Buying Freehold or Leasehold?

Does it really matter when come to buying a freehold or leasehold property? What’re the differences? I think the main differences between the 2 tenures are the land ownership. For the freehold properties, you will own the land while for the latter one, the ownership is mostly given by the government for tenures of 99 years.

freehold-leasehold

However, some of the people do not really care much about the tenure of the property while others find it quite important, especially when it comes to renewing leasehold titles. For leasehold and freehold properties with restriction, it will require the agreement of the state government in any kind of transaction. Therefore, the transaction period for leasehold properties with restriction is generally longer.

Most of the time, the sale of freehold properties will take roughly 3+1 months to complete, which is stated in the Sale and Purchase (S&P) agreement. Yet, for leasehold properties, the 3+1 months will only commence after the agreement of the state government has been obtained. Getting agreement from state government sometimes can take approximately 6 months to 1 year. In the other worlds, the buyers should not plan to move into their leasehold properties within 4 month time. Besides that, it may take as lon as one year to transfer the ownership.

One more important you should not that it will take more time and effort to transfer a leasehold property from a bumiputra owner to a non-bumiputra owner. This is probably because the government will try to maintain the balance between races living in a particular location.

In my views, freehold properties are more preferable option as the values are usually more stable and are highly likely to appreciate in the longer term. Sometimes, the values of freehold and leasehold properties can go up at the same rate during the initial years. But, the values of leasehold properties will face stagnant until the expiry of the lease.

4 thoughts on “Buying Freehold or Leasehold?”

  1. Personally, I think the house ownership of freehold and leasehold is not the main factor that influences the preference of the buyers. Because if you purchase a new property and you can own the property for 99 years, I feel it is a pretty long period. Your grandchildren may not even bother to live at your ‘old’ property after 99 years. I think most people prefer freehold is still because of the price appreciation factor.

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