Leasehold VS Freehold: Which is the better offer of a lifetime?

Freehold vs Leasehold Property Malaysia

Leasehold or freehold? As we venture into the adult world, we are told countless times from family, co-workers and strangers that buying a new house is a lifetime commitment. Yes, an important and daunting decision to make – besides marriage, having children and whatever is important on your bucket list.

But when we are living in a world with so much information available at our fingertips,  confusion rises evermore. So which one do we choose – leasehold or freehold?


What is Freehold? What is Leasehold?

In Malaysia, freehold tenure is the right to ownership of a property until the end of time. You could pass on the property to your children or anyone else after your death and they can pass it on to their children, and then their children, followed by their children or whoever they choose…until the end of time indeed.

As for leasehold, you are not the owner of any property or land. You are merely leasing it for an amount of time and that amount of time could also be less if you buy a pre-owned property.

When you reach the end of the tenure, an application to extend the lease will then have to be submitted to the state government, where if approved, you will have to pay a fee.


Read more;

5 signs that you’re ready to buy your first home in Malaysia
5 signs it’s time for you to upgrade to a larger home


Freehold or Leasehold which is better?

Advantages of owning freehold property?

  • There’s no certain timeline required when developing a freehold land.
  • Fewer limitations on transferring their land.
  • For properties that have been converted from leasehold to freehold, the state’s consent is required when transferring ownership
  • Owners have the right to subdivide and allocate the property – subject to town planning controls.

Advantages of owning leasehold property?

  • Would be priced slightly cheaper, thus making investments more value for money given the lower entry cost and higher rental yields.
  • Due to the nature of its tenure, leasehold properties are more attractive and equipped with facilities and features.

Disadvantages of owning a freehold property?

  • They are more expensive than leasehold properties.
  • Freehold properties have lower rental yields due to higher entry points.
  • The landlord is responsible for all repairs, refurbishment and maintenance required for the property.

Disadvantages of owning a leasehold property?

  • Leasehold property has a specific timeline (30, 60, 99 or 999 years).
  • The use of the land lease is restricted by land legislation and by environmental and urban planning controls.
  • Owners will have a greater responsibility to look after leasehold land or property as defined in land legislation.

 

Ladies and gentlemen, the verdict is…

Making a decision of a lifetime between owning a leasehold and freehold property does not solely depend on the price and cost –  despite your search to buy the perfect home for sale in the heart of Malaysia, whether it be Selangor or Kuala Lumpur.

At the end of the day, it depends on individual buyers on whether it is worth compromising on freehold status for other factors like affordability and location or looking forward to a leasehold with a more attractive and equipped with facilities and features.


Looking for the perfect dream home – be it a house, apartment or condominium for yourself or with your partner? Have a chat with us, and our dedicated team will help you make it a reality!

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