Leasehold vs Freehold property: Which Do You Prefer?
Table of Contents
What is Freehold Property?
Freehold property is the one that a state grants to an individual for an indefinite period. A few examples of freehold property are freehold bungalows, condominiums, and private housing.
The developer will have ownership of freehold property. The buyers of bungalow will be the owner of the condo, but not the owner of the land. Ownership will be shared through Strata title.
There will be a few restrictions when landowner (developer) wants to transfer property to anyone else. Besides, they will also be allowed to allocate and subdivide land even if the land is subjected to town planning controls.
When there will not be any development on the freehold property, the state cannot claim the ownership of property. That means you do not need to stick to any timetable. Moreover, in the case of redevelopment, the owners of the land will be compensated. In addition, the owner will need the permission of the state while transferring the ownership. One can take a take freehold property for 99 years leasehold.
What is Leasehold Property?
The leasehold property can be taken for lease from 30 to 999 years. These properties come with some restrictions such as dos and don’ts. The tenant needs to obey the land legislation. He will have the responsibility to maintain the property as well.
The downside is that if the state will feel that a tenant is unable to take care of the properties, then it can cancel the lease on non-performance ground. Moreover, any time you can get a notice to renew the lease when the expiring will be approaching. You will have to pay a very high amount to renew your lease. The amount will vary depending on the country. For example, the price of Malaysia will be different from Canada.
What is the difference between Leasehold vs Freehold property?
Both of leasehold and freehold come with many positive and negative sides. In a freehold property, the ownership can be distributed and an owner will have some control on the property. In brief, he will be the owner until any new step has initiated by the state. The negative side is that the state can take back the property any time for public purposes.
The Leasehold property will also have a few benefits. There will not be an owner. The user of the property will get the permission from the state authorities. In addition, he needs to oblige the state legislation related to the property. The downside is that the selling process will be long and the value might be lower than freehold. Financing can be a problem as well. If you want to know how to check freehold or leasehold property, then you should take the help of real estate agents.
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Which One To Choose & Why?
Many things will depend on the purpose of usage, location, and your budget. Freehold property is considered better than the leasehold. You will have to spend more on leasehold. Besides, there will be some strict rules as well. If you buy freehold property, you will have some flexibility. You might need to spend less than leasehold.