Leasehold vs freehold: what actually matters for your returns

It is one of the first questions buyers ask me: should I pay more for freehold? The honest answer is that tenure matters, but usually less than location, entry price and how long you plan to hold.

What the terms mean

• Freehold: you own the land indefinitely. Some older titles are 999-year leasehold, which is treated in much the same way.
• 99-year leasehold: you own the property for the remaining lease. At expiry, the land returns to the State.
• HDB flats are 99-year leasehold. Executive condominiums are also 99-year leasehold.

The price gap

In comparable locations, freehold condos typically command a premium over 99-year leasehold projects. Whether that premium is worth paying depends on what you are buying the property for.

Lease decay is real, but it is slow at first

A leasehold property loses value gradually as its lease runs down, and the decline speeds up in the later decades. For a new 99-year project held for 10–15 years, location and market cycles usually move the price far more than lease decay does.

A well-located leasehold condo bought at the right price often outperforms an over-paid freehold one. Entry price is the return you lock in on day one.

When freehold makes sense

• You plan to hold for 20+ years, or to pass the property on.
• You are buying in a prime district where freehold land is scarce.
• You want to avoid the financing and resale limits that come with older leaseholds.

When leasehold makes sense

• You want a newer project, better facilities or a better location for the same budget.
• Your holding period is 5–15 years.
• You are optimising for rental yield rather than legacy value.

If you are weighing up two specific properties, send me both and I will compare them on recent transactions, remaining lease and likely exit price.