hen buying a new house, bought for the purpose of own
be it for own occupancy occupation and will not be sold,
or for investment, there then there is indeed not much
are many factors to consider and difference between leasehold and
one of the most important thing freehold houses. In fact there is
to note is the type of land that advantage for the buyer who buys
the house or property is to be leasehold house as normally
built on. leasehold houses are being sold
at lower price compared to the
There are in general two types of freehold houses.
land namely freehold or
leasehold. As far as freehold However when a leasehold house is
land is concerned, the owner own being passed from parent to
the land in perpetuity until he children when the parent passed
sells the land whereas in away. The length of remaining
leasehold land, the land is only lease will probably in the region
leased to the buyer for a certain of 70 years or less. Should the
number of years, usually 99 child decide to sell the house,
years. he may face some difficulty in
finding buyer for his leasehold
While it has been widely property as the margin of finance
advocated that there is not much offered by the financial
difference between the two types institution decrease with the
of land as a 99 years lease is decrease in the length of lease.
long enough to serve 3 to 4 For a land with lease of 70 years
generation considering the or less, the margin of finance
overlapping lifespan of parents can be 70% or less. This is a far
and children. less than the 95% offered to
freehold houses. Therefore it is
The truth is if the house is difficult to find buyer for
leasehold property with short with length of remaining lease of
remaining lease unless the buyer leasehold property, it is
is willing to fork out 30% to 40% unlikely that a leasehold
of purchase price as down payment property will appreciate with the
and if indeed the purchaser can pace of freehold property.
afford such a large down payment, Therefore be it for own
he or she would probably consider occupation or for investment, it
buying freehold property of would be wise to avoid leasehold
higher value. property.
As the margin of finance decrease
About the Author:
Mr BT Khoo is the webmaster of Malaysia Real Estate, http://www.realestate2u.com.my , the property listing website in Malaysia
Source: www.isnare.com
