Freehold vs. Leasehold Property in Singapore: Which Is Better?
As part of youhome.sg series to address popular topics amongst property investors [New launch vs. Resale condo], I am addressing another hot favorite: Freehold vs. Leasehold properties.
In addressing this hot topic, I will cover 4 key areas (feel free to skip ahead to the area of your direct concern at Table Of Content):
- What are freehold and leasehold properties?
- Discuss common myths about freehold properties
- Case Studies (Comparison of performance of freehold vs. leasehold properties)
- Is the lease tenure the most significant factor affecting property value?
Table of Contents
Freehold vs. Leasehold Properties in Singapore
For the uninitiated, property ownership in land-scare Singapore largely consists of freehold estates and leasehold estates (mainly 99-year leases or 999-year leases).
Freehold properties, as the name suggests, means the property owner pays for the property and owns it indefinitely (no rents required) and upon death, passes on the ownership to his beneficiaries.
In contrast, leasehold properties are owned by the State (the Singapore government) who leases the property for a fee and a limited duration of time, after which the property will be reclaimed.
At first glance, it may seem that without a doubt, the freehold property is much more attractive than the leasehold property.
After all, indefinite ownership is always the best right? Not necessarily, let me explain more by addressing some of such common myths about freehold properties.
Common Myths about Freehold Property
When debating the pros and cons of freehold and leasehold properties, people tend to make quite a few assumptions.
So, I am hoping this can help shed some light on these common myths that people tend to believe about the benefits of freehold properties.
Myth #1: Freehold properties are better because the Government cannot take back the property
The idea that a freehold property allows you to pass on the property for perpetuity is a very tempting premise.
However, even freehold properties come with conditions – albeit a lot lesser than their leasehold counterparts.
If you are looking for a freehold property purely for this reason, I am sorry to burst your bubble.
There are provisions in freehold properties contract that allows the Government to reclaim your property for developmental purposes.
In 2016 and 2017, several such freehold landed properties and apartment block owners had to vacate their homes to make way for the new MRT lines in Singapore.
This goes to show that even freehold properties aren’t safe from being taken back by the government!
Myth #2: Freehold properties are better because they are not subject to en-blocs
That is absolutely untrue! En-blocs are not subject to the ownership of the properties.
If a substantial number of residents (> 80%) in your freehold property (e.g. a condo) agrees to it, an en-bloc can still go through, regardless if its freehold or not.
Well, you may think that your property can at least fetch a better price for en-bloc since it is freehold?
Not exactly too. That leads us to the 3rd myth.
Myth #3: Freehold properties are better because they fetch better prices (for sale or rental)
Property values are determined by way more factors than just lease tenure alone.
While freehold properties are indeed scarcer, it does not always result in a better price for many other reasons.
People who are looking for a home are likely to care more about the location and amenities of the property than whether they can hold onto the property for long.
For rental, it is even less true. People looking to rent, are in it only for short-term – the tenure of the property itself is usually not relevant for them.
So, if you are a property owner looking for a rental property, you probably do not really need to consider its tenure.
Comparison of Performance: Freehold vs. Leasehold Properties
Let us look at some cold-hard numbers to understand if there is really a tangible difference between Freehold and Leasehold properties in Singapore.
For property investors who are interested in capital gains, this is the chart to pay attention to.
From the chart above, we can see that for OCR (outside central region) – 99 years leaseholds perform better than Freehold properties.
But from the chart above, we can see that for CCR (core central region) – Freehold performs better than 99 years leasehold properties.
It’s no secret that when it comes to comparing freehold and 99-year leasehold properties in Singapore, the numbers can tell quite a varied tale depending on the region.
There’s simply no one-size-fits-all rule that can be applied when it comes to determining which type of property performs better.
While freehold properties have traditionally been perceived as the more desirable option, it is not always the case.
If you are looking to purchase a Freehold property simply because you think it has better capital gain potential, the above comparison might inspire you to relook at your assumptions and options.
Comparison of Performance: Freehold vs. Leasehold Properties
As a property consultant who has facilitated many Freehold and Leasehold property transactions, I can safely share that lease tenure is just one of many factors that affect a property’s value and rental yield.
The advantages of Freehold properties that you hear about are often more in theory than in practice – this can be seen from our first set of data comparison.
For homeowners or property investors interested in appreciating property values, it will be more relevant and practical to consider other factors too, including:
- Location and accessibility
- Amenities within the neighborhood
- Upcoming developments around the vicinity, [Related article: Understanding Growth Plans For Singapore Investment Property]
- Finding quantitative statistics to support your decision
For property investors looking to improve rental yield, all of the factors stated above applies and take precedence.
In addition, the key is selecting a property of lower total cost – regardless whether it is Leasehold or Freehold.
Lower cost results in higher yield for you as a landlord. Rental income is rarely affected by the property’s tenure – so it really should not be a priority when you are shortlisting a property to invest in for rental yield.
Conclusion - So, Does It Really Matter If A Property Is Freehold or Leasehold?
In conclusion, after reading through this article, you might be wondering if it truly matters whether a property is freehold or leasehold.
The answer, quite simply, is not really.
While tenure is an important factor to consider, there are many other key considerations that should take priority when researching and investing in a property.
By doing your homework and looking at factors such as location, accessibility, and potential for growth, you can make a well-informed decision that will serve you well in the long run.
So, don’t get too hung up on the freehold vs leasehold debate and keep your focus on the bigger picture!
Bonus for my readers
Are you feeling overwhelmed by the endless sea of property options in Singapore? Fear not, my friend!
While the debate between freehold and leasehold properties may have you feeling like you’re lost in a labyrinth, there are plenty of ways to navigate your way to success.
Whether you’re a first-time buyer or an experienced investor, I am committed to providing you with the highest level of service and support throughout your property journey.
Schedule a discussion now!
Questions and Answers
Q1) How can I ensure that I’m getting the most value for my investment in a freehold or leasehold property?
Answer: Maximizing the value of your investment in a freehold or leasehold property requires careful consideration of a variety of factors, including location, market trends, and the terms and conditions of the property.
Q2) How can I tell if a freehold or leasehold property is the right fit for me?
Answer: That’s a great question! Choosing the right property for you requires considering a variety of factors based on your unique needs and lifestyle. Some important criteria to think about include how long you plan to stay, the past price trends of the property, and the location that best fits your needs.
Q3) Can you assist me in finding my dream home, and do I have to commit to working with you after our initial discussion?
Answer: Of course! Whether you’re looking for a luxurious freehold property in a prime location or a cozy leasehold property with lots of character, I have the knowledge and resources to help you find the ideal fit for you. Having an initial discussion is a great starting point, and there is absolutely no obligation to work with me after that.
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Self Introduction
Hi, I’m Rick Long
With decades of experience in Singapore’s real estate market, I’ve had the privilege of being mentioned in media outlets such as Channel NewsAsia, The Straits Times, and 99.co.
Over the years, I’ve written extensively on the local property landscape — tackling the real questions buyers and sellers face, and helping them navigate each step with greater clarity and confidence.
Many of my clients have become long-time friends — their trust and kind reviews continue to inspire me to raise the bar in everything I do.
I believe real estate should be strategic, seamless, and deeply aligned with your life’s journey.
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