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Freehold vs. Leasehold Property in Singapore: Which Is Better?

freehold vs leasehold properties singapore

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):

  1. What are freehold and leasehold properties?
  2. Discuss common myths about freehold properties
  3. Case Studies (Comparison of performance of freehold vs. leasehold properties)
  4. Is the lease tenure the most significant factor affecting property value?
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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.

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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.

99 years ocr
99 years OCR price index
Freehold OCR price index

From the chart above, we can see that for OCR (outside central region) – 99 years leaseholds perform better than Freehold properties. 

99 years ccr
99 years CCR price index
Freehold OCR price index

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.

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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:

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!

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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.

freehold vs 99years

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.

Testimonials

I have successfully helped hundreds of homeowners just like you since 2010

Mr Ang
Mr Ang
Buyer of Parc Riviera
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As a investor interested in taking advantage of the booming property market in Singapore, I needed a realtor with in-depth knowledge of the local market. Using his understanding of the various sectors of the market, Rick generated a investment progression report and we decided to buy a condominium in a choice area with huge potential for multiple returns in the future. Thanks Rick, I will definitely be doing business with you for a long time!
Ms Claire
Ms Claire
Seller of Esparina Residences
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I am writing in to compliment Rick Huang for his invaluable service, for the sale of my Esparina Residences. The process was complicated but he was able to empathize with my situation and also provide brilliant advices that ensue the smooth transaction. In all, I am appreciative with his professionalism and human touch in this journey. Thank you!
Ms Ho
Ms Ho
Seller of Blk 272b Punggol
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I was sceptical about engaging a friend to sell our house. However, Rick has put himself out on so many levels just to ensure everything went smoothly, promptly and correctly at every stage. I trust Rick and would surely recommend him to anybody seeking to buy or sell a home! I do not usually post reviews but this is worth investing my time. Thanks once again..
Ms Malar
Ms Malar
Seller of Blk 332 Serangoon
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His service is beyond my expectations. Always going the extra miles to serve his clients.
Ms Jo
Ms Jo
Buyer of Blk 452a Sengkang
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My husband and I started our home-search by ourselves but was met with issues soon enough as we were unsure of the important things and areas to look out for and we were also not experienced in the negotiation process with the seller’s representing agent. Soon after hearing our problems, I was introduced to Rick by a friend. The entire buying process quickly became swift and smooth; Rick understands our needs, puts our personal interest first, seals us a good deal and educated us along the way about the important things and areas to pay attention to. Thumbs up to Rick and we will recommend him to anyone for their home-search
Mr Eddie
Mr Eddie
Seller of 127c Kim Tian
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"In short, Rick did an amazing job. He sold our house at a higher than initially discussed price and got us a good deal for our purchase. Both my wife and I are impressed with his professional yet friendly approach. We will definitely work with him again and recommend him to anyone."
Mr Liew
Mr Liew
Seller of 260c Punggol
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Rick is a very down to earth person. No hard sell or pushy technique. He helped us in planning for upgrade and showing us how to invest in property with in depth property analysis report.
Miss Chong
Miss Chong
Buyer of Regent Residences
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His service is superb. With his property mkt analysis skill, I managed to purchase my first property in Singapore. He is always patient and helpful whenever I have any query about property purchase procedure, especially the computation part of the downpayment. In nutshell, I am really grateful and appreciate for his support.
Selvi
Selvi
Buyer of Blk 130 Bishan
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Rick is an agent who has displayed his potential in his services. He provided us a very personalised guidance when we first approached him with an intention of purchasing a resale flat. With his knowledge and years of experience has made the entire purchasing process seamless. Thank you Rick for being a great friend and a fantastic agent!
Mr Mark
Mr Mark
Seller of Blk 686a Woodlands
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Rick service has a very personal touch. He was extremely patient and professional and does not rush us into making any decisions he provided us with sound advice whenever we have questions and was always ready to provide help with regards to any matter. What impress us the most was the extra step he went by assisting us with the purchase of our new home, even though this was in no way his responsibility to do so. Thank you for the hassle free experience Rick. Highly recommended
Mr Shawn
Mr Shawn
Buyer of Riverfront Residences
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"It was a pleasure working with Rick throughout my selling and upgrading journey. His recommendations and knowledge of financial calculations and preparations are impressive - even factoring in risk management specific to us, for the next 5 to 8 years. He has shown his expertise in real estate and guided us step by step all the way, making transactions effortless for us. Well done Rick!
Ms Shufen
Ms Shufen
Buyer of Cairnhill Crest
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Rick has been our go-to agent for our past few property transactions He actually patiently brought us to many various property viewings (I think it was more than 10!) before we finally settled on the Cairnhill unit. Rick also helped us iron out all the issues encountered along the way and we are very thankful for his service. Hence, we will continue to engage Rick for all our property related matters. We have encountered many agents throughout the years but Rick is the one that has the most profound display of professionalism, knowledge and dedication in his job. Please keep up the good work!"
Ms Meena
Ms Meena
Seller of Blk 475c Upper Serangoon
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Rick's guidance really helps us to sell our unit at a good rate. He did a excellent job giving us professional assistance from step by step till the keys are handed over to the new owner.
Mr Kingsley
Mr Kingsley
Seller of Blk 91 Tanglin
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We have worked with a few property agents. We find the interests of the agent are not well aligned with either the buyers or sellers as volume of transactions matter more. With Rick, you can be assured that your interests are well protected at all times. It is reassuring that he shares his opnion objectively to allow home buyers or home seekers to evaluate the decisions for themselves. Overall a smooth experience. Thanks Rick!
Ms Su
Ms Su
Seller of Blk 93 Paya Lebar Way
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"Rick was introduced by a close friend of mine. This is my second time buying a flat (first time was 20 years ago) and I have forgotten all the procedure. With no experience dealing with selling and buying, this is my honest testimonial. Rick is a very responsible agent which I've met so far. Fast response to all my enquiries and he answered to all my doubts which I have. Reliable and he knows exactly what to do and will give you his utmost advise and service. I highly reckon Rick to those have the intention of getting property agent. Thanks so much Rick for the help and assistance you have rendered from start until the end of transaction. I would definitely recommend you to my relatives and friends. Cheers
Shah
Shah
Seller of Blk 227a Compassvale
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My wife and I are grateful that a friend of ours referred us to Rick to help sell our unit. Rick responded fast to all of our queries. In fact, we managed to sell off the unit faster than we expected thanks to Rick. He did not even need to resort to cheesy gimmicks and marketing. The journey was kept professional. Despite the toxic culture of the property industry, we can feel that he is sincere and committed in helping us. He is trustworthy and we felt that we were in safe hands with Rick as our agent.
Ms Sharon
Ms Sharon
Seller of Blk 648 Ang Mo Kio
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I had in the past dealt with agents who were pushy and did not do their homework. But with Rick, I am put at ease with someone who is not only very knowledgeable but understanding. He keeps my family posted on what we need to know, is very diplomatic, tactful and professional. If you need your place sold, you need a reliable person like Rick to help you. Thanks Rick once again. Warmest Regards, Sharon Lim
Mr Sri
Mr Sri
Buyer of River Isles
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Rick was introduced to me by a friend, who has seen Rick while he was helping another client. Rick has played an exceptional role while I was buying a private property. He is patient, humble, polite and a nice human being. I highly recommend him if you are looking for an agent in your property hunting. I worked with several agents but he will be my go to agent for any future deals. It was excellent experience..!
Anthony & Sara
Anthony & Sara
Buyer of Yishun
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Having used Rick to help me sell an apartment in the past, I had no hesitation in turning to him as my husband and I began to look for a new home. Rick was able to help us navigate the market as we came to terms with what our budget and chosen geographic area had to offer. As we narrowed our criteria Rick was able to direct us to apartments that fit our needs and then proved a superior negotiator in helping us get a great deal once we had made an offer. His guidance throughout the process was invaluable and he was always available to answer questions and help with the followup as we negotiated finances, legal terms and liaised with HDB. If I was ever to need the services of a realtor again I would not hesitate to call Rick and know that I could comfortably rely on his professionalism and efficiency to capably see me through either a purchase or a sale of my property.
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Self Introduction

