What is a leasehold?
Land tenure is a set of rules that decide who owns a piece of land. This can be a person, a company, or the government. Simply put, it pertains to the duration of property ownership. Singapore has two types of land ownership: freehold and leasehold.
Freehold ownership means the land is owned entirely by the owner, with no restrictions on passing it on to future generations.
To be classified as freehold, a property must possess two characteristics: Firstly, it must be immobile or attached to land in some way. Secondly, it must have an uncertain duration or lack a specified endpoint.
Leasehold ownership refers to when the duration of ownership is specified. Generally, residential leasehold titles are valid for 99 or 999 years, while industrial leases are valid for 60 or 30 years, with a few exceptions. Once the lease term expires, the ownership of the land is returned to the State.
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What occurs when the 99-year lease expires?
When the lease of a condominium reaches zero, the land upon which the property is situated will be handed over to the State.
Private homeowners can petition for a lease extension by applying to the Singapore Land Authority (SLA). It is recommended that appeals be made more than three years before the lease expires, though exceptions will be evaluated case by case.
The SLA will only grant lease extensions after examining the market worth of the land and the development possibilities in the area.
However, homeowners requesting a lease extension must be willing to pay a significant premium for the extension. If their appeal is unsuccessful, homeowners must be prepared to relocate without compensation.
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Do HDB flats have freehold or leasehold tenure?
Housing Development Board (HDB) flats are mainly 99-year leasehold properties and follow a similar ownership structure to leasehold condos.
This lease duration is intended to fulfil the current owners and their offspring’s needs while ensuring that the land can be utilised for future generations.
Like other leasehold properties in Singapore, the ownership of the flats will return to HDB, the landowner, once the lease expires. Subsequently, HDB will give up the land to the State.
