Support My Efforts By Visiting The Advertisers


This is a personal blog. The opinions expressed here represent my own, not those of my employer and is not intended to malign any religion, ethnic group, club, organization, company, or individual.

Freehold Or Leasehold?

>> Saturday, January 16, 2010

Which gives better returns? The evidence is inconclusive.

As a result of this confusion, it has benefited many agents who will provide proof that the tenure of the property that they are selling is the more superior one. Twisting the facts to suit the situation and justifying the premium of a higher price.

Regardless, the general perception is that freehold is better. Hence, although the price gap between freehold and leasehold widens during bullish periods and narrows over downturns, it is still always there. However, this gap is not clearly defined, it is neither a fixed number (eg. $200 psf more) or a fixed percentage (eg. 5% higher).

From a rental perspective, rent is not determined by tenure. The prospective tenant is not concerned at all about the tenure. Hence, assuming the same rent, leasehold will achieve a higher rental yield due to the purchase price differential.

From an ownership perspective, freehold can be held in perpetual length of time whereas leasehold, the extension is never guaranteed by the master owner. However, in a small island like Singapore, land ownership is never guaranteed. Freehold properties have been compulsorily acquired before, nothing stands in the way of redevelopment.

A key drawback to note for leasehold is the policy of granting loans. Some banks do not give loans on leases with less than 60 years remaining. Without the aid of loans, demand for such properties shrinks due to affordability issues, resulting in lower prices.

In conclusion, leasehold or freehold? There is a Chinese saying, "Yi Fen Qian, Yi Fen Huo", you get what you pay for. So, do not be overly-fixated with tenure because the substantial value of the property is not determined by tenure. As the popular 3 rules of property goes 1. Location, 2. Location, and 3. Location.




The owner of this blog does not share personal information with third-parties nor does the owner store information is collected about your visit for use other than to analyze content performance through the use of cookies, which you can turn off at anytime by modifying your Internet browser’s settings. The owner is not responsible for the republishing of the content found on this blog on other Web sites or media without permission.

Blog Comments

The owner of this blog reserves the right to edit or delete any comments submitted to this blog without notice due to;

1. Comments deemed to be spam or questionable spam
2. Comments including profanity
3. Comments containing language or concepts that could be deemed offensive
4. Comments that attack a person individually

Terms and Conditions

All content provided on this blog is for informational purposes only. The owner of this blog makes no representations as to the accuracy or completeness of any information on this site or found by following any link on this site. The owner will not be liable for any errors or omissions in this information nor for the availability of this information. The owner will not be liable for any losses, injuries, or damages from the display or use of this information.

This policy is subject to change at anytime.

About This Blog

To promote the education of individuals for the need to have a healthy lifestyle and wealth management through proper financial planning, particularly in investments.

Top Blogs


Top Sites

  © Blogger templates Sunset by 2008

Back to TOP