Leasehold Anyone?

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I asked this question in Facebook recently. “Leasehold property will decrease in value as tenures reduces.

Some facebook users commented it will affect the price and some say it depends. What do you think?

Here are some of the comments

David commented “A good leasehold location with all the booster factors are still high in demand. 1st 40 years is not an issue. As long as 60 years lease and above and it’s a good & solid location, the value will still appreciate like freehold. Below 60 years may have problems with financing when you sell. Agree with Previn’s statement. Prime locations is key!”

David added “ Many leasehold areas are goldmine locations that are in better locations than freehold. Hence the strong appreciation year after year. It all comes down to the booster factors. Just my humble observations”

Frankie commented “But 1 factor defies this Location Location & Location”

Christopher commented “Only loan amount will be reduced”

I think everyone is right. My answer to this is “it depends”.

The following are my thoughts which I posted in facebook

  1. Price depends on location. I hv seen price go up in spite of tenure reducing.
  2. Some bank will not lend if tenure is less than 60 or 30 years.
  3. The risk will be lower if the land owner is state as I will think they will renew the tenure upon expiry but owners hv to pay land premium.
  4. Most Leasehold Properties are cheaper.
  5. If you are worried on price reduction sell before 60 years.

So far we did not encounter lease expiring yet. There is no case comparison, Singapore recently encounter this.

One facebook user commented that point no 5 is coming soon. This I agree.

What do you think?

 

From the desk of

Miichael Yeoh

Setia

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