Freehold vs Leasehold Properties in Singapore: What You Need to Know

When buying property in Singapore, you will come across two main types: freehold and leasehold. Each has its own benefits and drawbacks. Understanding these differences is key to making an informed decision.

What is Freehold Property?

Freehold property means you own the land and the building on it indefinitely. There is no expiration date. This type of ownership gives you more control over your property. Freehold properties are often seen as a long-term investment.

In Singapore, freehold properties are less common. They tend to be more expensive than leasehold properties. However, they offer a sense of permanence and stability.

Advantages of Freehold Property-term ownership: You own the property forever.

• Higher resale value: Freehold properties often retain their value better.
• More control: You have more freedom to make changes.
• Long-term Investment: Freehold properties can be passed down through generations.
• Higher Resale Value: They usually have higher resale values compared to leasehold properties.
  
  However, freehold properties often come with a higher price tag. This can be a significant factor for many buyers.

Disadvantages of Freehold Property

• Higher cost: Freehold properties are usually more expensive.
• Limited availability: There are fewer freehold properties on the market.

What is Leasehold Property?

Leasehold property means you own the property for a fixed period, usually 99 or 999 years. After the lease expires, ownership reverts back to the state. A good example will be that of the leasehold land returning back to the state  upon the expiry of the 60 years lease in the  case of 191 private terrace houses Lorong 3 Geylang leasehold property in the year 2020.  More info on it via this link. https://www.sla.gov.sg/articles/press-releases/2017/leases-at-lorong-3-geylang-to-expire-in-2020-and-land-to-be-redeveloped

These properties are generally more affordable. They can be a good option for those looking to enter the property market without a huge financial commitment.

Advantages of Leasehold Properties

Leasehold properties, while limited in terms of ownership duration, also offer several advantages:

• More options: There are more leasehold properties available.

• Lower Cost: Leasehold properties are generally more affordable.

• Location: Many leasehold properties are located in prime areas.
  

Disadvantages of Leasehold Properties

• Limited ownership: You only own the property for a fixed term.
• Depreciation: The value may decrease as the lease term shortens.

Things to Consider when deciding whether leasehold or freehold is better for you

When choosing between freehold and leasehold properties, consider your long-term plans. If you plan to stay in the property for many years or passing leaving the property behind for your future generation as a assest or legacy, a freehold property might be more suitable. If you are looking for a shorter-term investment or a property in a prime location, a leasehold property could be a better fit.

Also, think about your budget. Freehold properties are more expensive, so you need to ensure you can afford the higher price. Leasehold properties, while cheaper, may require you to move or sell the property when the lease expires.

What we at PropZen Consultant observed is that with the change in buyers' mindsets and sentiments, Freehold properties no longer have that much of a advantage  compared to leasehold properties. The location in which the property is located will determine whether the Freehold or Leasehold status makes a difference. 

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