Freehold or Leasehold? What You're Actually Paying For

Almost every buyer we sit down with asks the same thing within the first ten minutes: is freehold worth paying more for? The honest answer is sometimes. It depends on how long you plan to keep the home, where it is, and how big the price gap is. Here's how we think about it.

What the terms mean

Freehold means you own the land with no end date. A 999-year leasehold works the same way in practice, and buyers and banks treat the two alike.

A 99-year leasehold runs from the date the developer bought the land, not from the day you get your keys. By the time a new launch is completed, a few years of the lease have usually gone.

The land the government sells for new private homes is almost always on 99-year leases. New freehold homes mostly come from older freehold estates that are sold en bloc and rebuilt, which is why so few freehold projects launch each year.

Where the lease starts to matter

The lease affects your price mainly through the next buyer's financing.

To use CPF in full, the remaining lease has to cover the youngest buyer until they turn 95. If it doesn't, the amount of CPF they can use is scaled down, and once fewer than 20 years are left, CPF can't be used at all. Banks also get more careful with older leases.

Here's an example. Say you buy a 99-year condo that is 30 years old, so about 69 years are left. That's fine for you. But if you sell it 20 years later, 49 years are left. A 40-year-old buyer would need 55 years to use their CPF in full, so their CPF is cut back. Fewer buyers can afford it comfortably, and the price usually reflects that.

Freehold avoids this. Your buyer in 20 years can finance it the same way you did.

The en bloc angle

When an older leasehold estate is sold en bloc, the developer has to pay the state to top the lease back up to 99 years. That cost comes out of what they can offer the owners. Freehold sites don't carry that cost, so in the same area a freehold estate is often the easier en bloc sale.

En bloc should be a bonus, though. Don't buy for it.

When freehold isn't worth it

You'll usually pay more upfront for freehold, and that money could be working elsewhere.

If you're buying a new 99-year condo and expect to sell within 10 years or so, the lease will barely affect your sale price. Plenty of leasehold condos in good locations have done better than freehold ones in weaker spots. A freehold home in a poor location is still in a poor location.

If the gap is large, the price per square foot matters more than the tenure.

Three questions we ask

1. How long will you keep it? If you're planning to hold for 15 years or more, or pass it on, freehold earns its premium more easily.

2. Who will buy it from you? Think about the remaining lease when you sell, and whether a typical buyer at that point can use their CPF in full.

3. How big is the gap? Compare the price per square foot with 99-year condos of a similar age nearby. A small premium for freehold in a good location is usually fine. A big premium in an area full of good leasehold options is harder to justify.

The short version

Freehold won't guarantee a better return. What it does is keep your future buyer pool wide, because your buyer's financing doesn't shrink as the years pass. If you're holding for the long term, that's worth something. If you're not, put your money on location and entry price first.

If you're weighing a specific freehold and leasehold option, send us both and we'll compare them for you.