Real Estate

Understanding the Different Forms of Home Ownership

Written by Zilvinas Puisys

Before you purchase a home, it is critical that you know the different forms of home ownership to make an informed decision. You should know that there are two forms of home ownership – freehold and leasehold. Understanding the two can be the difference between owning a home outright and having a landlord.

Here are some things that you need to know about freehold and leasehold:

What is freehold?
When you buy a property, check if it is freehold. Freehold properties mean that you own the building including the land that it stands on – in perpetuity. In the land registry, you will be considered the “freeholder” having a “title absolute”. With this, freehold is always the preferred option.

Having a freehold property does not require you to pay annual ground rate. Aside from that, you have the responsibility for maintaining the building including the outside walls and the roof. Standalone houses are normally considered freehold properties. However, there are new homes these days that are leasehold properties.

What is leasehold?
Leasehold properties will give you the right to use the home for a number of years. You only have the lease from the landlord or freeholder. The leases are typically long-term from 90 to 120 years. When you consider this, you have to check the lease period because there are properties with a short lease period of 40 years.

The landlord has a contract with the leaseholder. The former is normally responsible for maintaining the common areas of the building like the staircase, entrance hall, exterior walls and the roof. With this, leaseholders will need to pay maintenance fees, building insurance and annual service charges. Leaseholders are also required to pay ground rent annually. Finally, if the leaseholders do not fulfill the terms of the lease, it may be forfeited.

What to avoid when buying a leasehold property?
If you decide to buy a leasehold property, you should know that leases of less than ninety years could be a problem. Without a doubt, any lease less than eighty years can significantly affect the value of the property. If you have a short least, there is a possibility that the property will decline in value even if the prices around the area are rising. This will ultimately mean that few people will want to purchase it when you plan to resell. It can also mean that the mortgage companies will be hesitant to lend on it.

In the case of Mayfair Gardens, the leasehold is 99 years. It is situated in Bukit Timah. The property is a five-minute walk from the King Albert Park station. According to the urban planning, this park will become a junction of the future Cross Island Line. The area is very close to schools like Hwa Chong Junior College, Nanyang Primary and Girls’ High School and the Methodist Girls’ Primary and Secondary School. Nearby banks include UOB, DBS, Maybank, and OCBC.

Bukit Timah is also home to the nature reserve, which is considered one of the richest ecosystems in Singapore. Aside from schools, banks and nature park, you will also see a multitude of restaurants, fitness and beauty centers, grocery stores, shops, and bars.

About the author

Zilvinas Puisys