Page 1 of 2 12 LastLast
Results 1 to 30 of 51

Thread: What happens when a 99y leasehold property reaches the end of its lease?

  1. #1
    Join Date
    Apr 2012
    Posts
    74

    Default What happens when a 99y leasehold property reaches the end of its lease?

    Answer copied from a local bank website: From legal point of view, the leasehold property would revert back to the State or reversionary interest owner upon the expiry of the lease term of 99 yrs, 999 yrs, etc. However, the government is currently looking into ways to allow old leasehold apartment/condominium developments to upgrade the existing unexpired lease term which they hope will provide an incentive for old apartment/condominium to be upgraded from their existing old and poorly maintained condition.

    If a buyer pays 1.5 million for a 30+ years old, 1615 sq ft apartment at Laguna Park, with leasehold tenure 99 years from 1978, can this buyer still make money from this investment?

    Would you buy an old leasehold property now? I certainly would not? Too risky!

  2. #2
    Join Date
    Jun 2009
    Location
    Southbank
    Posts
    9,531

  3. #3
    Join Date
    Jun 2009
    Location
    Southbank
    Posts
    9,531

    Default


  4. #4
    Join Date
    Jun 2012
    Posts
    170

    Default

    I once heard people saying that the property be in freehold or 99 years, most likely will kanna en-bloc sale or acquired by the government for other development before it even reach 50 years. Not sure how true.

  5. #5
    Join Date
    Jul 2009
    Posts
    7,482

    Default

    Colin Tan's spreadsheet is probably more informative than his fence sitting articles.

  6. #6
    Join Date
    May 2011
    Posts
    616

    Default

    Quote Originally Posted by Super
    I once heard people saying that the property be in freehold or 99 years, most likely will kanna en-bloc sale or acquired by the government for other development before it even reach 50 years. Not sure how true.
    don't think so. Else questown would be SERs many times ovet

  7. #7
    Join Date
    Jul 2009
    Posts
    7,482

    Default

    Quote Originally Posted by samuelk
    don't think so. Else questown would be SERs many times ovet
    They'll probably come back to that after they are done developing punggol.

  8. #8
    Join Date
    Jun 2009
    Posts
    2,511

    Default

    It is always best and sensible to get a FH/999 leasehold private property than to get 99 year leasehold.

    Singapore is a small nation, and there will be a peak period where all the places will be well-accessible and connected. Government will try all their means to spur construction and re-building to create jobs and driving the GDP. With that in mind, the island Singapore can only be developing continuously till a stage where most of the places will be covered.

  9. #9
    Join Date
    May 2009
    Posts
    1,381

    Default

    Quote Originally Posted by Arcachon


    A BIG mistake with this table is that it completely ignores inflation and assumes that a $1M FH property today will still be worth $1M in 99 years time.

    TS should ask: What was the Laguna Park's price 30 years ago and why is it worth $1.5M now? Was there any depreciation at all? Why or Why not?

  10. #10
    Join Date
    Jul 2012
    Posts
    1,070

    Default

    Quote Originally Posted by fclim
    A BIG mistake with this table is that it completely ignores inflation and assumes that a $1M FH property today will still be worth $1M in 99 years time.

    TS should ask: What was the Laguna Park's price 30 years ago and why is it worth $1.5M now? Was there any depreciation at all? Why or Why not?
    Yap..me also feel that the chart looks weird n seem not logic, may it 99 or FH/999... . I m about to ask the same question as you.. but your hand is faster.. !

  11. #11
    ikan bilis's Avatar
    ikan bilis is offline i'm Buaya ! Girls BEWARE !!...
    Join Date
    Apr 2011
    Posts
    1,385

    Default

    Quote Originally Posted by 30years
    .... However, the government is currently looking into ways to allow old leasehold apartment/condominium developments to upgrade the existing unexpired lease term which they hope will provide an incentive for old apartment/condominium to be upgraded from their existing old and poorly maintained condition....
    bro, where you found that info ??....

    arcadia applied for lease extension but kena thrown out by sla/ura...
    http://www.iproperty.com.sg/news/344...ng-for-Arcadia

    me don't mind to buy some 30yr old apt/condo for own stay if they found some way to upgrade all units' toilets for whole estate... like what they did on hdb toilet upgrades... no extension of land lease back to 99yr also happy...


  12. #12
    Join Date
    Mar 2012
    Posts
    4,990

    Default

    I think the chart indicates present value.

