Tenure & Ownership
Freehold vs Leasehold: The Number Nobody Asks For
One of these you own forever. The other you own until a date. And the date is the only thing that matters.
The short answer
Freehold: you own the property and the land. Forever.
Leasehold: you own the right to use it. For a term. Then it reverts to the lessor.
The only question that matters: HOW MANY YEARS ARE LEFT?
A 99-year lease with 82 years to run is, practically, freehold. One with 19 years left is a wasting asset that no bank will lend against.
The comparison
| Freehold | Leasehold | |
|---|---|---|
| What you own | The property AND the land. Outright. In perpetuity. | The RIGHT to use it, for a fixed term. The land belongs to the lessor. |
| Duration | Forever | A term — commonly 99 years. Sometimes 30. Sometimes 999. |
| The lessor | — | Usually the government, a development authority, or the collector — DDA, MHADA, a Housing Board |
| Ground rent | None | Payable, though often nominal |
| Transfer | Free. Sell to anyone. | May need the lessor's permission, and a transfer fee |
| Alterations | Subject only to building bye-laws | May need the lessor's consent |
| Bank loan | Straightforward | Depends on the remaining term. See below — this is the one that hurts. |
| Value | Higher | Falls as the lease shortens |
| At the end of the term | — | The property reverts to the lessor, unless renewed. Renewal is usually possible — at a price. |
The single most important number in a leasehold purchase is the YEARS REMAINING. A 99-year lease with 82 years left is, in practice, close to freehold. One with 19 years left is a wasting asset that most banks will not lend against — and almost nobody asks.
The years remaining — and how value actually behaves
| Years left | What it means |
|---|---|
| 80+ | Practically freehold. Banks lend. Value is unaffected. Not a concern. |
| 60–80 | Fine. Price it in, and remember your exit. |
| 40–60 | Think. Your buyer in fifteen years is looking at 25–45 years, and a nervous bank. |
| 30–40 | A real problem, and it worsens annually. Loans get hard. Value starts to slide. |
| Under 30 | Most banks will not lend. You are buying a cash-only asset, and so is your buyer. |
| Under 15 | You are buying a licence to live somewhere for a while, not an asset. |
Note that value does NOT decline in a straight line. It holds up reasonably while the lease is long, then falls sharply as it approaches the point at which banks withdraw. The cliff is around the mortgage-availability threshold, and it arrives faster than owners expect.
The bank test — the most useful thing on this page
You are considering a leasehold flat with 34 years left. Is that a problem?
The best test available to you costs nothing: ask two or three banks whether they would give a 20-year loan on it.
If the answer is no — then your buyer, in a few years, will hear the same no. Which means your pool of buyers is cash purchasers only, and that pool is small and it pays less.
The bank is doing your valuation for you, for free, and they have no interest in flattering you. Listen to them.
Where you'll meet leasehold in India
- Delhi — a great deal of DDA land. Much has been converted to freehold; much has not.
- Mumbai — substantial land held from the Collector, from MHADA, and from other bodies. Check the Property Card, which states the tenure.
- Noida and Greater Noida — the Authorities lease land; leasehold is the norm.
- Chandigarh — common.
- State housing board estates, across India.
- Some industrial and commercial estates.
Should you buy leasehold?
| Buy leasehold if… | Don't if… |
|---|---|
| 80+ years remain — it's effectively freehold | Under 40 years remain, and conversion isn't available |
| Conversion to freehold is available, and you'll do it | You'd need a loan and a bank won't lend on it |
| The price properly reflects the tenure — leasehold should be cheaper | It's priced as if it were freehold |
| You've read the lease deed — renewal, transfer fee, ground rent, restrictions | Nobody can produce the lease deed |
| You plan to hold a long time, and the lease is long | You'll need to sell in a few years into a shrinking buyer pool |
The commonest mistake is not buying leasehold. It is buying leasehold at a freehold price, because nobody asked — and then discovering, at resale, that the buyer's bank has looked at the lease and said no.
Leasehold should be cheaper than freehold. Measurably so, and increasingly so as the term shortens.
If a leasehold flat is priced the same as a comparable freehold one, you are being asked to pay for something you are not getting.
Ask the tenure. Ask the years. Then adjust the price you're willing to pay.
And if the seller cannot produce the lease deed — walk. Not because it is necessarily bad, but because you cannot value what you cannot read.
Frequently asked questions
What is the difference between freehold and leasehold?
Freehold means you own the property and the land, in perpetuity, with no landlord and no term. Leasehold means you own the right to use it for a fixed term — commonly 99 years — after which it reverts to the lessor unless renewed. The only question that really matters is how many years are left.
Is leasehold property a bad investment?
Not if the lease is long — 80+ years is practically freehold. It becomes a problem as the term shortens, because banks stop lending, which collapses your buyer pool to cash purchasers. Under 40 years it is a real problem that worsens every year. The commonest mistake is not buying leasehold; it is buying leasehold at a FREEHOLD PRICE because nobody asked.
How do I know if a lease term is too short?
Ask two or three banks whether they'd give a 20-year loan on it. It costs nothing, and if the answer is no, then your buyer in a few years will hear the same no — which means your pool shrinks to cash purchasers. The bank is doing your valuation for free, and has no interest in flattering you.
Where is leasehold common in India?
A great deal of DDA land in Delhi, substantial land in Mumbai held from the Collector or MHADA, Noida and Greater Noida where the Authorities lease land, Chandigarh, and state housing board estates across India.
Should leasehold be cheaper than freehold?
Yes — measurably, and increasingly so as the term shortens. If a leasehold flat is priced the same as a comparable freehold one, you are being asked to pay for something you are not getting. Ask the tenure, ask the years remaining, and adjust what you are willing to pay.