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Security and lifestyle boost estate versus freehold living despite premium price

Looking at why buyers would choose a freehold home in an estate compared to a freehold outside of an estate, deeds office trends show a clear shift despite the higher average house prices of estates.

Seeff Property Group Chairman, Samuel Seeff, says security and a better quality of life, especially since the onset of the pandemic, are key drivers of the shift.

Lightstone data also demonstrates the shift. While freehold estates comprise just over 6% of all freehold housing stock, it accounted for 20% of all units and 32% of the total value transacted for freehold property in the 2021-year. This is notably up on 2020 (18% units and 4.52% value) and slightly better compared to 2019 (17% units and 31% value).

There are some important differences between estate and freehold living. Seeff highlights some of these.

What is freehold property?

Freehold property means you have outright ownership of the property and land on which it is built. You can basically do as you please on your property, provided you comply with the law and bylaws.

Freehold property can also be in a housing estate in which case it will additionally be subject to the rules and guidelines of the particular estate.

What is a housing estate?

This is a grouping of homes, usually fully enclosed with 24-hour security being a main feature. Increasingly, these estates are offering added lifestyle features such as open spaces with hiking and cycling trails, dams and play parks, golf, tennis and squash, a clubhouse and other recreational features.

Housing estates are governed by the CSOS Act (Community Schemes Ombud Service Act). There is usually a Homeowners Association, which is a body of owners who looks after the day-to-day management, compliance and legal matters, insurance and finances, often with the assistance of estate managers.

Important differences between estate and freehold living

Homes in an estate usually cost more compared to freehold in the neighbourhood as you are paying for the added security and amenities.

Aside from monthly utilities, there is usually a levy which would include the cost of security and maintaining the estate.

In freehold (not in an estate) you would be responsible for the security, maintenance and insurance of the entire property. In an estate, your responsibility would pertain only to your own home while the communal property would be secured, maintained and insured by the estate as a collective, depending on the particular estate.

In an estate you are part of a community, hence the use of the communal property, receiving of visitors and your general conduct usually need to comply with the estate rules and regulations. In freehold, you are generally free to enjoy your property and receive guests as you wish, provided you comply with bylaws and do not interfere with neighbours’ rights to enjoy their property.

Keeping the aesthetic and integrity of the estate intact is hugely positive for property values, hence there are usually restrictions in place. In a freehold, you can paint and renovate as you like, but have little control over aspects which might impact property values such as poorly kept neighbouring houses or the neighbourhood in general.

Another big benefit of estate living may include open spaces, play areas for children along and recreational amenities such as a gym, tennis and squash courts or a golf course. Freehold homeowners (outside an estate), however, would need to make use of public spaces (which might not always be safe). For recreation, you would need to join a fitness centre or golf club, all of which would require additional costs and travel.