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Leasehold – what is it and how is it different between condo and HDB?

by • October 16, 2020 • Buying a propertyComments (0)166

Leasehold ownership between condo and HDB are similar in some ways, and yet they are quite different

By: Grace Hui/

The majority of land in Singapore is government owned. Where residential land is concerned, the bulk of that government ownership is divided between the Singapore Land Authority (SLA) and the Housing Development Board (HDB).

What is leasehold?

It may seem confusing to call what you think you have bought a leasehold but for all intents and purposes, if what you have purchased is not a freehold, then what you have bought is simply a right to be on that land for “x” number of years.

In the Singaporean residential context, it is usually 999 year or 99 years for condos and 99 years for HDB flats.

leaseholdCondo Ownership

As most might be aware, while condos are deemed as privately owned residences, the way such condos are owned differ depending on the terms of your “ownership”.

For those who own freehold condos, they own it out right. For those in the 999 years or 99 years condos, the terms differ. A 999 years lease by virtue of what it is called simply means that the SLA has granted the development ownership for the 999 years while a 99 years lease means the SLA has granted the development ownership for 99 years. In other words, you have the rights of ownership for 999 or 99 years respectively. For all intents and purposes, that condo is yours for that 999 or 99 years accordingly.

For 999 years leases, the issue of ownership is less of a concern. From the standpoint of current ownership, it might as well be freehold.

The 99 year leases are more of a cause for concern as it could directly affect the next generation.

What options are available when your 99 year leasehold condo is up?

From a legal standpoint, if you do nothing and the time runs out, the land reverts back to SLA. The “purchase price” paid at the outset was to own the land for 99 years. The SLA is under no legal obligation to reimburse you for taking that land back because your rights to that land was only ever for 99 years. Nothing more.

However, you do have the right to apply to the SLA for your 99 year lease to be renewed or topped up. However, the SLA has the discretion either to accept or reject your request. In so doing, the SLA has to consider if it may want to use the land for something else. Even if your request for renewal or top up is granted, the price may also not be palatable. Singapore is after all, land scarce and the price of that land may well have increased significantly since the time it was initially leased/bought.

There is also the issue of consent. Most people do not own the entire condo block. They simply own a unit in the block. To apply for a renewal or a top up therefore, you will need consent and agreement of the other unit holders, much like an en bloc process. This means that if the others do not wish for the 99 year lease to be renewed, it is a no go.

HDB Ownership

The HDB ownership structure is similar to the 99 year leasehold structure for condos in that both types of homeowners are granted a 99 year lease.

There is no such thing as a freehold HDB flat.

Where HDB flats are concerned, the ultimate landowner is the HDB, not the SLA. After the 99 years are up, the HDB flat returns to the HDB. The HDB is not legally obliged to reimburse you after your 99 years are up. There is no right to renew or top up the lease.

However, given that the HDB construct is Government controlled, it could be deemed safer in the sense that the Government is likely to intervene so as to ensure that this problem never arises.

To date, the government has always intervened before the 99 years are up, through the Selective En-Bloc Redevelopment Scheme (SERS.) However, it must be made clear that the SERS was not set up to renew leases. This means that any government intervention is at the behest of the government. It should not be taken as a given.

From a legal standpoint, if the government chooses not to intervene, your HDB flat will revert to the HDB at the end of the 99 years.

Key Differences between HDB ownership and 99 years leasehold Condos

They most obvious difference between the two is the ultimate land owner. For HDB flats, it is the HDB while for leasehold condos, it is the SLA. Given that the HDB’s purpose is to provide affordable housing to all Singaporeans, it is likely that the HDB will always use that land for housing which in turn means that there is a chance (through government policies, initiatives and schemes), that the HDB flat owner may have a right to purchase another flat in a new development.

For the leasehold condo owner however, this may not be as straightforward. The SLA (who owns the land) looks after all land use in Singapore. It’s mission statement is not to ensure that condo owners always have another condo to live in and as such, will be less likely to intervene when the lease ends.

Another difference is the right to renew or top up your lease. For HDB flat owners, there is no such right. For condo owners (and subject to conditions set out above), that right exists. However, there is always a chance that the land in question may be rezoned for other uses which makes that option untenable.

About the writer:

Grace has been a lawyer for 15 years, duo qualified in England and Wales and Singapore. Her main motivation is for laws to be easy to understand and accessible for all. Legal aspects of anything that governs our day to day life should be kept simple and she hopes to make that simplicity a reality by writing “step by step” articles in normal English.

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