"𝐁𝐮𝐲 𝐅𝐫𝐞𝐞𝐡𝐨𝐥𝐝 𝐨𝐫 𝐋𝐞𝐚𝐬𝐞𝐡𝐨𝐥𝐝 𝐁𝐞𝐭𝐭𝐞𝐫?" that's what friends and clients ask me every week.
Leasehold is usually 99 or 999 years in tenure. HDB is a 99 year leasehold property. Recently in Jan 2021, 191 private terraced houses in Geyland Lorong 3 has fully taken back by the government.
Freehold is forever in tenure unless the government want to take back according to land acquisition act. The compensation is according to fair market value. If the owners are not satisfied with the amount, they may file for an appeal to the government.
Freehold property does not necessarily appreciate higher than the leasehold property.
For e.g., the Alexis (Freehold District 3 Redhill) bought in 2009 at $1130 psf and sold at $1977 psf, making a profit of 74.9%.
Compared with the Centris (99-year Leasehold District 22 Jurong West) bought in 2009 at $639 psf and sold at $1281 psf, making a profit of 100.4%
Irregardless leasehold or freehold, the growth of a property does not depend on the tenure alone. You should focus on the future development of the location, your entry price and the exit pricing strategy,
Q: Which is better to rent out?
Tenant does not care about it is leasehold or freehold property.
Transport convenience, house condition, condo facilities such as better, newer and more varieties matter to them.
If freehold and leasehold property are in the same area and demand the same rent, the leasehold property has a higher rental yield due to lower cost input.
Q: Why people prefer freehold?
Because when leasehold properties reach 40 years old, the value depreciates as stated by SLA Bala table.
CPF cannot be used to finance property with less than 20 years lease.
CPF can be used to finance property according to the valuation limit pro-rated to the extent based on the youngest age of the owner.
Catch the youtube video here:
Read my blog about property investment insight: https://www.jacksontan.net/blog Watch some light-hearted property advice video: https://www.youtube.com/channel/UC-X0sV0SffDIfXUSFI0R0sg Subscribe my mailer for fire-sale property: https://www.jacksontan.net (Found at the BOTTOM page) Follow recent property FB updates: https://www.facebook.com/jacksontanpropertyassociates/ Follow recent property IG updates: https://www.instagram.com/jacksontanpropertyassociates/