Freehold vs Leasehold: Which Works Better for You?
When buying a home, most of us naturally focus on budget and pricing. But another key factor that often comes into play is the tenure of the property — whether it’s freehold or leasehold. Many buyers lean toward freehold, believing it offers ownership that can be passed down through generations. But is freehold always the better choice? Let’s take a closer look
Why would the majority prefer a Freehold Property? The first main criteria, that freehold is in demand is due to the no time limit in the full ownership of it. With that, the property can be passed down to the other generations. Therefore it portrays stability in the property holding. But, freeholds are usually priced higher and more expensive than leaseholds, therefore the cost may restrict the affordability of new buyers. Over time, freehold properties are getting lesser due to land scarcity especially in city centres and urban townships.
On the other end, there is the Leasehold Property which provides a property upon purchase in the period of up to 99 years. Developers are providing new property developments usually in prime locations under leasehold. Owners usually perceive that the value of a leasehold will drop over time as the lease shortens over the years and they need to spend a lump sum to do the renewal on lease. But, generally new developments in new areas are more towards leasehold as it is more attractive with much more affordable with low entry cost, especially for first time buyers consideration.
The choice of a property purchase is not about the option of freehold or leasehold even though that criteria is one of the main considerations, but it's about which suits your budget, your location and mostly lifestyle.
Before making a purchase, especially if you’re a first-time buyer, it’s important to read and understand the local laws and gather all the necessary information which will assist in your decision making. For further guidance on properties or leasehold regulations, PropNex is here to help.
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