Freehold VS Leasehold. Which One is Better? Let’s Find Out

Posted by Singhouse Pro on December 28th, 2020

Real estate in Singapore is a dream of many. Investors from around the world make a valuable investment in housing property or assets in Singapore. It is not easy to find a worthy property in Singapore without proper knowledge and research.

So, property investors or homebuyers come across this common question, whether to choose Freehold or Leasehold property?

Lease Tenures in Singapore

Singapore property has a variant in prices, lease, space, locality, and many other factors. There are three variants in the lease in Singapore. These are:

1. 99-years leasehold: This type of property comes at affordable prices for people to have a house of their own. Although there is a limit of 99 years to own this property, you can not leave it as a legacy for many generations.

2. 999-years leasehold: It is a little expensive than prior. But people invest in this property as they can allow inheritance for their offspring. 

3. Freehold: This tenure is forever. There is no limit on the duration of owning this type of property. It is a type of inheritable property, viz. people can pass on this type of property to their children, grandchildren, and so on. 

People usually choose to invest in freehold or 999-years leasehold due to the desirability of planning for future generations. And some people choose 99-year leasehold property houses because they are affordable. 

Comparing Freehold and Leasehold Property

Investors and homebuyers seek investment in freehold because of its reliability and owning rights for generations. There are different factors to compare these two. These are:

1. Price: There is no doubt that a freehold property is more expensive than leasehold property. There is a difference of about 10%-15% in the price of freehold and leasehold. It is a big difference in general for people. Though, it does not matter for people looking for a house for rent.

2. Competition in Market: To beat the competitor in the real estate market, a freehold property owner will have to open rental prices similar to or near leasehold property in the same locality. The leasehold property will give a benefit.

3. Higher Interest Rates: The more you invest in your property, the more interest rates you will end up paying. Since freehold property has a higher budget, the interest rate is higher too.

4. Passing a Legacy to Future Generations: With freehold property, you are securing your children's future. Freehold property houses are forever. You leave a legacy from one generation to another, and so on. But with leasehold property houses, there is a limit of fixed tenure either 99 years or 999 years.

This comparison leads to nowhere. Both freehold and leasehold have pros and cons. Yet, freehold wins, how?  

Freehold gives you the freedom to own, sell, and rent for as long as you desire. Owning a 999-years leasehold is not worthy when you can get a freehold in a near or a similar price range. With a 99-years leasehold property, you can enjoy the freedom of owning a house yet can not pass it for many generations.

Bottom Line

Singapore property market gives you a bunch of choices to invest in and fulfill your dreams. But to invest in housing property in Singapore, you have to know about different factors affecting the property in Singapore. One such factor is tenure. 

You have a good time reading this, and now you know which one is better, yet it is an everlasting discussion for which one to choose from freehold or leasehold.