Is Freehold Always Better Than Leasehold?

guide-to-buying-hdb-house-singapore

Leasehold vs freehold – What it means?

Land tenure is defined as a legal term in which the land is owned by an individual, corporation or even government. To put it simply, this is the duration of property ownership. 

In Singapore, there are two types of land ownership, freehold or leasehold.

Freehold – means you have full ownership of the land and you own it indefinitely. You can pass it on to future generations without restrictions. 

Freehold properties fetch higher prices for sale or rental It does not always result in a better price for many other reasons. People who are looking for a home are likely to give more emphasis to the location and amenities of the property than whether they can hold onto the property for a long time.

Myth One: Freehold are not subject to en-blocs

En-blocs are not subject to the type of ownership of the properties. When a significant number of residents (> 80%) in your freehold property (e.g. a condo) agrees to it, an en-bloc can still go through, regardless of its freehold or not. One example is Eunos Mansion being sold for $220m during an en-bloc exercise in 2018!

 

Myth Two: Freehold properties fetch higher prices for sale or rental

It does not always result in a better price for many other reasons. People who are looking for a home are likely to give more emphasis to the location and amenities of the property than whether they can hold onto the property for a long time.

Downpayment and using CPF for a second property

Myth Three: Government cannot take back the property

There are provisions in the freehold properties contract that allows the Government to reclaim your property for developmental purposes.

If you want a long-term investment where budget and location are not of major concern, getting a freehold property is a great option. They can be passed on to future generations and you can do whatever you want on your property.

But if you want to yield high investment returns in a shorter amount of time, acquiring a leasehold property will definitely give you more value for money. With leasehold properties, you can maximize all income-generating potentials with a lower capital cost.

 

To find out what works better for your finances and investment goals (including differences in rental yields between freehold and leasehold), schedule a no-obligation consultation with us today.

More Posts