What are Freehold and Leasehold Properties?

When it comes to real estate, terms can get confusing. Many terms sound similar and seem similar but they mean very different. Two such terms are freehold and leasehold properties.

We discuss the terms in detail:
 
Freehold properties:
To explain the term ‘freehold’ let us divide it into two terms, freehold. Freehold properties mean that the owner has the sole right over the property and can use it as he pleases. The owner is free to hold or sell it and the owner does not require any permission from government or any other entity to sell it. This is one reason why freehold properties are more expensive than leasehold properties.
 
Leasehold Properties:
Leasehold properties are given out on a lease, generally for 30 to 99 years. the owner of the land or property leases it to the person for a certain amount of time and the person getting the leased property is free to use it as per desired. However, after the lease ends, the property returns to the owner.

Most complexes and housing projects are now built on the leasehold properties and it is the responsibility of the owner to find out if the builder owns the land or it is leased. The future of the projects built on the leasehold properties are bit uncertain and it depends on the amount paid by the society to renew the contract. The banks and other financing institutes do not easily give out loans to the projects that are built on the leasehold properties.

The leasehold properties belong to the state or the owner for a certain number of years. After the lease ends, the owner must pay the sun for the extension of the lease. If the ownership has to be transferred, then one needs permission from the government and local bodies. It is important to note that most banks will not finance the purchase of the property is leased for less than 30 years.
 
Leasehold to freehold conversion:
One can easily convert their leasehold property to the freehold property if you have the NOC, General Power of Attorney and sales deed. You will also have to pay the conversion charges that are applicable in your state. In case of a non- sanctioned building plan, one can transfer the leasehold to freehold ownership based on house tax assessment or proof of permanent electricity connection.
 
Leasehold lands are less expensive as compared to freehold land and therefore to control the cost of construction, most developers buy the property on lease. If one has a choice between a freehold and leasehold property, it is better to go for a freehold property as the prospects are clear.
 
When it comes to real estate, terms can get confusing. Many terms sound similar and seem similar but they mean very different. Two such terms are freehold and leasehold properties.
We discuss the terms in detail:
 
Freehold properties:
To explain the term ‘freehold’ let us divide it into two terms, freehold. Freehold properties mean that the owner has the sole right over the property and can use it as he pleases. The owner is free to hold or sell it and the owner does not require any permission from government or any other entity to sell it. This is one reason why freehold properties are more expensive than leasehold properties.
 
Leasehold Properties:
Leasehold properties are given out on a lease, generally for 30 to 99 years. the owner of the land or property leases it to the person for a certain amount of time and the person getting the leased property is free to use it as per desired. However, after the lease ends, the property returns to the owner.

Most complexes and housing projects are now built on the leasehold properties and it is the responsibility of the owner to find out if the builder owns the land or it is leased. The future of the projects built on the leasehold properties are bit uncertain and it depends on the amount paid by the society to renew the contract. The banks and other financing institutes do not easily give out loans to the projects that are built on the leasehold properties.
The leasehold properties belong to the state or the owner for a certain number of years. After the lease ends, the owner must pay the sun for the extension of the lease. If the ownership has to be transferred, then one needs permission from the government and local bodies. It is important to note that most banks will not finance the purchase of the property is leased for less than 30 years.
 
Leasehold to freehold conversion:
One can easily convert their leasehold property to the freehold property if you have the NOC, General Power of Attorney and sales deed. You will also have to pay the conversion charges that are applicable in your state. In case of a non- sanctioned building plan, one can transfer the leasehold to freehold ownership based on house tax assessment or proof of permanent electricity connection.
 
Leasehold lands are less expensive as compared to freehold land and therefore to control the cost of construction, most developers buy the property on lease. If one has a choice between a freehold and leasehold property, it is better to go for a freehold property as the prospects are clear.
 
New developments:
1.    Under NDMC’s new gambit, people running a business or staying in the rented or leased properties in the Lutyen’s Delhi can now buy them in 11 of the 27 posh real estate markets.
2.    From April 2017, the cost of conversion of the leasehold property to freehold property has increased in certain areas of the capital. Even the owners who have converted their leasehold property to freehold from 2000 to 2017 will have to pay the outstanding amount.