View Full Version : 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!
http://1.bp.blogspot.com/_ePwCmg71B3o/SNsQZxeEJ3I/AAAAAAAAAQw/00f-7UYqyJM/s1600/99-LH-depreciation-SLA.gif
http://smartpropertybuyer.blogspot.fr/2008/09/99-leasehold-property-calculation-of.html
http://3.bp.blogspot.com/_ePwCmg71B3o/SNrdvVIRg3I/AAAAAAAAAQY/vOBWsjjZg_Y/s1600/99-leasehold-property-depre.gif
http://www.colintan.com/wp-content/uploads/2009/09/LH-vs-FH.jpg
http://www.colintan.com/colintan-group/property-articles/
http://4.bp.blogspot.com/-ctH0gBa4_Tc/TruWkMKOa5I/AAAAAAAABIs/1swqUb6ngcs/s1600/ST+%252810-11-2011%2529.jpg
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.
Colin Tan's spreadsheet is probably more informative than his fence sitting articles.
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
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.
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.
http://3.bp.blogspot.com/_ePwCmg71B3o/SNrdvVIRg3I/AAAAAAAAAQY/vOBWsjjZg_Y/s1600/99-leasehold-property-depre.gif
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?
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...:rolleyes: . I m about to ask the same question as you..:simmering: but your hand is faster..:cheers4: !
ikan bilis
21-08-12, 09:45
.... 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/3447/Fighting-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...
:( :(
I think the chart indicates present value.
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 ..
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.
ikan bilis
21-08-12, 09:54
now the value of a 10yr old lh99 is like >20% lower than a brand new lh99 next to it... :simmering:
now the value of a 10yr old lh99 is like >20% lower than a brand new lh99 next to it... :simmering:
This is not possible right? I thought HDB before 20 years ol still command high price? Can yo quote an example?
Shenton has FH and LH999 too. :tsk-tsk:
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 ..
ikan bilis
21-08-12, 11:00
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 ??... :confused:
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 ??... :confused:
are you sure?? can you quote some eg? :D that would be worth a buy if thats the case...:p
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.
are you sure?? can you quote some eg? :D that would be worth a buy if thats the case...:p
I think even with 20% off copared to new, its not a firesale but more of owner taking proft
ikan bilis
21-08-12, 12:55
are you sure?? can you quote some eg? :D that would be worth a buy if thats the case...:p
hur ?? i thought it has been like that ??...
correct me if i'm wrong .... :confused:
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%
Wild Falcon
21-08-12, 13:23
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.
Yap..me also feel that the chart looks weird n seem not logic, may it 99 or FH/999...:rolleyes: . I m about to ask the same question as you..:simmering: but your hand is faster..:cheers4: !
blackpepperj
21-08-12, 13:39
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)?
thomastansb
21-08-12, 13:43
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.
Wild Falcon
21-08-12, 14:09
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.
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?
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.
phantom_opera
21-08-12, 16:45
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
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?
That is what happen to my cousin. Relocated to Queenstown area. Jackpot.:D
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 parent in law bought clementi HDB in 1978 for 13K only...now huat ah almost 31X fold liao..:cheers5: as their neighbour just sold at 410k recently:scared-4: !
For long term, HDB flat prices sure move higher and higher...:D !
A FH terrace house cost only $10000 in 1968. A 10,000sqft FH industrial land in city fringe cost only $16000 in 1960.
My parent in law bought clementi HDB in 1978 for 13K only...now huat ah almost 31X fold liao..:cheers5: as their neighbour just sold at 410k recently:scared-4: !
For long term, HDB flat prices sure move higher and higher...:D !
My parent in law bought clementi HDB in 1978 for 13K only...now huat ah almost 31X fold liao..:cheers5: as their neighbour just sold at 410k recently:scared-4: !
For long term, HDB flat prices sure move higher and higher...:D !
Last Sunday, met a lady at the hawker centre near the Geylang Serai. We were sitting on the same table having our lunch, somehow didn't know why end up discussing about the property. She told me that 30 yrs ago, the HDB around that area was only $11k, now it was priced at $400k.:scared-1:
Last Sunday, met a lady at the hawker centre near the Geylang Serai. We were sitting on the same table having our lunch, somehow didn't know why end up discussing about the property. She told me that 30 yrs ago, the HDB around that area was only $11k, now it was priced at $400k.:scared-1:
my grandma's flat at bukit merah was bought at 9k
i think i can summarize this thread: 30 years later, property will be more expensive than today. DUH.:doh:
My parent in law bought clementi HDB in 1978 for 13K only...now huat ah almost 31X fold liao..:cheers5: as their neighbour just sold at 410k recently:scared-4: !
For long term, HDB flat prices sure move higher and higher...:D !
So in 30 years time. The HDB will cost >$10m??
So in 30 years time. The HDB will cost >$10m??
really depends on a lot of factors, based on our development trajectory, we will be experiencing slower growth than other newly industrializing economies, so naturally the rate of property growth for the next 30 years will not be as amazing as the past 30 years from Third World to First.
