Is Freehold Property Better Than Leasehold in Singapore – When it comes to buying property in Singapore, one of the biggest questions buyers face is whether to go for freehold or leasehold property. Both options have their advantages and drawbacks, and the decision often depends on factors like budget, long-term goals, and investment strategies. While freehold properties are often seen as more desirable due to their “forever ownership,” leasehold properties can be attractive for buyers seeking affordability and potential capital appreciation.
In this blog, we’ll break down the differences between freehold and leasehold properties in Singapore, their pros and cons, and help you decide which option might be better suited for your needs.
Is Freehold Property Better Than Leasehold in Singapore?
Understanding Freehold Property in Singapore
Freehold property means the buyer owns the property and the land it sits on indefinitely. In Singapore, freehold ownership is highly sought after because of the sense of permanence and control it provides.
Key Features of Freehold Property
- Ownership is perpetual with no expiry.
- Generally more prestigious and in demand.
- Offers better value retention in the long term.
- Often priced higher than leasehold properties.
Understanding Leasehold Property in Singapore
Leasehold property, on the other hand, is owned for a fixed period, usually 99 years, 999 years, or in rare cases, shorter leases. Once the lease runs out, ownership reverts back to the state.
Key Features of Leasehold Property
- Ownership lasts for 99 years (most common) or 999 years.
- Usually more affordable than freehold.
- Suitable for homeowners who don’t plan to keep the property for generations.
- May face value depreciation as the lease gets shorter.
The Price Factor: Freehold vs Leasehold
One of the most noticeable differences between freehold and leasehold properties in Singapore is the price gap.
- Freehold properties typically command a 20–30% premium over leasehold units of similar size and location.
- Leasehold properties are more affordable upfront, making them attractive to first-time buyers or investors on a tighter budget.
Example Comparison:
| Property Type | Average Price (psf) | Ownership Duration |
|---|---|---|
| Freehold Condo | Higher (20–30% premium) | Permanent |
| Leasehold Condo | Lower | 99 years (commonly) |
For buyers who prioritize affordability, leasehold can be more appealing, especially in prime locations where freehold units may be out of reach.
Longevity and Value Retention
When it comes to value retention, freehold properties generally perform better in the long run.
- Freehold: Since there’s no lease decay, freehold units often hold their value better and are more attractive to buyers across generations.
- Leasehold: Value starts to depreciate as the lease shortens, particularly after the 60-year mark. Banks may also impose restrictions on loans for properties with less than 30 years left on the lease.
This makes freehold property a safer bet for those looking to preserve wealth and pass assets down to future generations.
Rental Yield Considerations
Many investors focus on rental yield when purchasing property in Singapore. Interestingly, leasehold properties can sometimes provide better rental returns compared to freehold.
- Leasehold: Since the purchase price is lower, rental yield percentages can be higher even if monthly rental rates are similar to freehold units.
- Freehold: While rental rates are comparable, the higher purchase cost may mean slightly lower yield percentages.
For example, a leasehold condo in a central location may offer higher yield than a freehold condo in the same area simply because of the entry price difference.
Government Policies and Urban Planning Impact
Singapore’s property market is heavily influenced by government planning and policies. It’s worth noting that:
- En-bloc sales (collective sales): Leasehold properties, especially those nearing the end of their leases, are often targeted for redevelopment. Owners may receive substantial payouts if their property is acquired en bloc.
- Urban renewal: Leasehold projects may benefit more from urban planning initiatives, which can boost short-term capital appreciation.
Meanwhile, freehold properties are less likely to be part of en-bloc sales since developers often prefer leasehold land that can be easily redeveloped.
Lifestyle and Legacy Considerations
Beyond investment returns, many buyers also consider lifestyle and legacy when choosing between freehold and leasehold.
Freehold Advantages for Legacy
- Provides peace of mind that the property can be passed down for generations.
- Suitable for families looking for long-term security.
- Often associated with prestige and exclusivity.
Leasehold Advantages for Practical Living
- Ideal for younger buyers or investors who don’t need lifetime ownership.
- Provides access to prime locations at a lower cost.
- Practical for homeowners who don’t plan to keep the property beyond 1–2 generations.
Resale Potential in the Market
Another key factor is resale potential.
- Freehold: Generally easier to sell, especially when buyers are seeking properties with no lease decay. Freehold condos are also limited in supply, which adds to their demand.
- Leasehold: Resale is easier in the first 30–40 years of the lease. However, as the lease gets shorter, buyers become cautious, and prices may stagnate or fall.
Thus, freehold offers more long-term flexibility, while leasehold is more suitable for shorter investment horizons.
Which One Is Better for You?
Ultimately, the choice between freehold and leasehold depends on your financial goals and lifestyle needs. Visiting developments such as the Rivelle Tampines Showflat can also give you a clearer perspective, as you’ll be able to see how developers present both freehold and leasehold options in real life.
Choose Freehold If:
- You want to preserve wealth across generations.
- You prioritize long-term ownership and security.
- You are willing to pay a premium for permanence.
Choose Leasehold If:
- You want lower entry cost and better short-term rental yields.
- You plan to stay for only a few decades.
- You’re comfortable with potential lease decay risks.
Conclusion
So, is freehold property better than leasehold in Singapore? The answer depends on your priorities. Freehold property offers long-term stability, prestige, and legacy value, but it comes with a higher price tag. Leasehold property, on the other hand, is more affordable, practical, and potentially better for short-term rental yields, though it may lose value as the lease shortens.
For families looking to build generational wealth, freehold properties may be the better option. However, for investors or younger buyers seeking affordability and potential returns, leasehold can still be an excellent choice.
In the end, there’s no one-size-fits-all answer—both freehold and leasehold properties have their place in Singapore’s real estate market. The key is to align your property choice with your financial goals, lifestyle needs, and long-term plans.