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Greetings! My name is Rick Long, and I am proud to serve as the Associate Division Director of Huttons Asia Pte Ltd, with over a decade of experience in the real estate industry.

My passion for helping clients find their dream homes has grown exponentially during my tenure in the field. As a graduate of Singapore Polytechnic, I have always valued the importance of hard work and determination.

My prior experience serving in the airforce instilled in me the value of teamwork, perseverance, and discipline.

Over the years, I have been privileged to receive several accolades for providing exceptional service and dedication to my clients.

My ultimate goal is to ensure that each individual I work with has the best possible experience, whether they are buying or selling a property.

One of the most rewarding aspects of my work is receiving glowing five-star reviews from satisfied clients.

Knowing that I have positively impacted someone’s life is truly humbling, and it motivates me to continue striving for excellence every day.

When I am not working, I enjoy spending quality time with my loved ones, indulging my passion for sports, and exploring the rich and diverse culinary landscape of Singapore.

Amidst the bustling pace of life, I relish moments of calm by immersing myself in the art of tea-brewing and teapot appreciation.

Thank you for taking the time to learn a little more about me. I look forward to the opportunity to work with you.

Additionally, Rick is a proud fur daddy to two rescue kitties and loves spending his free time with his wife and furbabies. He believes in giving back to the community and volunteers his time to animal welfare causes whenever possible.

Related Articles:

Ever wonder if you are suitable for Sell one buy two investment concept? – Read more (Sell one buy two)

Is buying new launch or resale condo have better returns? – Read more (New Launch vs Resale condo)

Looking to upgrade from Hdb to condo? – Read more (Sell Hdb buy condo)

What to take note when selling Hdb resale flat? – Read more (Hdb Resale Process)

Buying another Hdb flat, and using the fund from current home? – Read more (Hdb contra)

Why do some Hdb flat price depreciate so much? – Read more (Hdb depreciation curve)

What is one of the most common reason for property negative sales? – Read more (Cpf accrued interest)

Financial calculation for selling a Hdb flat? – Read more (Hdb resale calculator)

Buying EC before selling your HDB? – Read more (Upgrade to EC before selling your HDB)

Should you sell your EC after 5 years? – Read more (Selling EC)

Should you sell your MOP HDB after 5 years? – Read more (Selling HDB after mop)

Property Wealth Planning – Read more (What is property wealth planning?)

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