Buying leasehold property is fine, but freehold status has niche appeal

In Singapore, the government typically sells land for residential and commercial use with tenures of 99 years. Generally, industrial land parcels are sold with shorter tenures. For historical reasons, some land parcels have freehold tenure or long leasehold tenures that start from 929 or 999 years.

A property’s land lease outstanding represents the number of years during which a property can be used for owner occupation or to generate rental income. With a new 99-year leasehold home, one has around 94 years to live in and/or collect rent after factoring in time to complete a development, versus an indefinite period for a freehold home.

New freehold private homes may cost around 10 per cent more than 99-year leasehold ones. The premium is about 4 per cent for freehold versus 99-year leasehold land, according to the table used by the Singapore Land Authority that shows leasehold values as a percentage of freehold value.