Leasehold vs freehold
When buying a property, one of my very first question is whether it is freehold or leasehold. This will usually determine the price, apart from the location of course.
Usually a leasehold property will have 99 years till the lease expire. However, some developers may have bought the land and held on to it for some years before developing it. The lease would have already started and by the time the property is handed over, it will not be 99 years anymore. As the lease becomes shorter, the price of the property will deteriorate. Of course there are instances where the lease is likely to be renewed and that will change the price again.
Freehold, on the other hand will mean that the property will be yours “forever”. What I mean is that although there is no lease to the land, the government reserves the right to “claim” the land from you should your property be in their way of future development. The government can offer you a payment to obtain your land/ property and then, you will be “forced” to comply.
Everytime I want to buy a house, I struggle with the debate of whether I should buy freehold or leasehold? I usually use the price factor to answer this question. You see, freehold can cost up to double the price you would pay for a leasehold, assuming the same location and built-up.
My mum is a big fan of freehold properties. She will nag me to no end if I should decide to buy a leasehold. She is willing to move out to the sub-urban areas and pay the same amount of money as a leasehold property in the urban areas. Her main reason is because she can leave it to the next generation without the fear of having its lease expire.
This is where we disagree. I am willing to buy leasehold because the lower price would mean I would pay lesser interest and this will help me build my retirement/ education funds. I also want to live in the urban areas, as near to the kids’ nanny as possible and also as near to work as possible. I also do not envision myself to stay in one house for the next 2 decades, therefore the lease expiring is not an issue to me. Granted, I know that the price would be lower when I sell it in the coming years, but then I would have already “earned” the stay. And I also do not really want to pass on the house to the kids when I am gone because it may be an extra burden for them – they may not want to stay there, the house may have gone out of fashion etc.
So, what about you? Would you buy leasehold or freehold?
