Indian Real Estate

Leasehold & Freehold Property


17, January 2026

The difference between Leasehold and Freehold property has been troubling Homebuyers for a long time.

Well, we're on a mission to end it!

Just read ahead to find out the meanings and differences between leasehold and freehold properties.

So,

What is a freehold property?

Freehold Property meaning: A freehold property is under single ownership. There aren't any others who hold rights to the property or estate in question. The complete ownership is enjoyed by a single person who can decide what to do with the property or sell it. It transcends mere ownership, a timeless legacy bestowed upon generations yet to come. The ownership does not have a time frame. He/she can exercise the rights over the land at any time as he/she sees fit. The owner's descendants or successors can inherit freehold property.

Now,

What is a leasehold property?

A Leasehold property means the property's ownership is leased to another party for a fixed period of time. Though the project's official ownership is within the owner, the leaseholder can act upon the real estate as he sees fit during the tenure of the lease or according to any pre-existing conditions mentioned within the deed set by the owner. It's a harmonious collaboration where the proprietor and leaseholder, each playing unique roles, contribute to the cooperation.

It primarily favors residents in metropolitan areas where the population and demand soar, and the limited land availability results in high prices.

And for the uninitiated,

What is a lease?

A Lease is an agreement that states that the first party or the user (lessee) can use or operate a piece of the estate owned by the owner( lessor) in exchange for a fixed amount of money for a certain tenure or time period.

In Indian real estate, lease models are mostly seen in the commercial estate ( offices or store spaces), Agricultural land ( land used for farming ), and Residential spaces ( Houses or buildings).

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What are the three types of lease (Residential)?

1.Gross Lease

Gross Lease states that the tenant or lessee need only pay a single sum, and any other costs related to the real estate, including maintenance, should be undertaken by the lessor.

With a clear understanding that their single payment includes all costs, tenants experience an elevated degree of fiscal certainty. This makes it easier for tenants to budget without the uncertainty of extra charges.

2. Net Lease

Net Lease is an agreement where the base amount payable by the lessee will be lower, but the additional cost should be undertaken by him. It allows lessees to personalize their financial commitments based on their operational practices. Tenants may endeavour to secure advantageous terms related to how additional property costs are distributed.

3. Modified Gross Lease

In Modified Gross Lease, the lessee should pay a huge sum to the lessor, but the amount will also cover the additional costs. The lump sum payment typically includes extra expenses like property taxes, insurance premiums, and maintenance costs.

Differences Between Leasehold Property and Freehold Property:

Feature

Leasehold Property

Freehold Property

Ownership

Leaseholders have the right to occupy the property for a set period of time, as agreed upon in the lease agreement.

Freehold owners have complete ownership of the home and the land it sits on, which gives them unrestricted rights and entitlements.

Term

Typically lasts for a specified period of time, usually between 99 and 999 years, after which ownership reverts to the freeholder.

Perpetual ownership means that the owner and their heirs will retain title to the property and land perpetually.

Ground Rent

Leaseholders must pay the freeholder of the property on a regular basis, which is known as ground rent. This is an annually fixed payment.

Freehold owners have entire ownership of their land and do not have to pay ground rent. They maintain all the profits from the land.

Service Charges

Cleaning, gardening, building insurance, and security are all common upkeep charges. The sum charged varies according to the size and location of the property, as well as the services provided by the building or complex.

Owner responsible for all maintenance costs

Property Value

Depreciation may occur when the lease term shortens. Leasehold properties typically lose value as the remaining lease period shortens. This is because after the lease expires, the right to occupy the land reverts to the freeholder.

Generally increases over time. Freehold properties tend to increase in value over time as a result of inflation, local development, and overall market trends.

Control

Limited by lease terms, requires permission for changes

Full control of property, subject to regulations regarding planning.

Inheritance

Can be passed on, but subject to lease terms

Can be passed on to heirs indefinitely

Purchase Price

Often affordable initial cost.

Generally higher upfront cost

Flexibility

Less flexible due to lease restrictions

High degree of flexibility

Legal Complexity

More complex due to leasehold agreements

Generally simpler ownership structure

Benefits of Sole Ownership

  • The individual will possess absolute authority over all decisions related to the property.
  • He/She can enjoy incredible appreciation over time on property value.
  • The sole owner can enjoy the liberty to initiate construction, renovation, or development projects.

Lease Vs Rent? Which is better?

In simple words, the difference between lease vs rent comes down to the time tenure and the type of payment involved. Rent usually consists of lesser amounts payable in accordance with the time frame (usually monthly) and lesser time period, whereas lease would generally consist of a large sum of money paid at once, and the time period comes around to a minimum of 12 -24 months at least, providing stability for those with long-term plans or seeking a secure residency arrangement.

So, folks, I hope we cleared what does a freehold property means and leasehold property. And then what are the difference between Leasehold and Freehold property!

Stay tuned for more!

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Most Frequently Asked Questions?

Which is better, lease or rent?  

Rent involves smaller, regular payments for a shorter time, while a lease requires a larger one-time payment for a longer period, providing stability for long-term plans.

What sets apart freehold from leasehold properties?

Freehold properties grant unrestricted ownership to one person indefinitely, while leasehold properties offer ownership for a limited time under specific terms set by the owner.

What advantages come with owning a property solely?

Individual ownership grants full control over property decisions, potential value growth, and the liberty to initiate construction or development projects.

 

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