News & Articles Freehold Property – Pros and Cons
Freehold Property – Pros and Cons
5 Oct 2016
To most, choosing between the freehold and leasehold property is like a walk in a park. One option grants you complete ownership over the home, the land it’s build upon and the title. The other less preferred option leaves you with a lease with the landlord, albeit the long tenure period.
However, freehold property with all its positives isn’t without its negatives. Before you dive head first into purchasing that home you’ve been eyeing, have a read below.
Pros
1. Upon purchase, full ownership of the home goes to the buyer.
2. Management of the building is entirely up to the owner; self-manage or hire a managing agent.
3. For freehold land, the owner has the unlimited right to subdivide and allocate the land, although it is still subjected to town planning controls.
4. There is no limit of time to hold the property. A freehold property lies with the title holder until they transfer it of their own accord
5. Over time, the value of the bank loan decreases to a point where the home completely belongs to the buyer indefinitely.
6. Freehold property gives the owners to enhance to value of the property, increasing its marketability and desirability to future buyers.
7. There is no restriction in law on the number of owners who can be registered as proprietors.
Cons
1. Managing a home is a complex task with a host of laws and regulations to learn.
2. Fix ups and maintenance of a home needs to be followed through regularly, especially for investment properties with tenants.
3. Engaging a professional and experienced managing agent to deal with the day-to-day running of the building does not absolve owner from ultimate responsibility for making sure it is done properly.
4. The ownership of freehold properties may be subject to Land Acquisition Act 1960 where the state government has the power to compulsorily acquire the property. The title holder will be compensated based on its market value.
5. Limited availability in key areas that would often generate a positive rental yield or a substantial growth in property value.
6. Price of a freehold property is generally 20% higher than that of a leasehold.
(中文版请看这里:http://www.durianproperty.com.my/blog/article/1051)
However, freehold property with all its positives isn’t without its negatives. Before you dive head first into purchasing that home you’ve been eyeing, have a read below.
Pros
1. Upon purchase, full ownership of the home goes to the buyer.
2. Management of the building is entirely up to the owner; self-manage or hire a managing agent.
3. For freehold land, the owner has the unlimited right to subdivide and allocate the land, although it is still subjected to town planning controls.
4. There is no limit of time to hold the property. A freehold property lies with the title holder until they transfer it of their own accord
5. Over time, the value of the bank loan decreases to a point where the home completely belongs to the buyer indefinitely.
6. Freehold property gives the owners to enhance to value of the property, increasing its marketability and desirability to future buyers.
7. There is no restriction in law on the number of owners who can be registered as proprietors.
Cons
1. Managing a home is a complex task with a host of laws and regulations to learn.
2. Fix ups and maintenance of a home needs to be followed through regularly, especially for investment properties with tenants.
3. Engaging a professional and experienced managing agent to deal with the day-to-day running of the building does not absolve owner from ultimate responsibility for making sure it is done properly.
4. The ownership of freehold properties may be subject to Land Acquisition Act 1960 where the state government has the power to compulsorily acquire the property. The title holder will be compensated based on its market value.
5. Limited availability in key areas that would often generate a positive rental yield or a substantial growth in property value.
6. Price of a freehold property is generally 20% higher than that of a leasehold.
(中文版请看这里:http://www.durianproperty.com.my/blog/article/1051)
Source: DurianProperty.com