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Old January 22 2011, 08:06 PM   #1
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Icon25 LeaseHold Vs FreeHold

I tried to search some discussion about Lease Hold Vs Free Hold but could not find one.

Entire Noida and Greater Noida is LeaseHold, Please put forward your views about the pros and cons of Lease hold and Freehold.

Would appreciate this help from all of you since I am not able to convince myself about buying anything which I would actually leasing.


Rohit

 
Old January 22 2011, 08:56 PM   #2
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Quote:
Originally Posted by rohit_warren View Post
I tried to search some discussion about Lease Hold Vs Free Hold but could not find one.

Entire Noida and Greater Noida is LeaseHold, Please put forward your views about the pros and cons of Lease hold and Freehold.

Would appreciate this help from all of you since I am not able to convince myself about buying anything which I would actually leasing.


Rohit
Actually I found another thread which was started about 10 months back but I am surprised that even that thread does not have any replies.

http://www.indianrealestateforum.com...ies-10568.html

I am amazed how we can act in a denial mode on such a big issue of what we are paying for at par with other areas is not even ours.



Please post your views
 
Old January 22 2011, 09:56 PM   #3
 
 
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Here is a nice article -




Which type of property should you preferably buy leasehold or freehold? Does power of attorney give you complete and unrestricted ownership? These and other legal issues pertaining to property ownership explained
"Typically brokers want to get the deal done fast. So they do not allow buyers the time to examine the papers carefully. In the process, several minute but important details get overlooked. If any error happens, it can become a burden for the buyer in later years" BP SINGH, mortgage valuation expert

Buying a property is an elaborate procedure that can tie you up in knots unless you educate yourself beforehand about the intricacies of the entire exorcise. First, you need to identify the right property and then you need to check the legal title of the property to determine its rightful owner. What buyers find most daunting is the complex trail of paperwork that must be completed before you can rightfully call the property yours. In the metros procedures get more convoluted as multiple types of properties exist. The regulations governing the buying and selling of these different property categories also differ, and so does the paperwork required for an unproblematic purchase.

FREEHOLD PROPERTY


In urban areas two types of properties exist freehold and leasehold.

In case of a freehold property (plot or flat), the owner’s right over the property is full and unconditional (within the provisions of the laws of the land). The title paramount (the President of India acting through the land-owning agency) has conveyed the property in favour of the purchaser by conveyance or sale deed. There are no restrictions on the rights of the latter to further sell and transfer the ownership of that property.

In case of a standalone property, the owner owns the property as well as the land on which it stands. In case of a multi-level property, land ownership is usually divided in proportion to the floor area of each owner.

The ownership of a freehold property is transferred to another buyer through registration of sale deed.


LEASEHOLD PROPERTY


In a leasehold property, on the other hand, the land-owning agency gives the land on lease to a lessee for a stipulated period. The land ownership rights remain with the lessor. The lessee pays a lease premium and an annual lease rent as fixed by the lessor. Further, the lessee requires the lessor’s prior permission if he wants to sell the property.

To cite an example, the Noida Authority and other new land-owning authorities in the NCR offer land on lease for 90 years. Same is the case in Navi Mumbai. After the stipulated period gets over, allottees have to renew the lease by paying the lease rent once again.

Leased properties can also be transferred, provided permission has been obtained from the land-owning agency. The buyer pays a stamp duty and a memorandum of transfer has to be executed.

If you are going to buy a leasehold property, a few points need to be kept in mind. Says BP Singh, mortgage valuation expert: “Make sure that the ground rent has been paid up to date.”

Buying a leasehold property has a few disadvantages. Says Singh: “You can’t take a loan on a leasehold property as you can in case of a freehold property.”

Most transactions involving leasehold properties are done through Power of Attorney (POA). Such a transaction does not confer a clear title on the buyer. It also ceases to be effective on the seller’s death. If you are the buyer in such a transaction, ensure that you get a general as well as a special, irrevocable POA, which allows you to transfer the property. Moreover, buying properties involved in multiple POAs is usually fraught with difficulties.

BROKERS’ MISDEEDS

In many property transactions, property dealers show prospective buyers a bundle of papers but do not give them the time to examine those papers closely. Experts recommend that the buyer should take a photocopy of all these documents and check them properly. It is also advisable to have the papers examined by a lawyer or a trusted property expert.

“Typically brokers want to get the deal done fast. So they do not allow buyers the time to examine the papers carefully. In the process, several minute but important details get overlooked. If any error happens, it can become a burden for the buyer in later years,” says Singh.

FROM LEASEHOLD TO FREEHOLD

The union government has modified the procedure for conversion of leasehold property to freehold in the capital city. If the buyer has a regular sale deed, he can get the property converted to freehold by paying a conversion fee.

There are several land-owing agencies in the city that wield control on land: the Land and Development Office (L&DO), the Delhi government, Delhi Development Authority (DDA), Delhi State Industrial Corporation (DSIDC), Waqf Board, and so on. If you want complete ownership of your property, it is best to pay the conversion changes and get the property converted. Conversion of flats and floors, shops and spaces in multi-storeyed buildings developed on leasehold plots has also been permitted, provided the buyer has a registered sale deeds, registered GPA (general power of attorney) or agreement to sell. Conversion is permitted after the lessee has paid his proportionate share of dues of lease rental.

