DIFFERENCE BETWEEN FREEHOLD & LEASEHOLD PROPERTY
Leasehold and Freehold are the two forms of legal ownership of a property, whereby freehold property is a property or land, which is owned or inherited for life. As against, when a property is acquired under the lease, it is termed as Leasehold property. When you are buying a freehold property, it means that you are buying it in full for an indefinite length of time, which covers both the land and the property as well.
“A freehold property is a property that is ‘free from hold’ of any entity other than the legal owner, while a leasehold property is a property a lessee or tenant contracts to rent from a lessor over an agreed-upon time.”
On the other hand, the arrangement which confers the right to hold any property for a temporary period to another person or entity is called Lease, and the property which is transferred through a lease is termed as a leasehold property.
The main difference between freehold and leasehold property is their ownership. In a leasehold property, the property is leased to a lessor for a specific lease period, but the ownership of the land remains with the original owner. However, freehold property refers to the ownership of both the property and land on which it is built.
Freehold and leasehold are two terms that indicate the nature of ownership of a property. You have to know the difference between freehold and leasehold properties when looking for a potential apartment or home.
PointWise Difference Between Freehold & Leasehold Property:
|BASIS FOR COMPARISON||LEASEHOLD PROPERTY||FREEHOLD PROPERTY|
|Meaning||Leasehold means the lessor purchases the right to occupy and use the property for a stipulated tenure.||Freehold property is the one, on which the owner has the full-fledged rights as to its ownership and use.|
|Ownership||State/Government remains the ultimate owner of the estate leased.||Buyer enjoys absolute ownership.|
|Tenure||Specific tenure, which can be extended through renewal.||No tenure|
|Rights||Lessor has the right to use, mortgage, rent, transfer for a limited time. However, the transfer may require the approval of the concerned authority.||Owner has the right to use, mortgage, rent and transfer.|
|Mortgage||It is not easy to a mortgage.||It can be easily mortgaged.|
|Alteration||Lessor does not have the right to modify or alter the property, according to his wish.||Owner can make alterations as desired, except structural changes which require the permission of the relevant authority.|
|Annual rent or Tax||Ground Rent or Lease Rent||Only Property Tax and no other charges|
|Cost||Based on upfront cost, it is relatively cheaper, however, lease renewal charges are generally high.||Freehold properties are more expensive since they also include the price of the land.|
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