A 999-year lease is an exceptionally long-term property agreement, often referred to as being "as good as freehold," that grants the right to occupy a property for nearly a millennium. Common in the UK and former colonies, this lease structure makes the property highly marketable, avoids issues with short leases, and is generally considered equivalent to outright ownership.
In Singapore, common leasehold durations are 99 years or 999 years. While this might seem like a very long time vs freehold properties, it's essential to remember that ownership eventually reverts to the state when the lease expires. This impacts the property's depreciation as well as your long-term plans.
The 99-year term originated as a practical common law choice — long enough to outlast any person involved in the lease, yet finite enough to eventually return control to the landowner or their heirs.
What happens when a 99-year HDB lease in Singapore expires? When the lease ends, the flat reverts to the state. Owners receive no compensation unless the property is selected for redevelopment schemes such as SERS or VERS.
One of the key benefits of owning a share of the freehold is the opportunity to extend your lease cheaply. As long as all co-freeholders agree, you could extend your lease up to a maximum of 999 years for zero premium.
If you've already got a decent length lease – for example, 999 or 99 years – buying a share of the freehold might not add a huge amount of value. You'd still pay the same legal costs as someone with a short lease, but would only add a little extra to your home's value.
Having a 999 year lease can add value to your property as people will be more likely to purchase a property where a lease extension is not required. On average, it can increase the market value by 5-7%. The marriage value of the property will increase when its lease is extended.
If the property has a short lease it might also be difficult to get a mortgage, as the property is less attractive to mortgage lenders. The value of a leasehold flat reduces as the term of the lease gets shorter. If the lease term comes to an end you have certain rights if you live in the property.
Under this model, residents do not purchase the land itself. Instead, they acquire a long-term leasehold right to occupy and use the property for a 99-year period. Crucially, when the leaseholder sells the property or passes it on to heirs, the lease does not diminish in remaining years.
This is usually 99 or 125 years. The person who owns the lease on the property is called the leaseholder. Unless it has been extended, at the end of the lease, the right to live in the property reverts to the freeholder. The rules a leaseholder must follow are governed by a contract, known as the lease.
If you own the leasehold of a house you can buy the freehold by law if you and the building meet certain conditions: the building must be a house. if the house has been divided into flats you must have the lease for the whole house. your lease must have been for more than 21 years when it was first granted.
The 90% rule in leasing is an accounting guideline for classifying leases, stating that if the present value (PV) of a lessee's minimum lease payments equals or exceeds 90% of the leased asset's fair market value (FMV), the lease should be treated as a finance lease (or capital lease) rather than an operating lease, reflecting essentially a purchase for accounting purposes. This rule helps determine if the lease transfers substantially all the risks and rewards of ownership, requiring balance sheet recognition of the asset and liability.
Considerations before you buy a home on leased land
Unlike traditional homeownership, you'll build equity only in the home—not the land—which typically results in lower overall equity than if you owned both. Additionally, the cost of leasing the land may increase each time your lease is renewed.
It's very rare that a landlord can end the lease and evict you. There are some circumstances and leases that let them do this, sometimes known as 'forfeiture proceedings'. They need to send you a formal written notice and get the court's permission. You can usually end a lease by giving at least 1 month's notice.
When the lease runs out, the property will be returned to the freeholder. A lease of fewer than 80 years can become problematic for a leaseholder as the property value will decline. This will make the property harder to sell in the future and mortgage lenders may be reluctant to lend for a property with a short lease.
But the one change has been significant. Using the formal process, since January 31, 2025 you no longer need to wait 2 years before making the application. Your right to either freehold of your leasehold house applies from day 1 of ownership.
Many property investors have successfully added leasehold properties to their portfolios. For instance, city centre flats have proven particularly profitable due to high demand for rental properties in these areas.
Once the lease of the development run its course and expires, the land where the development sits on reverts to the government without any compensation. This happened a few years back with the row of houses at geylang and the owner's had to move out when date was due.
In most cases, it will not be difficult to sell a leasehold property, as long as there are no lease complications. If your lease term is over 90 years, then you should not encounter problems with the lease length but if you have a shorter lease term, this can put buyers off.
Buying a leasehold property can be smart for affordability and specific situations like rental investment or short-term living, but it's generally not ideal for most homebuyers due to complexities like shorter lease terms, escalating ground rent/fees, less equity building (only on the structure, not land), and potential financing/resale difficulties, making freehold (owning both land and building) usually a better long-term wealth-building choice.
Getting a mortgage on a leasehold property
The length of the lease on your leasehold property can affect whether you can get a mortgage. The shorter your lease, the less likely it is that lenders will allow you to borrow. Ideally, you want to buy a leasehold property with at least 70 years remaining on its lease.
Restrictions on your use of the property could apply, for example, you may not be allowed to own pets, make certain alterations sublet your flat – and there are sometimes even restrictions on sharing your flat with another household .
Can you extend a lease to 999 years? You can extend a lease by up to 999 years via the informal lease extension process. The formal process remains set at 90 years. The issue with extending to 999 years is you can only do this with the cooperation of your freeholder and they may use this to bargain for ground rent.
How long is left on the lease? Lease lengths can vary but typically a new lease will start off at around 99–125 years but can run for as long as 999 years. You must find out how long is on the lease you are buying, especially if you're buying an existing lease that has already begun to run down.