The question on every would-be property buyer is always: “Should I buy
Freehold or Leasehold?” Before we attempt to answer that question, let’s look at
the definition of the 2 terms.
A freehold property belongs to the owner indefinitely, which means it can be
pass down from generations to generations. A 99-year leasehold property
reverts back to the state upon expiry of the lease. There is however a third type
which is 999-year lease, which is almost as good as freehold.
Generally speaking, a new launch freehold property is priced about 15% higher
than a leasehold property in an apple-to-apple comparison. So if you are willing
to pay more, you have an asset to leave for your future generations and you do
not have to worry about the lease running out.
According to the Singapore Land Authority (SLA) Bala’s Table, a leasehold
property at the 30th year is worth about 60% against a freehold property.
But lease tenure is just one factor when considering freehold or leasehold. Other
factors you need to consider are:
- Rental yield. Tenants are not going to pay higher rental for a freehold
property; they are more interested in the location, nearby amenities and
condition of the property.
- En-bloc opportunity. Freehold properties tend to command a higher price
during en-bloc sales. For 99-year leasehold en-bloc, developers would
have to pay to top up the leases of that site.
- Affordability. Buying freehold would mean having to fork out more for
down payment and monthly repayment. So you should consider your
- Long-term vs. short-term investment. According to URA data, over the
period of March 2010 to March 2020, leasehold property prices
appreciated from about $1,023 psf to about $1,594 psf which is
approximately an increase of 56%. Freehold properties over the same
period appreciated about 41%, from an average of $1,282 psf to $1,812
Ultimately, the decision will come down to location along with the amenities that matter the most to you. Well-located properties with important amenities or facilities nearby will always be easier to rent out, achieve higher rental yield and appreciate faster in the short term. And if you were buying for your own stay, better accessibility, convenience and amenities would matter more rather than freehold or leasehold.