Difference Between Freehold and Leasehold Property in India

When buying property in India, one of the key decisions is whether to choose a freehold or leasehold property. Both types have their own benefits and limitations. Understanding the difference can help you make an informed decision.

What is a Freehold Property?

A freehold property means that the owner has complete ownership of the land and the building on it. The ownership is permanent, and there are no restrictions on selling, transferring, or inheriting the property.

Key Features of Freehold Property:

The owner has full control over the land and building.

Ownership is for a lifetime and can be passed to heirs.

There is no need to pay rent or lease renewal charges.

It can be sold or transferred without government permission (except in some restricted areas).

It usually has higher resale value and appreciation.

What is a Leasehold Property?

A leasehold property means that the land is owned by the government or another entity, and the buyer gets the right to use it for a fixed period, usually 30, 60, or 99 years. After the lease expires, the ownership may return to the original owner unless it is renewed.

Key Features of Leasehold Property:

The ownership is limited to the lease period.

The buyer may need permission from the original owner (often a government authority) to sell or transfer the property.

Lease renewal may involve additional costs.

Banks may hesitate to provide loans for properties with short lease periods.

Property value may not appreciate as much as freehold properties.

Major Differences Between Freehold and Leasehold Properties

Which One Should You Choose?

If you want long-term ownership and better investment returns, a freehold property is the better option.

If you are looking for a lower upfront cost and are okay with periodic lease renewal, a leasehold property can work for you.

For commercial properties, leasehold can be a good choice as they are often located in prime areas.

Can a Leasehold Property Be Converted to Freehold?

Yes, in some cases, leasehold properties can be converted to freehold by paying a conversion fee to the government authority that owns the land.

Conclusion

Understanding the difference between freehold and leasehold properties is crucial for making the right property investment decision. While freehold properties offer complete ownership and higher appreciation, leasehold properties are often more affordable but come with certain restrictions. Always check the property documents and consult a legal expert before making a purchase.