The decision to buy a leasehold condo in Singapore comes with multiple factors to consider—location, affordability, investment potential, and, most importantly, lease decay. Unlike freehold properties, leasehold units come with a fixed tenure, which directly affects their resale value, financing options, and long-term appreciation potential.
Whether you’re a first-time homebuyer or an investor, understanding the factors influencing lease decay and how to time your sale can make all the difference in maximising your property’s value. Here’s everything you need to know about leasehold properties in Singapore before making a purchase.
Leasehold vs. Freehold: What’s the Difference?
In Singapore, private residential properties are categorised into two main tenure types:
Freehold properties – Owned indefinitely, with no lease expiry.
Leasehold properties – Come with a tenure of 99, 60, or 30 years, after which ownership reverts to the state.
Most private condominiums are 99-year leasehold, while some government land sales (GLS) projects are on 60-year leases. 30-year leaseholds are rare and typically apply to certain commercial properties or niche residential developments.
While freehold properties offer perpetual ownership, they also come with higher price tags—usually 15-30% more expensive than leasehold options. In contrast, leasehold condos in Singapore are often more affordable and located in prime locations, making them attractive to both homeowners and investors.
However, the key downside of leasehold properties is lease decay, which impacts their resale value over time.
Thinking of buying a short lease property in Singapore? Discover the risks, benefits, financing challenges, and key factors to consider before making a decision!
Understanding Lease Decay and How It Affects Property Value
What Is Lease Decay?
Lease decay refers to the depreciation in value of a leasehold property as the remaining tenure decreases. Unlike freehold units, where land appreciates over time, a leasehold property loses its attractiveness as the lease shortens—especially once it drops below the 60-year mark.
The rate at which lease decay happens is not linear. Instead, it follows a pattern known as Bala’s Curve, which illustrates how leasehold property values decline as they approach expiration.
Factors Influencing Lease Decay
Several factors influence lease decay, impacting a property’s resale price and demand:
Remaining Lease Tenure
When a leasehold condo has more than 80 years left, it maintains strong resale potential.
As the lease drops below 60 years, financing restrictions start to limit potential buyers.
Below 30 years, properties are extremely hard to sell as bank loans and CPF usage become restricted.
Location & Amenities
Leasehold condos in prime districts (e.g., Orchard, Marina Bay) tend to hold value better than those in suburban areas.
Proximity to MRT stations, shopping malls, and reputable schools can slow down depreciation.
En Bloc Potential
Older leasehold condos may still command strong prices if they have en bloc potential—where developers purchase the land for redevelopment.
Factors like plot ratio and URA zoning changes can determine whether a development is likely to go en bloc.
Government Land Supply (GLS) Cycle
If many new leasehold projects are launched in a given area, older leasehold condos may see faster price depreciation due to competition.
Financing Challenges: Can You Get a Bank Loan for a Leasehold Property?
As leasehold condos in Singapore age, banks become more restrictive in granting home loans. If you're planning to finance your purchase with a bank loan for a condo, it’s crucial to understand the impact of lease tenure on loan eligibility.
How Bank Loans Work for Leasehold Condos
Properties with at least 60 years left
Most banks offer loans up to 75% Loan-to-Value (LTV) for first-time buyers.
Buyers can use CPF savings for both down payments and mortgage repayments.
Properties with 40–59 years left
LTV ratio is reduced, meaning buyers need a higher cash down payment.
CPF usage is restricted—buyers must be able to fully repay the loan before age 65.
Properties with less than 30 years left
Very few banks offer financing; most require full cash payment.
CPF cannot be used for purchase.
Thus, if you’re considering a bank loan for a condo in Singapore, it’s best to avoid properties with short remaining leases, as securing financing can be a challenge.
When Is the Right Time to Sell a Leasehold Condo?
Knowing the right time to sell a leasehold condo is critical in maximising returns. Selling too late can mean a steep loss in value due to lease decay.
Key Indicators for Selling
Before the lease drops below 60 years – Properties with less than 60 years left face resale difficulties due to bank loan and CPF restrictions.
When the en bloc potential is high – If there’s growing interest from developers, you might secure a premium price.
During a property market boom – Selling when demand is high allows you to fetch better prices.
Homeowners holding onto leasehold properties should plan their exit strategy early to avoid being stuck with an asset that’s difficult to sell.
Investment Considerations: Should You Buy a Leasehold Condo?
When investing in condominiums in Singapore, choosing between leasehold and freehold properties is a critical decision.
Pros of Buying Leasehold Condos
Lower entry cost: Leasehold units are cheaper than freehold properties, allowing buyers to afford better locations.
Potential for en bloc: Older leasehold developments may be redeveloped, offering a payout for owners.
High rental yields: Leasehold condos in prime districts tend to attract strong rental demand.
Cons of Buying Leasehold Condos
Depreciation risk – Value declines as the lease shortens, especially after 60 years. Financing restrictions – Shorter leases make it harder to secure loans and CPF funding.
Lower long-term appreciation – Unlike freehold properties, leasehold condos lose value over time.
For homeowners, leasehold properties are ideal for short-term living or for those who prioritise affordability over long-term appreciation. Investors, however, need to time their entry and exit carefully.
How to Make a Smart Purchase
If you’re considering a leasehold condo in Singapore, here are some key tips to minimise risks:
Check the remaining lease tenure – Properties with 80+ years left offer better resale value.
Choose a strong location – Prime areas, MRT connectivity, and top schools help maintain demand.
Consider en bloc potential – Older developments in high-growth districts may offer en bloc opportunities.
Plan your exit strategy – Don’t hold onto leasehold properties for too long, as lease decay accelerates after 60 years.
Understand financing limits – Secure a bank loan for a condo in Singapore before the lease tenure affects loan eligibility.
Final Thoughts: Is a Leasehold Condo Right for You?
Buying a leasehold condo in Singapore comes with advantages in affordability and location, but it also requires careful planning due to lease decay. Understanding when to sell, how financing works, and what factors influence value depreciation is essential to making a smart investment.
As the lease of a property shortens, securing a private property loan in Singapore becomes more challenging.
Lease decay doesn’t only affect property value; it also restricts the bank loan for condo.
For those looking at short-term homeownership or rental investments, leasehold condos remain an attractive option—provided you enter at the right price and exit before depreciation sets in.
Comentários