Constructing Houses Since 1993.

  • 040-2335
  • 5th Floor, SMR House, Nagarjuna CirclePunjagutta, Hyderabad - 500082
  • Mon - Sat 09:30 AM - 6:00 PM

What is a leasehold property?

An owner of a leasehold property enjoys the ownership and control over the property for a stipulated period of time, up to 999 years. Most leases are granted for a period 99 years. discusses the advantages and disadvantages of owning a leasehold unit.

In India, properties get ownership status under two heads - Freehold and Leasehold. The primary difference between the two is the land ownership and authority. In the case of leasehold properties, the ownership is usually entitled for 99 years, granted by the local authorities. The State government and the local authorities are the real owners of such properties. The lease tenure can be further extended up to 999 years. Minimum lease tenure of a leasehold unit is of 30 years. Once the lease agreement is over, the ownership gets back to the landowner.

In Noida and Greater Noida, the ownership rights over the land parcels exist with the local authorities. They give land to develop societies on leasehold. Homebuyers and even developers are not the real owners of the property. Going by the leasing policy, flats and plots are subleased to buyers for a specified tenure (mostly 90 years). However, buyers can renew the lease agreement. The leasehold ownership of a flat is restricted within the four walls of the flat, including flooring and plaster.

Advantages of buying a leasehold property


Leasehold properties are usually cheaper as compared to freehold properties which are accompanied with full ownership rights.

No legal tussle

Leasehold units are pre-owned by local governing authorities, having clear titles, guaranteeing no legal hassles.

Disadvantages of buying a leasehold property

Fixed tenure

In case of leasehold properties, the period of ownership is limited, mostly up to 99 years. Once the tenure is completed, buyers need to pay a fixed amount (varying from city to city) to extend the ownership.

Transfer rights

A leasehold property cannot be easily transferred. Such properties can only be transferred through a Power of Attorney. If the buyer of a leasehold property intends to sell the property in the future, he/she must secure a Power of Attorney to sell it.

Lower loan-to-value

Homebuyers must make a note that leasehold properties tend to have a lower loan-to-value (LTV) as compared to freehold properties. The loan-to-value ratio (LTV ratio) is employed by financial institutions and banks to assess the lending risk before granting a home loan. For instance, if you own a freehold property, you can get a home loan of 90 percent of the total value of the property. In case of a leasehold flat, the maximum LTV would range between 70 percent and 80 percent.

No complete ownership

Buyers of a leasehold property do not enjoy full ownership rights. It is limited to a certain period of time. Experts advise to know and understand the lease tenure before buying a leasehold property as it will impact the value of the property. Several States have introduced a system allowing conversion of leasehold properties into freehold. For this, a buyer has to pay the conversion charges, which vary from States to States. It is preferable to get leasehold property converted into freehold property, if allowed.

Share This Article:

Leave A Reply