Freehold vs leasehold property in India: what is the difference?

General information, not legal advice. Land and lease rules differ by state and by authority. Have a lawyer read the title and any lease before you buy.

Freehold means you own the property and the land under it outright, with no time limit. Leasehold means the land belongs to another party, often a development authority or a government body, and you hold the right to use it for a fixed number of years under a lease. Both can be good buys, but they come with different rights and different checks.

What is a freehold property?

With freehold, ownership passes to you in full on registration. You can usually sell, gift or leave the property to your heirs without anyone else's permission, subject to ordinary local rules. Most standalone houses and many apartments in private layouts are freehold.

What is a leasehold property?

With leasehold, you own the building or the right to use the property, but the land is leased to you for a stated term. In some cities, plots and flats allotted by an authority are leasehold at first. The lease may later be converted to freehold on payment of charges, if the authority allows it. The terms are set by the lease deed, so the deed matters more than the label.

How do they differ?

• Ownership: freehold covers land and building; leasehold covers a right for a fixed term over land that belongs to someone else.
• Selling: a freehold owner usually sells freely. A leasehold seller may need the lessor's permission or have to pay a transfer charge.
• Loans: some lenders are cautious about leasehold, especially when little of the term remains. Ask your bank early.
• Renewal and conversion: leasehold may need renewal, and conversion to freehold depends on the authority's current policy.
• Resale: buyers often prefer freehold, so check how easy a leasehold property would be to sell later.

What should I check before buying a leasehold property?

1. Read the lease deed: the term, what remains of it, any ground rent, and any limits on use or transfer.
2. Ask the authority what it needs for transfer and whether conversion to freehold is open.
3. Confirm that any charges due to the authority are paid, with a clearance in writing.
4. Check the approvals, as for any property. See the documents checklist.
5. Ask your lender whether it will fund a leasehold property of that age and term.

Comparing options? See apartments for sale, houses for sale and plots on Bhavano, and ask each seller whether the title is freehold or leasehold before you visit. If you are buying land, read the plot buying checklist too.