  13. #13
    Join Date
    May 2008
    Posts
    219

    Default

    in certain areas, you can only buy 99
    ie sentosa cove and marina bay, shenton

    so what happens after 99 years?
    the govt raze these areas down? doesnt seem likely ..



    Quote Originally Posted by yowetan
    It is always best and sensible to get a FH/999 leasehold private property than to get 99 year leasehold.

    Singapore is a small nation, and there will be a peak period where all the places will be well-accessible and connected. Government will try all their means to spur construction and re-building to create jobs and driving the GDP. With that in mind, the island Singapore can only be developing continuously till a stage where most of the places will be covered.

  14. #14
    ikan bilis's Avatar
    ikan bilis is offline i'm Buaya ! Girls BEWARE !!...
    Join Date
    Apr 2011
    Posts
    1,385

    Default

    now the value of a 10yr old lh99 is like >20% lower than a brand new lh99 next to it...

  15. #15
    Join Date
    Jan 2011
    Posts
    1,636

    Default

    Quote Originally Posted by ikan bilis
    now the value of a 10yr old lh99 is like >20% lower than a brand new lh99 next to it...
    This is not possible right? I thought HDB before 20 years ol still command high price? Can yo quote an example?

  16. #16
    Join Date
    Nov 2008
    Posts
    9,217

    Default

    Shenton has FH and LH999 too.
    Quote Originally Posted by vboy
    in certain areas, you can only buy 99
    ie sentosa cove and marina bay, shenton

    so what happens after 99 years?
    the govt raze these areas down? doesnt seem likely ..

  17. #17
    ikan bilis's Avatar
    ikan bilis is offline i'm Buaya ! Girls BEWARE !!...
    Join Date
    Apr 2011
    Posts
    1,385

    Default

    Quote Originally Posted by CCR
    This is not possible right? I thought HDB before 20 years ol still command high price? Can yo quote an example?
    now lah... i'm not talking about hdb... how to compare resale hdb price with new bto hdb... and hdb got SER....

    i'm talking about new launch/sub-sale condo comparing with 10yr old resale condos near by.... isn't that so at >20% difference ??...

  18. #18
    Join Date
    Apr 2012
    Posts
    1,295

    Default

    Quote Originally Posted by ikan bilis
    now lah... i'm not talking about hdb... how to compare resale hdb price with new bto hdb... and hdb got SER....

    i'm talking about new launch/sub-sale condo comparing with 10yr old resale condos near by.... isn't that so at >20% difference ??...
    are you sure?? can you quote some eg? that would be worth a buy if thats the case...

  19. #19
    Join Date
    Jun 2009
    Posts
    2,511

    Default

    Quote Originally Posted by vboy
    in certain areas, you can only buy 99
    ie sentosa cove and marina bay, shenton

    so what happens after 99 years?
    the govt raze these areas down? doesnt seem likely ..
    Hi. I mean there is no need of worrying FH/999LH will be in remote area as Singapore is relatively small and compact.

    The connectivity, accessibility and network can only be more intense and closely knit as years go by. May not see in this lifetime but there is always a possibilities that government will upgrade the other remote areas once the central has already fully developed. This is how they keep the nation keep going with GDP growth and progression.

  20. #20
    Join Date
    May 2011
    Posts
    616

    Default

    Quote Originally Posted by lajia
    are you sure?? can you quote some eg? that would be worth a buy if thats the case...
    I think even with 20% off copared to new, its not a firesale but more of owner taking proft

  21. #21
    ikan bilis's Avatar
    ikan bilis is offline i'm Buaya ! Girls BEWARE !!...
    Join Date
    Apr 2011
    Posts
    1,385

    Default

    Quote Originally Posted by lajia
    are you sure?? can you quote some eg? that would be worth a buy if thats the case...
    hur ?? i thought it has been like that ??...
    correct me if i'm wrong ....


    parc vista vs lakefront residences
    modena vs my manhattan
    northvale vs hillsta/micasa


    i like brand new condo also, but not willing to pay that 20% difference....


    note:
    - i'm talking about comparing psf$, not the quantum...
    - i do not mean condo will depreciate 20% every 10 yr (the 1st 10yr depreciate most)
    - there is big difference between brand new LH99 vs 10yr old LH99, like 20%
    - there is not much difference between 10yr old vs 20 yr old LH99... is like 5-10%
    Last edited by ikan bilis; 21-08-12 at 13:00.

