Freehold is a property in which the owner of the property can hold title indefinitely. For a property with a freehold, the owner holds freehold of all real estate on his land, including land, buildings, trees and underground resources, which are subject to a certain depth of the ground and can be passed down from generation to generation.

In Singapore, where land is scarce, freehold properties are scarce and valuable.

These freehold properties have been passed down since the founding of the country, as the Singapore government announced in 2007 that freeholds would no longer be available for property developers to bid on.

So, if you see new freehold properties for sale in the market now, they are bought back from the private owners of the old freehold properties and redeveloped.

Advantages of Freehold Property in Singapore

1. Freehold properties retain their value.

The title of the freehold property belongs entirely to the owner and the government is not allowed to interfere with it. It can be passed on to future generations of the family and become a family asset.

It is worth noting that while the law protects the owner's absolute title for the term of the lease, all land required for public purposes, such as the construction of roads, MRT systems, schools, hospitals, parks and government HDB flats, can be forcibly expropriated by the government under the Land Acquisition Act.

This applies to both freehold and 999-year land leases. Of course, the government will compensate for the expropriation and demolition, usually not lower than the market price, so don't worry too much.

2. Appreciation of freehold properties.

Since the Singapore government stopped selling land with freehold title, freehold land has become a scarce resource.

Rare things are expensive. The more developed Singapore's economy is and the stronger the country is, the higher the value of these scarce resources will be, so rich people like to come to Singapore to buy properties with freeholds.

3. Freehold properties have the opportunity to become rich overnight.

The Singapore real estate market is known as collective sale when two or more property units are sold as a package to the same buyer.

In Singapore, after a property is put up for collective sale, all owners are consulted. Once more than 80% of the owners agree to sell, the property is put up for auction to the highest bidder, who is usually a property developer.

Since the collective sale price is often 50% or even 100% above the market price, for the owners, the collective sale is almost equivalent to winning the lottery and becoming rich overnight. This is especially true for properties that have freeholds but are old.

Both 99-year leasehold properties and freehold properties can be sold en masse. However, it is important to note that a developer can develop a new 99-year leasehold property after buying the land that holds the freehold. Therefore, special attention should also be paid to new properties that are built on freehold land but have a 99-year lease only.

Features of freehold properties in Singapore

1. Freehold properties are more expensive.

For the same location, configuration and size, the price of a freehold property will be 15-20% higher than that of a 99-year leasehold property.

2. There are fewer restrictions on the transfer of freehold property.

In Singapore, there are restrictions on the use of loans and CPF if there is less than 60 years remaining on the title deed of the property.

If there are less than 40 years remaining, the property will be difficult to sell unless the property has the potential to be sold collectively.

In this regard, freehold properties have little to no time remaining on the deed to worry about. Even abandoned homes that have been vacant for more than a decade can fetch a higher price if they have a freehold.

Because buyers are interested in freehold, they will usually tear down the old house and rebuild it outright.

3. Freehold properties are located in the core area and are generally not close to the subway.

Freehold properties are concentrated in core areas such as Orchard Road, Bukit Timah, East Coast and Novena.

There are basically no freehold properties in the newly developed areas by the government, so almost all freehold properties are not close to the MRT and are mainly used to build luxury houses, town houses and detached or semi-detached houses, with relatively few large properties.