People who intend to buy property often get confused between freehold and leasehold properties. To understand things in a better perspective, it is better to clearly define and understand the difference between them.
Freehold Property
The term literally defines its name itself. It means the property in question is free from the hold of any other entity except the owner of the property. The owner, in this case, enjoys complete ownership of the property and can use the property for any purpose, be it selling, renovating or transferring. However, local regulations have to be kept in mind.
Thus, freehold property is comparatively costlier than leasehold property.
Example of a freehold property
Any kind of property including plots or a big chunk of land which has its ownership title with only a single person comes under the category of a freehold property.
Leasehold Property
The leasehold property has been leased for a certain amount of time to the developer. This lease duration generally ranges from a period of 30 years to 99 years. The lease in most cases can be extended upon the expiry of the lease term, but that always depends upon the prevalent conditions at that point of time.
Example of Leasehold property
A leasehold property is a term that is usually applied for commercial properties. Big factories, hotels, stadiums and commercial complexes, which are used for the business purpose generally fall in this category.
Difference between Freehold and Leasehold Property
| Freehold Property | Leasehold Property |
| The land in such cases belongs to the owner. | The land in such cases often belongs to the Government or agency and is leased to a party on certain pre-conditions and mutually agreed amount for a fixed number of years. |
| The ownership of the property is indefinite and naturally belongs to the person who buys the same. | In the case of leasehold properties, the leaseholder has to extend the lease on expiry of the term by paying further. |
| This property does not require the consent of the state for transfer of ownership. | This property needs the consent of state and concerned legal authorities before any lease transfer can take place. |
| The freehold properties are financed with relative ease by banks. | In cases where the lease period is less than 30 years, the banks avoid financing the property. |
Read also:Â Pre Approved Property
