Homebuyers often go through a dilemma of thoughts when they come across terms like Freehold property and Leasehold property.
Let us explain to you these basic terminologies along with their advantages and disadvantages in detail.
Freehold property means the property that you have purchased and you own complete rights on the same. There is no time limit until how long you own the property unless and until you decide to sell it to someone else. You and only you are the sole owner of the property.
Advantages of Freehold Property
- Buyer is the sole owner.
- The owner has complete rights on the property and he can do whatever he wants with it keeping in mind the law and order and legal authorities.
- It is a long-term investment.
- You do not have the concern of a lease running out. The property is yours indefinitely.
Disadvantages of Freehold Property
- The maintenance and functioning of the building comes under your responsibilities list.
- You have a responsibility to your local council and community to be a responsible homeowner.
- Buying a freehold property can in some cases be more expensive than buying a leasehold property.
Leasehold property means the ownership of the land is leased to the developer for a particular amount of time on which the property is built. The period varies from 30 to 99 years. In a leasehold property, the legal agreement happens with the landlord called a ‘lease’ that states the number of years the owner shall own the property and under what conditions. Leasehold is basically giving your property on rent for a particular period of time.
A lease is a contract between the owner and the landlord. A lease defines your rights and responsibilities and the time period for which you will be given the property. Ownership of the property will return to the landlord when the lease ends. Majority of housing options in Navi Mumbai, Delhi, Noida Extension and Gurgaon are leasehold properties.
Advantages of Leasehold property
- Leasehold properties are less expensive.
- Owner has less responsibility for repairs and maintenance.
- Provides a home for people with a short-term requirement.
- There is a possibility of buying the leasehold property outright, through enfranchisement, or share of the freehold.
Disadvantages of a leasehold property
- If your lease expires and if you approach your landlord for renewal, he is not obliged to renew the term of your lease.
- The landlord has control over the amount of service charge costs that you have to pay.
- Your lease is subject to conditions that may limit the way you can use the property. For example, whether or not you can have pets.
- A short lease may prevent the resale of the property or your ability to get a mortgage.
Can a property be sold on the basis of Power of Attorney?
If an individual wants to sell his property through power of attorney then there’s a big NO. In 2011, the Supreme Court held that transferring property title through General Power of Attorney is not valid.
The law holds that a power of attorney is not an instrument of transfer in regard to any right, title or interest in an immovable property but any genuine transaction carried out through General Power of Attorney is considered valid under the law.
How to convert Leasehold Property to Freehold Property and its benefits?
The process of converting a leasehold property to a Freehold property is very simple, you only need GPA (General Power Of Attorney), a clear sale deed and a NOC (in case the land is under mortgage or rent). Further, you need to pay a conversion charge to authorities.
Before finalizing on buying a property, you should go through the legal documents thoroughly and understand the status of the property.
Disclaimer: The views expressed above are for informational purposes only based on industry reports and related news stories. Propertypistol does not guarantee the accuracy, completeness, or reliability of the information and shall not be held responsible for any action taken based on the published information.