KEEN to buy these "cheap" homes'

Make sure you have plenty of cash because few banks will grant you a loan.

Banks usually take the cue from a government rule barring the use of Central Provident Fund (CPF) savings for the purchase of homes with 30 years or less left on their leases.

So interested buyers may have to pay cash upfront for these leasehold houses, said HSR Property Group executive director Eric Cheng.

'People who buy these houses have to use cash. And it's not easy to sell too because the next buyer also has to pay cash in full and can't use CPF,' he said.

'Those who buy such houses are usually investors who are in it for the rental yield. They don't go for the capital appreciation but they just focus on the returns.'

Mr Cheng estimated that the rents there vary from $2,000 to $2,600 a month.

For example, if one were to rent out a $160,000 unit at $2,000 a month, the rental yield will be about 15 per cent.

Said Mr Cheng: 'It's quite a good investment compared to putting money inside the bank.

'You can get rental yields of 15 per cent upwards, compared to the market rate of about 3.5 to 5 per cent.'

Residential (landed) leases rarely extended

THE Government generally lets leases for residential (landed) homes expire without extension, said the Singapore Land Authority (SLA). There has been no renewal or top-up of residential (landed) leases in the last five years.

Said an SLA spokesman: 'For selected cases, the lease may be extended if the proposed use and tenure are aligned with the Government's planning intention.'

The Government generally sells land on leasehold so as to allow flexibility in re-allocating land to meet socio-economic needs.

This article was first published in The New Paper.