Singapore is widely recognised as a strategic hub for businesses, given its prominent location in Asia and rapidly growing economy. In addition to its flourishing economy, the city-state’s political, financial, and social stability make it an attractive destination for investment in both residential and commercial spaces.
Investors are actively acquiring residential properties in Singapore for either personal use or as an investment vehicle. This has led to a surge in demand for such properties, which is further fueled by the constant influx of foreigners.
Establishing a real estate business in Singapore can be a lucrative endeavour, as there is a steady stream of clients seeking properties for investment or personal use throughout the year. The availability of local talent and resources has contributed to the city-state’s success as a leading destination for entrepreneurs, ensuring that real estate agencies will always have a steady flow of business.
However, starting a real estate business in Singapore requires careful attention to the existing guidelines and procedures. To guide you in this regard, we will outline the necessary steps for setting up a real estate agency in Singapore.
What’s the Business of a Real Estate Agency?
Like anywhere else, the real estate industry in Singapore deals with the purchase, sale, investment, and management of real estate properties. The type of property involved may include land, buildings, and houses. Typically, this business begins when clients are looking for properties or need the services of a management company to oversee their properties on their behalf.
A skilled property manager will be able to identify these opportunities and take action to establish their real estate business in order to capitalise on them. If the individual also possesses strong asset management skills, they can easily establish a profitable real estate agency. Therefore, the key to setting up a successful real estate agency is having the necessary skills.
Assuming that you already possess the skills required to steer your real estate business towards success, we will guide you through the next step, what are the procedures and requirements for establishing a real estate agency in Singapore. However, before that, it is necessary to find out who is allowed to open a real estate agency in the city-state.
Who can Open Up a Real Estate Agency in Singapore?
The guidelines for opening a real estate agency business in Singapore are provided by the Estate Agents Act. According to this legislation, all real estate agencies, regardless of their business structure – whether it is a sole proprietorship, partnership, or limited company – must be registered and licensed by the Council of Estate Agencies (CEA) in Singapore if they are dealing in real estate.
In addition, any individual who is employed by a real estate company and performs real estate duties must also register with CEA through the company they work for. Therefore, the first step towards establishing a real estate agency business in Singapore is to obtain a license from CEA and also comply with its regulations. Anyone who does so, whether a citizen or a foreigner, is qualified to open a real estate agency in the Asian city-state.
What are the Licensing Requirements for Real Estate Agencies?
Although the business environment in Singapore is favourable to most, the government takes a tough position against individuals who break the law. Any penalties issued could severely hurt your organisation, so doing the right thing is critical to avoiding legal troubles. One way to ensure this is to avoid violating existing regulations.
For real estate businesses operating in Singapore, whether as a sole proprietorship, partnership or private limited company, it is crucial to first register with the nation’s registrar of companies, the Accounting and Corporate Regulatory Authority (ACRA). Another critical requirement to note is the appointment of a Key Executive Officer (KEO), who must not have a history of bankruptcy, have been convicted of any fraudulent activities, have violated fiduciary duties, or have served detention or police supervision orders under the Misuse of Drugs Act or Criminal Law Act. In addition, there are other requirements which the KEO must also fulfil.
Furthermore, neither the agency nor its primary employees must hold a moneylender’s license or be associated with a licensed moneylender. They must not be bankrupt, have been convicted of fraudulent activities, have violated fiduciary duties, or had engaged in dishonest acts.
The list of requirements for real estate agencies is lengthy, but those mentioned here are the most important. As they are in a volatile industry, the professionals employed by real estate agencies in Singapore are subject to regulation. Therefore, agents must meet specific criteria before being licensed, such as being at least 21 years old, holding at least four GCE ‘O’ Level passes or their equivalent, and passing at least one industry examination, such as the Real Estate Salesperson (RES) exam.
Moreover, agents must only register with one licensed real estate agency at a time and meet various requirements, such as not having a history of bankruptcy or conviction for fraudulent activities, breaching of fiduciary duties, or serving detention or police supervision orders under the Misuse of Drugs Act, Criminal Law Act, or Estate Agents Act.
The requirements for agents and agencies in Singapore are broad and go beyond those listed here; therefore, seeking expert guidance to walk you through them all is the best option.
What is the Procedure for Obtaining a Real Estate Agency License in Singapore?
Starting a real estate agency business requires obtaining a license, which involves a process that begins with registering with the country’s business registry, ACRA. The next step is submitting certain documents to the Council of Estate Agencies (CEA), which include a copy of the company’s Business Profile, a copy of the cover note or policy schedule for the real estate agency’s Professional Indemnity Insurance, and details of 30 sale/lease transactions concluded in the last three years.
Once the necessary documents have been submitted by the Key Executive Officer (KEO), such as the CEO, COO, or MD of the agency, an e-mail notification will be sent upon approval. It’s worth noting that no hardcopy license will be issued, but a soft copy can be downloaded and printed by logging onto the CEA website. The entire application process takes around 4-6 weeks, unlike that for business registration with ACRA, which takes only about three days.
Obtaining a license comes with an annual fee that varies from S$300-S$3,000, depending on the number of real estate agents a company employs. The application fee for a new license or renewal of an existing license is S$107, payable annually, irrespective of the fact that the license may be valid for more than one year.
Moreover, every employee of a real estate company must register with CEA and pay an annual registration fee of S$230. The application fee to newly register or renew the registration of each real estate agent is around S$54. It’s important to note that the annual registration fee and application fee are payable each time the real estate agent switches companies.
The Singaporean real estate sector is expected to expand in tandem with the country’s growing economy. With a robust legal framework in place to govern transactions and safeguard the interests of buyers and sellers alike, you stand to reap substantial returns from this lucrative market.
Setting up a real estate agency is a relatively straightforward process, with clear guidelines laid out for registration. While it is possible to navigate the licensing process yourself, engaging the services of a seasoned professional is strongly recommended. By doing so, you not only save valuable time but also ensure that all regulations are thoroughly and correctly adhered to.