Freehold versus Group Title

Are you a first-time home buyer considering a townhouse? Here’s what you need to know:

There are two types of ownership in the real estate market: group title and freehold title. They have similarities, but also significant differences.

Group title ownership (like townhouses or units) has a lower entry price point into the market, making it easier to get started on building equity and wealth. Banks look at equity and collateral, so owning a unit/townhouse can improve your borrowing capacity.

Freehold properties (like houses) may seem to not have body corporate fees, but technically, owners should be saving for maintenance and insurance, just like a body corporate fee. Recording these costs can even show that freehold owners do spend similar or even more than a standard body corporate fee for townhouses.

The main disadvantage of group title ownership is that land appreciation is shared, so gains are smaller.  Other disadvantages are mainly related to day-to-day living, such as closer neighbors and shared common areas.

For investors, diversifying with both townhouses/units and houses offers the benefits of great location, capital growth, and flexibility. For first-home buyers, buying a unit/townhouse can help you get into the real estate market sooner, forcing you to save and build equity faster.

Ultimately, the decision to buy a townhouse or a freehold property depends on personal preferences, financial situation, and lifestyle. If getting into the real estate market is a priority and you are looking for a convenient location, a townhouse may be the right choice for you. If you value privacy and the potential for greater wealth creation, a freehold property may be a better fit.