What goes up must come down. Just a matter of TIMING. Location is less important, especially in tiny SG.
So in 30 years time. The HDB will cost >$10m??
Then median household income would be 90k/mth, 1mil/yr. :scared-4: :scared-4:
Maybe Spore extinct liao as what the wise man predicted.
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.
I was NOT referring to the SLA table which is used to calculate the lease top up required for the purpose of working out the DC. I was referring to the blue table by smartPropertybuyer who tried to be smart by doing up an example using $1M value to 'show' how a 99LH depreciates. It is misleading and totally wrong. Notice SLA never mentioned anything about depreciation at all.
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.
1998 everything low lah. U could get a FH landed in D19 for $700K.
What goes up must come down. Just a matter of TIMING. Location is less important, especially in tiny SG.
What goes up must come down...This s a general law in reality, but, can you buy a bowl of noodle with 80cents? Taking inflation away, I would say sure, why not, but maybe not 80cents, at $1.5??...but with inflation, the general law might not be so applicable. So take a look at the price appreciation from another angle and we might learn something new.
History does provide a ref point but will history repeats, nobody knows. If a hdb flat can cost u 800k in 1996 with 2mil+ ppl, what makes you think that it will not cost more than 1mil today with inflation and double population...:cheers1:
However, I still think that location is one of the most impt factor irregardless of situations.
my grandma's flat at bukit merah was bought at 9k
Ya, my mother-in-law's house at Bukit Ho Swee was bought at 6.5k 50 yrs ago, then there was an upgrading project about 10 yrs ago and she had to foot out about 10k.
1998 everything low lah. U could get a FH landed in D19 for $700K.
Yap true. My brother bought his FH, Westvale less than 900k n recently just en-blocked...and the return capital appreciation was more than 3x:scared-1: !
I was NOT referring to the SLA table which is used to calculate the lease top up required for the purpose of working out the DC. I was referring to the blue table by smartPropertybuyer who tried to be smart by doing up an example using $1M value to 'show' how a 99LH depreciates. It is misleading and totally wrong. Notice SLA never mentioned anything about depreciation at all.
What the fella couldn't factor in is asset inflation which although affects both times but depending on the rate of growth, the maths could look very different.
Putting Hdb aside. Let's focus on PC.
For 99yrs PC with 60 or less unexpired lease left, banks may not be willing to give loan right?
With inflation and demand, a PC value will goes up for the first 30+ years. But when it's nearer to 60 yrs lease left, it's value should goes down if buyers cannot get bank loan. I don't think buyers want to pay in cash for these old PC.
Anyone bro tried getting bank loan for such old PC before? Successful?
The owners got to find ways to sell their PC to realize their profits. One way is en-bloc. But there are also old folks who may not want to en-bloc that's why got battle between parties when comes to en-bloc.
What goes up must come down...This s a general law in reality, but, can you buy a bowl of noodle with 80cents? Taking inflation away, I would say sure, why not, but maybe not 80cents, at $1.5??...but with inflation, the general law might not be so applicable. So take a look at the price appreciation from another angle and we might learn something new.
History does provide a ref point but will history repeats, nobody knows. If a hdb flat can cost u 800k in 1996 with 2mil+ ppl, what makes you think that it will not cost more than 1mil today with inflation and double population...:cheers1:
However, I still think that location is one of the most impt factor irregardless of situations.
In SG, looking at location = looking at who is heading the GRC.
In SG, looking at location = looking at who is heading the GRC.
Really meh? Then you should look out for cheap FH landed at Serangoon Gardens liao...
Really meh? Then you should look out for cheap FH landed at Serangoon Gardens liao...
sylvia lim won 60% of the votes there against Lim hwee hua.. lidat serangoon gardens buay huat for the next 4 years liao lar. :banghead:
Really meh? Then you should look out for cheap FH landed at Serangoon Gardens liao...
It was a wrong bet by the ruling party to demarcate Serangoon Garden in Aljunied.
Look at D9, 10, 11 - belong to who?
Look at Marine Parade, Tampines, Jurong Lake, Bishan, AMK, TPY - belong to who?
Putting Hdb aside. Let's focus on PC.
For 99yrs PC with 60 or less unexpired lease left, banks may not be willing to give loan right?
With inflation and demand, a PC value will goes up for the first 30+ years. But when it's nearer to 60 yrs lease left, it's value should goes down if buyers cannot get bank loan. I don't think buyers want to pay in cash for these old PC.
Anyone bro tried getting bank loan for such old PC before? Successful?
The owners got to find ways to sell their PC to realize their profits. One way is en-bloc. But there are also old folks who may not want to en-bloc that's why got battle between parties when comes to en-bloc.
yes I tried a bank loan for a unit at the plaza.
loan tenure was shorten to around 15yrs-20yrs max if remembered well
cpf is capped at % for withdrawal.
it's a troublesome purchase to go through and at much higher mortgages with shorten loan years
are you sure?? can you quote some eg? :D that would be worth a buy if thats the case...:p
Kovan melody is cheaper than kovan residence which TOP not long ago in terms of psf.
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