Lease Decay in Singapore: What Every Property Buyer Must Know
Most Singapore buyers focus on price, location, and floor level — but the remaining lease on a property can quietly shape everything from your CPF usage to your eventual resale proceeds.
What Is Lease Decay?
Every HDB flat and most private properties in Singapore are sold on a leasehold basis — typically 99 years, though some condos carry 999-year or freehold titles. From the day the lease begins, it counts down. "Lease decay" refers to the gradual reduction in a property's remaining lease, and the knock-on effect this has on its value, financing options, and the rules governing CPF usage.
A flat with 60 years remaining on its lease is a fundamentally different asset from one with 90 years left, even if they are in the same block, on the same floor, and finished to the same standard. Understanding why is one of the most important things any buyer can do before committing.
Why Does Remaining Lease Matter So Much?
CPF Usage Restrictions
The CPF Board ties the amount of Ordinary Account (OA) savings you can use to the property's remaining lease. The core principle: if the remaining lease does not cover the youngest buyer to age 95, CPF usage is pro-rated and capped. In practice, this means:
- A young couple buying a flat with only 40–50 years left may find their CPF contribution significantly limited.
- The shorter the lease relative to the buyer's age, the less CPF OA savings can be deployed — meaning you need more cash upfront.
Always check the CPF Board's online calculator and verify the exact rules before committing, as the figures are age- and lease-specific.
HDB Loan Eligibility
The HDB concessionary loan has its own lease requirements. As a broad rule, HDB will not grant a loan if the remaining lease falls below a minimum threshold — currently widely understood to be around 20 years, though the exact qualifying conditions depend on your age and other criteria. Verify directly with HDB before applying.
Bank Loan Tenure
Bank loans are similarly constrained. The maximum loan tenure is subject to the property's remaining lease. Lenders typically cap the loan tenure so that it does not extend beyond the end of the lease, and they apply age-plus-tenure limits under TDSR and MSR guidelines. A shorter lease compresses the loan tenure you can access, which raises monthly repayments for the same loan amount.
Resale Value and Exit Strategy
A property's remaining lease is a key input in how buyers — and valuers — assess its worth. As a leasehold property ages, each passing year shaves a little more off the asset's useful life. This is reflected in property valuations and, eventually, in what the next buyer is willing or able to pay. If the next buyer faces severe CPF and loan restrictions because of the short lease, your pool of potential buyers narrows — and so does the price you can command.
常见问题
- What is lease decay in Singapore property?
- Lease decay refers to the gradual reduction of a property's remaining lease over time. In Singapore, most HDB flats and many condominiums are sold on 99-year leasehold terms, so the remaining lease shortens each year, which can affect the property's value, CPF usage eligibility, and financing options for future buyers.
- How does a short remaining lease affect my CPF usage when buying a home?
- The CPF Board restricts how much Ordinary Account savings you can use based on the property's remaining lease relative to the youngest buyer's age. If the remaining lease does not cover the youngest buyer to age 95, CPF usage is pro-rated and capped, meaning you will need more cash upfront to complete the purchase. Always check the CPF Board's online tools for your specific situation.
- Will a bank give me a full loan tenure on a property with a short lease?
- No. Banks cap the loan tenure based on the property's remaining lease, so a shorter lease reduces the maximum loan tenure available to you. A compressed tenure means higher monthly repayments for the same loan amount. This is separate from, and in addition to, the age-plus-tenure limits applied under TDSR guidelines — verify the exact figures with your lender.
- Does lease decay affect the resale value of my HDB flat or condo?
- Yes. As the remaining lease shortens, future buyers face increasingly strict CPF and loan restrictions, which narrows the pool of eligible buyers and typically puts downward pressure on prices. A property with fewer than 60 years of lease remaining generally attracts fewer buyers, particularly younger purchasers who face the most significant CPF limitations.
- Is freehold always better than 99-year leasehold in Singapore?
- Not necessarily for every buyer. Freehold properties carry no lease decay risk and typically command a price premium over comparable 99-year leasehold properties in the same area. However, for an owner-occupier planning to hold a property for 10 to 20 years, a 99-year leasehold unit with 80 or more years remaining offers broadly similar day-to-day utility. The freehold premium may or may not be worth paying depending on your budget, holding period, and exit strategy.