Leasehold vs Freehold Property
| Factor | Leasehold | Freehold |
|---|---|---|
| Ownership | Right to use for defined period — government/authority retains land ownership | Full ownership of land and building — no time limit |
| Ground rent | Annual ground rent payable to lessor (often nominal) | None — no ongoing payments to anyone |
| Term | Typically 30, 60, 90, or 99 years | Perpetual — no expiry |
| Salability | Leasehold interest can be sold — buyer gets remaining term | Freely saleable — full ownership transfers |
| Home loan | Banks lend against leasehold — minimum remaining term required (typically 10–15 years beyond loan tenure) | No restrictions |
| Market value | Generally lower than freehold equivalent | Higher — preferred by most buyers |
| Examples | DDA flats Delhi, CIDCO Navi Mumbai, BDA Bangalore | Most private builder projects, independently owned properties |
Lease Deed vs Rent Agreement
| Factor | Lease Deed | Rent Agreement (Licence) |
|---|---|---|
| Duration | Long-term — years to decades | Short-term — typically 11 months |
| Registration | Mandatory if >11 months | Not mandatory for 11-month agreements |
| Lessee rights | Strong — protected under TPA | Weaker — licensor can terminate with notice |
| Stamp duty | Calculated on period and rent | Nominal — fixed amount in most states |
| Renewal notice | Formal notice required per deed terms | Usually month-to-month or renewed at 11 months |
Why landlords prefer 11-month agreements: A lease above 11 months must be registered, creates stronger tenant rights, and is harder to terminate. Most residential landlords in India use 11-month Leave and Licence agreements to avoid tenant protection laws that apply to longer registered leases.
Related Terms
Frequently Asked Questions
A lease deed is a legal document granting the right to use and occupy property for a defined period in exchange for rent — ownership stays with the lessor. Leases exceeding 11 months must be registered at the Sub-Registrar. Many government-allotted flats (DDA, BDA, CIDCO) are leasehold properties.
Leasehold property means the buyer gets the right to use the property for a fixed term (typically 30–99 years) but does not own the land outright — the government authority retains land ownership. Ground rent may be payable annually. The leasehold interest can be sold, but the buyer gets only the remaining lease period.
Yes. Any lease of immovable property for a period exceeding 11 months must be compulsorily registered under Section 17 of the Registration Act. An unregistered lease above 11 months is inadmissible as evidence in court and does not create valid rights. Stamp duty on lease deeds is calculated based on the annual rent and lease period.
Yes, banks do give home loans on leasehold properties — DDA, BDA, CIDCO flats are commonly mortgaged. The key requirement is that the remaining lease period must exceed the loan tenure by a comfortable margin (typically 10–15 years). A 99-year BDA lease allotted in 2000 has 73 years remaining in 2026 — well within any home loan tenure.
A sale deed permanently transfers property ownership from seller to buyer — the buyer becomes the absolute owner. A lease deed grants the right to use property for a defined period without transferring ownership — the lessor remains the legal owner. At the end of the lease, the property reverts to the lessor unless renewed or converted to freehold.