While buying a house, it is very important for you to know whether the property you are buying is really yours or it belongs to someone else. To easily understand the difference between leasehold and freehold property, you need to know what it means. Freehold means that both the land and the building belong to you. And leasehold means the house belongs to you, but the land belongs to some institution like government or local authority.
Today, in areas like Mumbai and Navi Mumbai, most of the flats, especially those belonging to CIDCO and MHADA, are mostly on leasehold Although these are not necessarily bad investments, their ownership rights are quite different from freehold properties. Therefore, it is very important for you to understand these details before buying so that you do not regret your decision later.
What is a freehold property? (Who is the real owner?)
You are the full owner of the freehold property. When you buy it, you own both the building and the plot of land on which it is built. This is the main difference when comparing leasehold property and freehold property, because freehold gives you permanent rights without any expiry date.
Key Advantages
- It’s yours forever: There is no “expiry date” on your ownership. You can keep the property for as long as you want and pass it on to future generations as a family heirloom.
- Freedom to Renovate: You have the freedom to make structural changes or add floors (subject to local regulations) without constant approval from the landlord.
- More resale value: The prices of freehold properties are usually very high according to the market. Buyers prefer them because ownership is clear, permanent, and there are fewer legal hurdles.
- Easy access to finance: When approving a home loan or mortgage from a bank, freehold properties are preferred. Because ownership is secured, lenders view these properties as low-risk investments.
Difference between Leasehold and Freehold Property (Comparison Table)
| Feature | Freehold Property | Leasehold Property |
| Ownership Tenure | Forever (permanent). | Fixed period (usually 99 years). |
| Land Ownership | You also own the land. | The ownership of the land rests with the authority (roads/government). |
| Transfer Fees | Only Stamp Duty and Registration. | A transfer fee has to be paid to the authority. |
| Bank Loan | Very easy (high priority). | It’s a bit difficult (it depends on the lease period). |
| Price | It’s a bit expensive. | Comparatively cheaper (it can be 10-20% cheaper). |
| Control | Full control (you can change the structure). | Limited control (permission from the authorities is required). |
Loan and Mortgage Math: The Bank’s Perspective
When you approach a bank for a home loan, their primary concern is your security or collateral.
Benefits of buying freehold property in India
Banks consider freehold property as “low-risk” property. Since both the building and the land belong to you, the bank is confident that the value of the property will increase over time. This makes it very easy for you to take a loan of 20 to 30 years at a very good interest rate.
Mortgage for leasehold properties
Banks are much more careful with leasehold assets, and pay more attention to the time remaining on the lease.
- The time of the loan: If there are only 20 to 30 years left on the lease, the bank will probably refuse a long-term loan. The term of your loan cannot be longer than the remaining years of the lease.
- Mortgage Permission: To take a mortgage, it is very important to get a “No Objection Certificate” (NOC) from authorities like CIDCO or MHADA. This process often takes a lot of time.
Pro tip: If you want to take a leasehold flat, make sure that the remaining lease period is more than 30 years. If it is low, you will find it difficult to sell the property later as it will be almost impossible for future buyers to get a loan.
Disadvantages of Buying Leasehold Property
Even though a leasehold property may look very affordable, there are some long-term disadvantages that can greatly affect your wealth:
- Lease renewal cost: When the lease comes to an end, the renewal fee can be quite high. In 2026, many old buildings have to deposit large amounts of money for “extension fees.”
- Transfer charges: If you want to sell your leasehold property, you don’t just have to pay stamp duty, but also a “transfer fee” to the Balki land authority (like CIDCO, MHADA or collector). This amount can range from ₹50,000 to 1-2% of the value of the property.
- Asset Acquisition: The value of a leasehold property increases a little more slowly than that of a freehold property, because as the lease time decreases, the “attractiveness” of the property begins to decrease.
- Tension of Permission: You may also have to make rounds of the authority for a small renovation or name change (mutation).
How to Convert: The Journey from Leasehold to Freehold
The Maharashtra government has now given people in many areas the option to convert leasehold property into freehold. This is called “ghosting.”
What is the Process?
- Application: For conversion, you have to apply to the collector or the concerned authority (like MHADA / CIDCO).
- Conversion Premium: You will have to pay a fixed “premium” or fee to the government, which usually ranges from 5% to 2 5% of the ready reckoner rate, depending on the locality.
- Certificate / Order: After paying the fee, the government issues a “sanad,” which turns your property into freehold forever.
Expert advice: If you are given the option to convert your society into freehold, do it. This will instantly increase the market value of your property by 15-20%, and it will be as easy as butter to take any kind of loan.
Conclusion
It is very important for you to understand the difference between leasehold and freehold property to save your investment. If your budget allows you to, then freehold should always be the better option. But, if you are buying a house in the prime location of Navi Mumbai or Mumbai, where only the leasehold is available, then definitely pay attention to the rest of the lease term.
Frequently Asked Questions
Will the government take back the land after 99 years?
In practice, this rarely happens. Authorities typically renew the lease once the 99-year term ends. As long as the building remains structurally safe and you pay the required renewal fees, you won’t face eviction.
Can I get a home loan on a leasehold property?
Yes, you certainly can. However, lenders usually require the remaining lease period to be longer than your loan tenure (typically 15–20 years).
Does a flat owner have ownership rights to the land?
In a freehold building, flat owners hold an “Undivided Share of Land” (UDS). In a leasehold property, you only hold these rights for the specific duration of the lease.
Disclaimer: The information in this article is for general awareness only. Property laws vary by state and governing authorities like CIDCO, MHADA, or the Collector, and can change at any time. Always have a legal consultant verify your documents before making a final decision.
