What is a SOHO Property?

by PAUL HO

SOHO stands for Small Office, Home Office. SOHO is simply a marketing terminology developed and used by property developers.

Of note, is that the Urban Redevelopment Authority (URA) does not recognize the planning term SOHO. (http://www.ura.gov.sg/dc/connect/connect11-02/reliable-02.html)

The term SOHO is misleading because it gives the impression that the property can be used as an office or a residential dwelling. It is important that property buyers check what the property is approved for use as.

What is Home Office Scheme?

SOHO is not to be confused with the Home Office Scheme. This scheme allows property owners and tenants of private properties or HDB flats to operate a business out of their residential premises.

You can register up to 2 non-resident employees provided that the business does not cause disturbance or inconvenience to the surrounding residents. The full detail of the Private property home office scheme is specified here: - (http://edanet.ura.gov.sg/dcd/homeoffice/HOMainPage/HOindex.jsp)

The full detail of the HDB property home office scheme is specified here: - (http://www.hdb.gov.sg/fi10/fi10326p.nsf/w/HomeBusinessHomeOfficeScheme)

Business permitted under the Home Office Scheme

The business to be run must not adversely affect the character of the estate. There are certain types of rules and restriction. The types of businesses approved under the Home Office Schemes are: -

• Accountancy services
• Architectural services
• Consultancy services (Business, engineering, IT management or education)
• Design/Advertising services • Insurance/Financial planning services
• Real estate agencies
• Technology based and knowledge intensive businesses
• Transportation services
• Trading offices
(Source: http://edanet.ura.gov.sg/dcd/homeoffice/HOMainPage/HObusinesslist.jsp)

What is the land zoning of a SOHO?

Most SOHO that we see today are zoned under residential land. One such source is from www.onemap.sg.



Under Lot number Mukim MK03-04324P.



The land query indicates that the plot of land is owned by JTC corporation; therefore it is uncertain if the reversionary land rights will be transferred back to JTC at the end of the 99- year lease. Or if this land that is being transferred to the property developer now will be returned to the state at the end of the 99-year lease. Reversionary rights and top ups of 99-year leasehold properties shall be a separate topic and a discussion for another time.

The zone for this One North Residence is “Residential with commercial at 1st storey”.



(Source: http://www.ura.gov.sg/uramaps/?config=config_preopen.xml&preopen=Sales%20Of%20Plans&saleIndex=1)

The property description captured from one of the websites are: - “One-north Residences, developed by Vista Development, will have about 400 residential units and 20 street retail units. Its design concept leans towards glass and steel, with blocks connected by sky bridges, and fits in with the area’s master plan to create a ‘fenceless’ community.

‘Because there is a limited supply of residential projects there in one-north, demand for housing will be extremely great from expatriates who work there,’

‘People who buy see the potential of the hub. After all, the government has committed to spend $15 billion to develop this city within the city.’

This development will ‘allow like-minded experts and professionals to get together, mingle and socialise within a short walk of their home’ ..”

The units on the 1st floor (Ground level) are supposedly retail units. However the rest of the units are marketed as SOHO.

If you look at the zoning definition, URA master plan states that it’s zoned at 1st floor for Commercial while the rest are zoned as residential. Only the 1st floor is zoned for commercial use, in this case, as retail.

The rest of the units are presumably marketed as SOHO units while the zoning definition is Residential.

Therefore, if anyone is thinking of using the SOHO units for business use, they will still have to apply under the Home Office Scheme as there is no such category of SOHO within URA’s planning terminology.

The Scotts Tower SOHO

As can be seen from the map, the Scotts Tower is zoned under Master Plan 2008 as Residential. Therefore, these are technically speaking residential units.

Part of the marketing collateral says, “This development comprises 231 SOHO-concept apartments that offer breathtaking views over the height of 31 storeys, with recreational facilities abound at the sky terraces on Level 2 and Level 25.”

Nonetheless they are marketed as SOHO-concept apartments.

 

Bank loans for SOHO

Many banks' internal policies dictate that a property, whether it is considered residential or commercial is determined by its intended use. For example, if you buy a SOHO unit and then use it as an office, the bank will use commercial loan terms and interest rates.

Some banks, however, treat SOHO as commercials because they are considered as commercial regardless of the zoned use.

Other banks strictly look at SOHO or any property as residential as long as they are zoned as residential properties under URA’s master plan.

As such, getting a bank loan for SOHO properties will require some understanding of the issues. Do consult with www.iCompareLoan.com, our consultants will be most happy to guide you through and get the best home loan or commercial loan for you.

Summary

Therefore, it is very important to understand and plan your property purchase accordingly to make sure that your intended business falls within the approved office use. If in doubt, seek out a mortgage consultant who is independent of the property buying process such as www.iCompareLoan.com for a discussion.  

Read more articles at  
PropertyBuyer.com.sg/articles
SingaporeHomeLoan.net/blog/  
iCompareLoan.com/resources/category/faq/