Wednesday, January 10, 2018
Everyone wants to own a property in Singapore. However, before owning a property, one should know the various property types so that they can make the best of choices at the time of investing.
First and foremost, you should be aware of the deal you are contracting at initial step. A property option is as important as your finances. With regards to leasehold or freehold, you need to consider the terms that are the best-suited for your transaction.
It hardly matters if it is a landed property or a condominium in Singapore as long as you are sure of what you want. In general, a freehold property is worth around 10 to 15% more than a leasehold property in Singapore. Near MRT station, the premium will be higher for freehold condo even more.
Lease simply means that the property owned will expire at the end of the lease term tenure. The proprietorship of land is usually of a certain period as specified in the lease document whether thirty years, sixty years, 99 years or 999 years Leasehold. Once this property or land is owned by the state i.e. the government, the ownership will be returned to the state after the lease term is over. The 999 years leasehold property is reflected comparably to a freehold property in Singapore. This is because the values of leasehold property and a freehold property are almost the same. As far as 999 years leasehold and freehold property are concerned, Financiers, lenders or the Banks will not enforce any loan bounds. It is open to Total Debt Servicing Ratio (TDSR) of the purchasers. Usually, the span of the lease is up to 99 years. For industrial properties, the span might be as less as thirty years.
The term “freehold” for property primarily implies that you have complete ownership of the property. An Estate in Fee Simple and Estate in Perpetuity are some of the best examples of Freehold titles. Whether small or large, you are entitled to do whatever you want to do with the property. This is your very right as an investor who is the sole owner of the asset. As far as proprietorship of land is concerned, Freehold is better-regarded. However, on the contrary, when it comes to Freehold condominiums or freehold strata and other types of properties, owners usually get a certain share value. The price of Freehold property may be as much as 17% higher than Leasehold property in same scenario as you own the unit purchased in the development officially.
When you gauge these major differences between the two property terms, leasehold properties will appear to be a little more reasonably priced than the freehold tenure. Certain leasehold properties are also situated in better locations with better facilities and amenities like markets. A majority of these leasehold properties are located next to or close to MRT Stations. This is because a majority of these are state lands. However, the truth is that freehold title may have one very attractive benefit that is the land can be passed on to the next generations.
In the conclusion, Singapore Freehold or Leasehold properties are both great assets. This is simply because owning a land or property does not only afford you profits and other benefits but also gives you a sense of satisfaction that you have something that is indeed valuable and can serve you as a shield or collateral any day and anytime. Make sure to look deep into and understand all legal aspects before investing your money for any property. This way you can avoid unforeseen circumstances or situations.