En-bloc optionality: is old freehold worth paying up for?
- The freehold premium is a long-dated option: ~2 pts when young, widening to +27 pts by 45+ years as leasehold decays and freehold’s land holds.
- That growing gap is the land & en-bloc optionality — it emerges with age, not at purchase.
- But it’s slow and uncertain: pay the premium for a short hold and it’s dead money; most old estates never en-bloc.
- Best for: deciding whether to pay up for freehold — hold-length and a real en-bloc case are everything.
Is the “en-bloc premium” on old freehold worth it?
Freehold costs more than leasehold — the question is when that premium pays off. A freehold’s real asset is its land: perpetual, and redevelopable via an en-bloc sale. So the payoff shouldn’t show up in a shiny new building — it should emerge as the block ages, when a leasehold is decaying but a freehold’s land keeps its worth. We track the freehold-vs-leasehold $psf gap by age.
| Age since completion | Freehold idx | 99-yr LH idx | FH premium | Resales |
|---|---|---|---|---|
| <15 | 106 | 104 | +2 | 43,000 |
| 15–29 | 99 | 85 | +14 | 25,617 |
| 30–44 | 96 | 77 | +19 | 4,506 |
| 45+ yrs | 88 | 61 | +27 | 948 |
Why — and when it disappoints
Old freehold doesn’t fall to the building’s value; it’s floored by land, plus the chance of an en-bloc windfall (especially on an under-built plot ratio in a prime, redevelopable location). But the option is slow and uncertain: you pay the freehold premium up front, yet it earns its keep only over decades or if an en-bloc actually happens — and most old estates never do, or take a very long time. Pay a big premium for a short hold and it is dead money.
Investor verdict
Freehold is worth paying up for only if you’ll hold long — or the site is a genuine en-bloc candidate. The premium compounds with age, so a multi-decade hold captures it; a 5–8-year flip usually won’t. For the en-bloc bet specifically, look for the real ingredients: old, low-rise, unrealised plot ratio, prime/redevelopable, and an owner base likely to agree. Absent those, you’re paying an en-bloc price for a lottery ticket.
How to use this before you buy
Match the premium to your hold
Long-hold (10–20 yr+) captures the widening freehold gap; a short flip rarely does — then leasehold’s lower entry often wins (see leasehold vs freehold).
Score the en-bloc case honestly
Old + low-rise + spare plot ratio + prime + cohesive owners = a real option; miss those and the premium is just cost.
Don’t double-pay
A young freehold gives you little of this gap yet — you’re pre-paying an option that only starts paying decades out.