Buying a freehold property in Singapore is still worthwhile.

Reader:
Hi AK,

        Hello! I only found out about your blog in Jan this year and have benefitted a lot from your analysis and sharing. 

        I have been reading your recent posts about upgrading to private housing. I happen to work in a landuse planning agency, hence i would like to share my views. 





While i agree that one should not upgrade to a condo if it means overstretching your finances, i think getting a freehold property might be the only way to preserve the value of your property. 

For 99 year leasehold properties, they would eventually need to be returned to the state, and the value of the flats will depreciate after it hits around its half life. 





From the capital preservation point of view, especially for couples who have kids and intend to pass down their properties to their kids, wouldn’t it still be worthwhile upgrading to a freehold property? 

The truth is that freehold land is scarce. 

        Was wondering when you bought your freehold condo, was the lease a major consideration? Would like to hear your thoughts on this 😊 Thanks!

My reply:
Hi,

Welcome to my blog. :)

You started reading my blog in January this year. So, you might have missed this:
http://singaporeanstocksinvestor.blogspot.sg/2016/12/buy-99-years-leasehold-or-freehold.html

I have friends who also work in the landuse planning agency here and when we talk about land leases in Singapore, they share our sentiments.





I won't say anything about myself but if legacy is a consideration, then, buying FH or 999 years leasehold makes more sense than a 99 years leasehold property here.

Oh, I don't mean buying a FH property in JB is better than buying a 99 years leasehold property in Singapore hor. That is not an apple with apple comparison. 

Sorry, I couldn't resist that.





Related posts:
1. Flat is 37 years old and son is 8.
2. When the lease on HDB flat ends.
(Do read the comments section too.)

When the lease on my HDB flat ends (UPDATED).

What happens to our CPF money used to buy a HDB flat when the lease ends?

Reader:
can I assume that whatever has been used to pay for the flat will be forfeited and we still need to pay back the accrued interest? 

I have friends who are paranoid over the lease issue cuz they keep on reading the anti hdb and anti CPF articles. 

End up frightening themselves.






AK:
Tell your friends it is the same anywhere in the world. 

Leasehold means there is a limited life. 

Once it is gone, it is gone. 

Money from CPF used in the purchase of such flats at the end of the lease is gone. 

Logically, if the money is gone, how to pay back?


Reader:
My friend just bought a 940k EA resale 30++y flat recently.










Simplistically, if there is 65 years left to the lease, the reader's friend is paying about $15K a year to "lease" the flat.

Of course, if we take into consideration time value of money and interest on a housing loan (or interest he could have made if he had not used his CPF money in the purchase), it would be more than $15K a year.

It is good to know that more people are thinking about this issue but don't over think. 

There is no conspiracy to impoverish anyone.





BTO HDB flats are the most affordable form of housing for Singaporeans and they come with a 99 years lease. 

Even if we were to live to be a hundred, the lease is more than enough.

The worry is when people pay top dollar for much older 99 years leasehold properties.






There is regulation in place to guard against CPF members from buying much older 99 years leasehold properties using their CPF money:

http://singaporeanstocksinvestor.blogspot.sg/2014/07/financing-purchase-of-hdb-flat-new-or.html


If a young couple decide to pay $1 million for a resale flat that has 65 years left to the lease, they have to be aware of the consequences.





We have to pay for the roof over our heads.

There is no free lunch in this world.

If we get something for free, someone else is paying for it.

If we are staying for free with our parents, it is because they paid for the roof.

People who want the CPF money which they used to buy their HDB flat returned to them after the expiry of the 99 years lease are looking for a free lunch.

Wake up.







Related posts:
1. Why I stay in a condo?
2. Resale Sengkang or BTO Bidadari?
3. Stop accrued interest from growing!

NDR 2018:
HDB, HIP, HIP II and VERS.