Freehold Vs Leasehold Property: Know the Key Differences

In Indian real estate, you will see terms like freehold and leasehold. What separates them is land ownership and land control. Leasehold properties involve leasing from the owner for a specified time with limitations on transfer and ownership. Freehold property involves absolute and permanent right of ownership, which allows the owner to construct, renovate, and transfer without restrictions. Learn more about these property types, and the difference between freehold and leasehold to choose better. 

What is Leasehold Property?

The leasehold property is where a lessee or a tenant rents from a lessor for a period of time with a fixed term.

Many flats and apartments in India operate under this arrangement. Owners charge leaseholders for the land, service, and maintenance costs. They return the property at the end of the tenure.

Lease durations can range from 30 to 999 years, and longer leases generally increase property value.

What is Freehold Property?

The freehold property is a type of ownership that provides absolute rights with no limitations to the buyer. Owners have the freedom to sell, transfer, or modify the property at will. The simple way of opting for the sale deed registration eventually eases the property transfer to any preferred person. Consequently, freehold properties often carry higher price tags compared to leasehold properties.

Also Read: Movable Property: Meaning, It's Types and Legal Rights

Difference Between Freehold and Leasehold Property

When acquiring a property, it is important to be well-informed about the difference between freehold property and leasehold property:

Parameter	Freehold Property	Leasehold Property
Ownership	Absolute ownership with no time limit	Ownership for a specific period
Duration	Indefinite	Fixed duration determined by the lease agreement
Transferability	Easily transferable without restrictions	Transfer may be restricted or require consent
Modification	Can be modified or renovated without restrictions	Modifications may require permission from the lessor
Control	Complete control over the property	Limited control, subject to terms of the lease agreement
Renewal	Not applicable, as ownership is perpetual	Renewal may be an option at the end of the lease term
Value	Generally higher due to perpetual ownership	Value may decrease as the lease term approaches
Responsibilities	Sole responsibility for maintenance and upkeep	Responsibilities may be shared with the lessor
Legal rights	Enjoy full legal rights as a property owner	Legal rights are limited to the terms of the lease

Also Read: What is Immovable Property? It's Types and Legal Rights

Conclusion

Choosing between leasehold and freehold properties in India is a little tricky, especially when considering a property loan and property interest rates. This decision hinges on variables such as budget, investment objectives, and personal choice. Freehold properties offer full ownership and flexibility, which can be advantageous. However, for those considering a property loan, leasehold properties might be more affordable, particularly in prime areas. It's crucial to weigh these factors seriously and consider how they align with your requirements before making a decision.

Frequently Asked Questions

1. Is it better to buy a leasehold or a freehold?

In terms of budget and a long-run plan, freehold is permanent ownership, whereas leasehold may be a little bit of a less expensive option but you may have restrictions.

2. Are apartments leasehold or freehold?

Apartments can be either freehold or subject to a fixed-term lease, depending on the developer and the regulations governing the unit.

3. Is it worth buying freehold?

Yes, some believe that these properties may be more appealing and may have a greater resale value as they give unrestricted ownership and more promotional chances.