to the data five years ago. Singapore’s rich pool of human resources and amazing location pulls in affluent international investors to set up their businesses in this island or even make it as their second home. Both residences and official spaces are getting stronger when it comes to demand and hence the prices are also estimated to shoot up in 2018.
Singapore is fast gaining the top-slot as one of the rapidly growing economies in Asia and therefore, its real estate industry is booming too. There is high demand for not only residential complexes but also commercial and official space. Singapore is known as a flourishing trade and financial hub. Its capacity for strong economic recovery and a thriving employment scenario has helped in an upward trend in market optimism. Global investors, Businessmen, and professionals are buying residential spaces either for the purpose of their occupation or as also as an investment. Even the property rental market in this country has gone up rapidly because of the constant inflow of foreigners.
The real estate or property market in the island has seen unparalleled growth off late. Consequently, the real estate agency segment is rapidly being seen as a profitable option for business. This article provides general guidelines on the process of setting up a real estate company in Singapore.
As per the existing legislation, all the real estate agencies should get a license from the Council of Estate Agencies (CEA) before beginning the agency work in Singapore, be it for domestic or foreign properties. Professionals who are doing real estate agency work on an individual basis in Singapore should be registered with the CEA through the real estate agency that they are associated with.
Requirements for Setting up a Real Estate Agency
As per the Estate Agents Act, all the real estate agencies be it sole-proprietorships, partnerships, or even a private limited company, who are conducting estate agency work in Singapore be it for domestic or foreign properties should necessarily be licensed by the CEA or Council of Estate Agencies.
A professional who is working for a real estate agency needs to first register with the CEA, through the real estate organization that he or she is working for.
Licensing criteria for real estate agencies
- The real estate business should be registered with the Singapore Companies Registrar, ACRA either as a Singapore private limited company, a partnership or a sole-proprietorship.
- The estate agency needs to appoint a Key Executive Officer (KEO) who should not be an undischarged bankrupt or should not be convicted of any fraud, dishonest dealing or violation of the fiduciary duties in any nation; and someone who has not served detention or police supervision order either under the Misuse of Drugs Act or Criminal Law Act. Besides this, the KEO must:
- Have at least 4 GCE ‘O’ Levels passes or equivalent;
- Should have passed the industry examination, that is, the Common Examination for House Agents (CEHA) or Real Estate Agency (REA) exam, or equivalent;
- Should be a director, sole-proprietor, or partner of the estate agency he or she is associated with;
- Should not be registered with any other real estate agency and should be an existing licensee of an agency;
- Have a minimum of 3 years work experience under a Singapore licensed real-estate agency;
- Should have conducted a minimum of 30 real estate transactions in Singapore within the last three years, or who has adequate experience in overseeing the functioning of an estate agent as an executive director or partner, or chief executive or sole-proprietor;
- Should not have earlier held a position as a sole-proprietor, director, KEO, or partner of an estate agency whose license was revoked.
- The estate agency or any of its main employees should not be holding a money-lender’s license or be a part of a licensed money-lender.
- The estate agency should fulfill the complete requirements and proper criteria, that is, it should not be bankrupt, or convicted of any fraudulent dealing, dishonest act, or breach of fiduciary duties.
- The agency should possess a valid Professional Indemnity Insurance Policy, which covers the business and all its employees or real estate agents.
- The estate agency should have Standard Operating Procedures (SOPs) and proper documented guidelines for training and also supervision of the real estate agents, complaint-handling process, dispute resolution, marketing, and advertising, publishing of publicity material, protection of the confidential information and data of clients and the service and delivery standards for its operations.
- All real-estate agencies should have issued the estate agents cards to every real estate agent as mandated by the guidelines set by the CEA.
- Individual real-estate agents or professionals employed by a real-estate agency should fulfill the following criteria of registration.
- Should be at least 21 years of age;
- Should possess at least 4 GCE ‘O’ Levels passes or equivalent;
- Should have at least passed one industry examination such as Real Estate Salesperson (RES) exam or equivalent;
- Must be registered with only one licensed real-estate agency at any point in time;
- Should not be working as a licensed moneylender or an employee of a licensed moneylender;
- Should not be a current licensee or Key Executive Officer (KEO) of any other real estate agency;
- Has to take on the mandatory professional development of a minimum of six hours every year;
- Should be satisfactorily covered under a Professional Indemnity Insurance that is valid for a minimum of one year from the start date of the registration;
- Should not have ever defaulted on Medisave contributions to the Central Provident Fund Board;
- Must fulfil all the proper criteria; for example, he or she should not be an undischarged bankrupt; not be convicted of any fraud, dishonest act or breach of fiduciary duties in any nation; and should not have ever served detention or police supervision order in the Misuse of Drugs Act, Criminal Law Act or Estate Agents Act;
- All practicing estate agents should mandatorily wear their agent identification card while conducting their estate agency work.
Real Estate Agency License: Application Procedure
Applying for the real estate agency license involves various steps like submitting some requisite documents and information to the CEA or Council of Estate Agencies. Here is a snapshot of the procedure:
- Submit a copy of the company’s Business Profile (it could be obtained from ACRA for a nominal fee);
- Submit a copy of the policy schedule or cover note for the agency’s Professional Indemnity Insurance, any pending issuance of the insurance certificate, which should be valid for at least one year from date of application;
- The real estate agency’s name should have been registered with ACRA;
- You should have the registration number of your business;
- Keep the details such as personal details of the Key Executive Officers, sole-proprietors, directors, or partners, as the case may be;
- You would need the details of the recent 30 sale or lease transactions that were done in the last three years.
Remember that the application has to be submitted by the appointed Key Executive Officer (KEO) such as the company’s CEO, COO, or MD. Once the necessary documents are submitted and are in order, an email notification is sent stating that the application is approved. The license is not issued as a hard copy, but a soft-copy could be easily downloaded and printed by simply logging into the CEA website. This application processing usually takes around 4-6 weeks.
Now talking about the license fee; the annual charges or fee for real estate agencies ranges between S$300-S$3,000 depending upon the number of employees or real estate agents in that agency. The application fee to get a new license or to renew an existing one is S$107 and it can be paid every year irrespective of the fact that the license could be still valid for more than one year.
The annual registration charges or fee for all the real-estate agents employed is S$230 and the application fee for new registration or renewal of the registration of every real estate agent in the agency are S$54. Please note that these charges or the annual registration fee and the application fee is payable every time the real estate agent changes his/her companies.
Seek professional assistance
Though you could apply for a license on your own, it is usually better to hire a professional services firm to save your precious time and effort. So if you are thinking of setting up a private limited company in Singapore or accounting services for small business in Singapore, do get in touch with us at IMC, and we will be more than happy to assist you.