  22. #22
    Join Date
    Nov 2009
    Posts
    2,368

    Default

    The chart doesn't make mistake. It's from SLA. It's the value of a leasehold as compared to an EQUIVALENT FREEHOLD.

    In short, if your leasehold property only has one year left, its value is 3.8% of an equivalent freehold. Assuming you can still enbloc, it means if an equivalent freehold is worth say $1 million, the leasehold is worth 3.8% of 1 million which is $38k. If a kind property developer wants to enbloc, you the owner of 1-year land gets $38k only (1 yr), and the $962k (98 yrs) goes to SLA as a lease top-up. Get it? Had the development been freehold, you get the entire cool $1 million - doesn't matter how old is your land.

    Do you know why some condos so hard to enbloc? Because the lease-top up (to be paid to government) is like $400 million for say pine grove and assuming 600 units, you would have lost $600k per unit HAD IT BEEN freehold. Its about value lost compared to freehold. Had your property been freehold, they would have gotten so much more.

    Of course you ca find a carrot head who has no idea what leasehold means. When your property only has one-year left, the value is just what the present value of one-years rental at best. At the end of the lease, the land has to go back to the government becasue after all it goes back to ALL SINGAPOREANS as tax payers and our reserves. It has not happened yet but I'm sure u can pay rental to the govt and ask for renewal.

    that is why so many are so deperate to enbloc at 30 years old or so. Or else chance of enbloc diminish every year.


    Quote Originally Posted by CondoWE
    Yap..me also feel that the chart looks weird n seem not logic, may it 99 or FH/999... . I m about to ask the same question as you.. but your hand is faster.. !
    Last edited by Wild Falcon; 21-08-12 at 13:32.

  23. #23
    Join Date
    Jul 2009
    Posts
    115

    Default

    Quote Originally Posted by Wild Falcon
    The chart doesn't make mistake. It's from SLA. It's the value of a leasehold as compared to an EQUIVALENT FREEHOLD.

    In short, if your leasehold property only has one year left, its value is 3.8% of an equivalent freehold. Assuming you can still enbloc, it means if an equivalent freehold is worth say $1 million, the leasehold is worth 3.8% of 1 million which is $38k. If a kind property developer wants to enbloc, you the owner of 1-year land gets $38k only (1 yr), and the $962k (98 yrs) goes to SLA as a lease top-up. Get it? Had the development been freehold, you get the entire cool $1 million - doesn't matter how old is your land.

    Do you know why some condos so hard to enbloc? Because the lease-top up (to be paid to government) is like $400 million for say pine grove and assuming 600 units, you would have lost $600k per unit HAD IT BEEN freehold. Its about value lost compared to freehold. Had your property been freehold, they would have gotten so much more.

    Of course you ca find a carrot head who has no idea what leasehold means. When your property only has one-year left, the value is just what the present value of one-years rental at best. At the end of the lease, the land has to go back to the government becasue after all it goes back to ALL SINGAPOREANS as tax payers and our reserves. It has not happened yet but I'm sure u can pay rental to the govt and ask for renewal.

    that is why so many are so deperate to enbloc at 30 years old or so. Or else chance of enbloc diminish every year.
    Shouldn't the top up to SLA be 922k (96% of a freehold less 38k)?

  24. #24
    Join Date
    Nov 2008
    Posts
    2,438

    Default

    FH or LH are the same. If Government want to acquire the land, you have to sell it. Like the upcoming MRT lines, they can buy the land anytime they want. 99 or 999 or FH, it is the same.

    I rather go for location. Rental higher, en bloc chances higher, resale higher. Of course, purchase price also higher lah.

  25. #25
    Join Date
    Nov 2009
    Posts
    2,368

    Default

    The chart has no mistake. Its your interpretation that is a mistake. It is the value of an equivalent freehold at that point in time. So assuming Laguna is 40 years old at the time of enbloc. The valuer will ask himself, what is the value of Laguna had it been freehold? Say the value is $1.8 million. Based on the formula above, it means 80% of the value, i.e. 80% of $1.8 million = $1.4 milliom. $1.4 million goes to the Laguna owner (or lessee). The rest of the $400k goes to SLA for lease topup. Had it been freehold, the entire $1.8m will go to the owner. The formula merely allocates the value between the lessee and SLA. And as Laguna ages, the proportion that goes to the lessee gets less and less, until when the lease is only 1 year left, the lessee only gets 3.8% of an equivalent freehold. Hope that clarifies.

