Freehold Vs Leasehold Properties

A freehold property is owned indefinitely while a leasehold is reclaimed by the government after the lease expires. In freehold property, the government can reclaim it by following certain provisions of property ownership. The fact that your house is freehold cannot prevent the government from reclaiming the land for infrastructural development or security purposes. The most important thing is for leasehold properties is location though such as core city centre condos. One of them is Riviere which is located in the heart of the the city next to Great World City MRT Station.

Freehold Vs Leasehold Properties

Singapore has three types of condos; freehold (held by owner indefinitely), a 99-yr Leasehold( State reclaims after 99 yrs) and 999-yr Leasehold (it’s practically freehold due to its long lease period). Nevertheless, Freehold lease condos are the most common in Singapore.

The price of freehold property is slightly higher than that of leasehold- it is usually 10-15{fe1651efae7ea8f9856df347f41780f67844cac08462340e0c3b78592d0c579e} higher. It’s on assumption that their accessibility, location and amenities are relatively the same. The difference is however significant after 40 years. Banks tend to restrict financing of leaseholds that have reached the 40 year mark.

CPF Restrictions on Leasehold Properties

Additionally, it is impossible for people to use their CPF savings in case they want something that is 30 years old on lease. The value of such property is lower compared to a freehold property. However, Singapore has few units there are that can reach that age because most of them are redeveloped.

Worth: Freehold vs Leasehold
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A unit that has 70 or 80 years left, and is in the Central Business District is likely have a higher value than a freehold in the outskirts of town such as in Punggol. Similarly, if a freehold unit is near an MRT station, it is difficult to ascertain its value due to involvement of other factors such as accessibility. For the past three decades, investors and analysts have engaged in endless discussions about Freehold vs Leasehold property. However, there few conclusions can be made:

Both Freehold and Leasehold Properties have its Advantage.

1.Price difference of property occurs at 30 and 78 years.
2.In theory,a freehold property has a higher value than a leasehold during en bloc (it’s higher because the owner is giving up more).
3. Leasehold property is a better choice for renting-it’s cheaper and the tenant doesn’t care if it’s a freehold or leasehold. Example; if an investor buys a leasehold condo for 1 million dollars, it will generate roughly $3,000 per month in rent, a yield of 3.6{fe1651efae7ea8f9856df347f41780f67844cac08462340e0c3b78592d0c579e}
4.Advantages of freehold property tend to be theoretical, unless the governments reclaims the property and the owner gets compensated.

There is no best choice. It depends on what one wants and how they stand to benefit from the choice they make.

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