The Ultimate Investment Secret: Should You Choose Freehold or Leasehold Property?

When you are discussing real estate, it’s common for the terms freehold and leasehold property to come up.

But do you know how they stack up against one another and the premise behind them?

Let’s get started. Both freehold and leasehold represent your ownership rights in relation to your property. Let’s figure out in detail.

Freehold property

Suppose you buy a top-of-the-line four-wheeler all dues cleared. Now, whether you wish to drive in-city, go on a getaway, let your friends or family borrow, or sell it off -  you have all the rights to do so.

In other words, you call all the shots!

It’s the same with freehold property. The final word to make changes- structural, design, aesthetical or any other (in compliance with local authorities) sits with the owner.

Furthermore, the owner can rent out, lease, or resell as required. Moreover, if you buy a freehold property in India, you do not incur any maintenance or other charges except applicable government taxes.

That is because freehold ownership entails rights to the property and the land it is built on.

Leasehold Property

Leaning back on our four-wheeler analogy, suppose you decide to ply Uber as a side hustle. This time around, Uber has ownership rights while you operate the vehicle as per the terms of your commercial agreement with the company.

Here, you commit to Uber as a lessee (renter) commits to the lessor (owner), obtaining usage rights of a leasehold property.

Leasehold, therefore, means possessing occupancy rights right through the lease; ownership, however,  rests with the lessor. These terms are laid out in a lease agreement.

So, what kind of rights do you get?

Can you make structural and design modifications or transfer the lease?

No!

The lessee cannot, by free will, do so. Exercising such rights demands compliance with the lease agreement and buy-in from the lessor.

A lease term typically ranges from 30 to 999 years, whereby the lessee incurs maintenance, upkeep, service, and other costs.

It is best to go with a lease of at least 30 years to seek financing from banks and financing institutions.

The Freehold Vs Leasehold Snapshot

Should I buy Freehold or Leasehold property?

Now that you know the inner workings, how do you decide between buying a freehold or leasehold property?

There is no straight answer there except that your situation and expectations from the arrangement determine the way forward.

Buying a freehold property gives you greater rights but commands a higher price.

Investing in a leasehold property is suitable if you have to relocate or have to work through limited budgets.

Where buying a leasehold property makes a good fit- 

Where buying a freehold property makes a good fit-

Convert leasehold property into freehold property

A question that gets thrown around often is: how to convert my leasehold property to freehold in India?

Is it possible?

The answer is yes!

Converting leasehold into freehold essentially means acquiring ownership title upon submission and review of the following documents:

Additionally, approvals from civic bodies and authorities listed below are required-

In the case of a property on land leased out by the Government, certain additional approvals from statutory authorities come into play.

Final Comments

Freehold property and leasehold property have unique benefits. Your best buy depends entirely on the story you want to create within those walls.

Make a  decision that is in line with your goals and vision. After all, your place is where your story comes to life.

Freehold properties for sale in Noida are a great option if you want to invest. But we strongly suggest contrasting it against leasehold properties for sale in Noida to get a broader perspective.

Feel free to connect with us for more on that.