    Quote Originally Posted by fclim
    A BIG mistake with this table is that it completely ignores inflation and assumes that a $1M FH property today will still be worth $1M in 99 years time.

    TS should ask: What was the Laguna Park's price 30 years ago and why is it worth $1.5M now? Was there any depreciation at all? Why or Why not?

  26. #26
    Join Date
    Apr 2012
    Posts
    74

    Default

    Those who plan to invest in old leasehold properties should be aware that the prices of these properties cannot appreciate forever and will hit a saturation point sometime in the future where its value will then fall lower and lower and eventually drop to zero at the end of its lease.

    Those property bulls who shout that they guarantee prices will be higher in 2030 compared to now are probably morons with vested interests. Nobody knows what will happen in the future and prices of old leasehold properties will not rise forever.

    In 1996 at its peak, leasehold HUDC apartments like Farrer Court or Pine Grove can fetch a million each. In 1998 at the low, units sells for 400k.

    Now the HUDC apartments are older but more expensive. Will prices go up further or fall 50% like it did back in 1996? I don't know but I would not risk 1.5 million to find out.

  27. #27
    Join Date
    Feb 2011
    Posts
    8,926

    Default

    assuming an HDB near MRT left with 70y lease, you rent it out, one year net profit 25,000 after tax/expenses

    it should be ok to rent out another 30y without issue, even assume rental does not go up, it will be 750k ... at the end you still have 40y lease ... can probably sell 500k without any problem ... if ah kung helps you SERS you strike jackpot

    so HDB is different due to constant programs like NRP to maintain it FOC
    Ride at your own risk !!!

  28. #28
    Join Date
    Apr 2012
    Posts
    74

    Default

    Quote Originally Posted by phantom_opera
    assuming an HDB near MRT left with 70y lease, you rent it out, one year net profit 25,000 after tax/expenses

    it should be ok to rent out another 30y without issue, even assume rental does not go up, it will be 750k ... at the end you still have 40y lease ... can probably sell 500k without any problem ... if ah kung helps you SERS you strike jackpot

    so HDB is different due to constant programs like NRP to maintain it FOC
    My 3rm HDB flat, 1969, left with 56 years only but price now at near all time high. Sell now can buy two luxury freehold condo, 1600+ sq ft in JB.

    Used to own an executive HDB flat in Jurong. In 1996 its value was around 550K. I sold it in 1998 for 385K. The owner who bought it had to endure negative equity as its value drop further to around 250K during the lows of 2005/2006.

    How can anyone be sure HDB flat prices will continue to move higher?

  29. #29
    Join Date
    Nov 2008
    Posts
    9,217

    Default

    That is what happen to my cousin. Relocated to Queenstown area. Jackpot.
    Quote Originally Posted by phantom_opera
    assuming an HDB near MRT left with 70y lease, you rent it out, one year net profit 25,000 after tax/expenses

    it should be ok to rent out another 30y without issue, even assume rental does not go up, it will be 750k ... at the end you still have 40y lease ... can probably sell 500k without any problem ... if ah kung helps you SERS you strike jackpot

    so HDB is different due to constant programs like NRP to maintain it FOC

  30. #30
    Join Date
    Jul 2012
    Posts
    1,070

    Default

    My parent in law bought clementi HDB in 1978 for 13K only...now huat ah almost 31X fold liao.. as their neighbour just sold at 410k recently !

    For long term, HDB flat prices sure move higher and higher... !

Similar Threads

  1. 3 Cuscaden reaches new high of $4,241 psf
    By reporter2 in forum Singapore Private Condominium Property Discussion and News
    Replies: 0
    -: 21-02-22, 10:54
  2. When en bloc fever distorts 'lease decay' principle of leasehold property
    By reporter2 in forum Singapore Private Condominium Property Discussion and News
    Replies: 3
    -: 09-09-18, 03:42
  3. Replies: 1
    -: 09-11-14, 11:26
  4. Europe crisis reaches its climax
    By phantom_opera in forum HDB, EC, commercial and industrial property discussion
    Replies: 24
    -: 18-05-12, 01:16
  5. Dangers ahead as US real estate reaches endgame
    By mr funny in forum HDB, EC, commercial and industrial property discussion
    Replies: 0
    -: 12-10-06, 10:39

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •