In today’s day and age, the fight for land is more difficult than ever. The availability of freehold property in prime locations is scarce, thus more and more buyers are willing to accept leasehold options for the sake of location and convenience.

However, many first time purchasers jump to this conclusion without really weighing in on the pros and cons that come along with a leasehold property.

Pros
1. Relatively cheaper for more space as compared to freehold property.
2. More options to choose from in prime areas that offer more convenience.
3. Better options for investment property in locations that can yield a positive rental income.
4. Long lease period (up to 99 years) which is not a worry for buyers not looking to retain for future generations.

Cons
1. The property does not entirely belong to you as leasehold can be defined as the right to hold or use the property for a fixed period of time at a given price, without transfer of ownership, on the basis of a lease contract.

2. The sale of a leasehold property will require the consent from the state government authorities and this will usually take a fair bit of time.

3. The value of a leasehold property will usually depreciate when the lease period is coming to an end. This is because of the reduced marketability of such property where its lease is near expiration given the complications related to renewal and difficulty of obtaining a bank mortgage.

4. Upon expiry of the lease, the ownership reverts back to the State government. However, the lease can be extended or renewed subject to the approval of the state government authorities and payment of a premium.

5. During renewal of the lease, if the property is appraises at a higher value, you will be looking at a larger lease payment. The uncertainty and fluctuation of those lease payments is a deterrent, especially for those really budgeting.


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