PLUGGING THE GAPS

In order to prevent loss of revenue, some of the state governments such as those of Himachal Pradesh and the Chandigarh administration are laying stress on the use of POAs. In Chandigarh, the majority of commercial properties are on leasehold and cannot be sold under the law of the land. Registered with the Estate Office, these can only be transferred through POA. Flats in certain sectors of Chandigarh like sectors 41 to 52 and 38 West are also on lease. Hence the emphasis on POA.

MUST-DO POINTS FOR BUYERS

Since property deals involve vast sums of money, buyers must exercise all possible precautions.

The ownership status of the property is one of the first issues you must address. Confirm that the land has a clear and marketable title. Do not pay any advance before you have made sure that the person from whom you are buying the property is indeed its legal owner, and that the property is not entangled in any dispute. All this can be checked at the office of the sub-registrar. “Verify the seller’s title mentioned in the land-owing agency’s records. The land-owning agency records will tell you if the title is disputed and if the matter is in court, because usually the rival claimant would have sent a notice to that effect to the agency,” says Singh.

Several other papers also need to be examined: completion certificate of house or building; forms C & D and B-I which relate to electrical conduits and sanitation; building plan of the property (it should have the necessary sanction from the concerned authority); a copy of the latest property tax bill with a receipt to ensure that all property tax dues have been cleared; latest water and electricity bills with a ‘paid’ stamp to again ensure that these dues have been cleared.

From the legal standpoint, say experts, buying a freehold property is always preferable to buying a leasehold property.

Only after you have conducted all the checks mentioned above should you enter into a sale agreement. Thus, you need to exercise a lot of caution right from the site seeing stage till the property has been registered in your name.
sequence likes this.
 
Old January 22 2011, 10:01 PM   #4
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Quote:
Originally Posted by MANOJa View Post
Here is a nice article -




Which type of property should you preferably buy leasehold or freehold? Does power of attorney give you complete and unrestricted ownership? These and other legal issues pertaining to property ownership explained
"Typically brokers want to get the deal done fast. So they do not allow buyers the time to examine the papers carefully. In the process, several minute but important details get overlooked. If any error happens, it can become a burden for the buyer in later years" BP SINGH, mortgage valuation expert

Buying a property is an elaborate procedure that can tie you up in knots unless you educate yourself beforehand about the intricacies of the entire exorcise. First, you need to identify the right property and then you need to check the legal title of the property to determine its rightful owner. What buyers find most daunting is the complex trail of paperwork that must be completed before you can rightfully call the property yours. In the metros procedures get more convoluted as multiple types of properties exist. The regulations governing the buying and selling of these different property categories also differ, and so does the paperwork required for an unproblematic purchase.

FREEHOLD PROPERTY


In urban areas two types of properties exist freehold and leasehold.

In case of a freehold property (plot or flat), the owner’s right over the property is full and unconditional (within the provisions of the laws of the land). The title paramount (the President of India acting through the land-owning agency) has conveyed the property in favour of the purchaser by conveyance or sale deed. There are no restrictions on the rights of the latter to further sell and transfer the ownership of that property.

In case of a standalone property, the owner owns the property as well as the land on which it stands. In case of a multi-level property, land ownership is usually divided in proportion to the floor area of each owner.

The ownership of a freehold property is transferred to another buyer through registration of sale deed.


LEASEHOLD PROPERTY


In a leasehold property, on the other hand, the land-owning agency gives the land on lease to a lessee for a stipulated period. The land ownership rights remain with the lessor. The lessee pays a lease premium and an annual lease rent as fixed by the lessor. Further, the lessee requires the lessor’s prior permission if he wants to sell the property.

To cite an example, the Noida Authority and other new land-owning authorities in the NCR offer land on lease for 90 years. Same is the case in Navi Mumbai. After the stipulated period gets over, allottees have to renew the lease by paying the lease rent once again.

Leased properties can also be transferred, provided permission has been obtained from the land-owning agency. The buyer pays a stamp duty and a memorandum of transfer has to be executed.

If you are going to buy a leasehold property, a few points need to be kept in mind. Says BP Singh, mortgage valuation expert: “Make sure that the ground rent has been paid up to date.”

Buying a leasehold property has a few disadvantages. Says Singh: “You can’t take a loan on a leasehold property as you can in case of a freehold property.”

Most transactions involving leasehold properties are done through Power of Attorney (POA). Such a transaction does not confer a clear title on the buyer. It also ceases to be effective on the seller’s death. If you are the buyer in such a transaction, ensure that you get a general as well as a special, irrevocable POA, which allows you to transfer the property. Moreover, buying properties involved in multiple POAs is usually fraught with difficulties.

BROKERS’ MISDEEDS

In many property transactions, property dealers show prospective buyers a bundle of papers but do not give them the time to examine those papers closely. Experts recommend that the buyer should take a photocopy of all these documents and check them properly. It is also advisable to have the papers examined by a lawyer or a trusted property expert.

“Typically brokers want to get the deal done fast. So they do not allow buyers the time to examine the papers carefully. In the process, several minute but important details get overlooked. If any error happens, it can become a burden for the buyer in later years,” says Singh.

FROM LEASEHOLD TO FREEHOLD

The union government has modified the procedure for conversion of leasehold property to freehold in the capital city. If the buyer has a regular sale deed, he can get the property converted to freehold by paying a conversion fee.

There are several land-owing agencies in the city that wield control on land: the Land and Development Office (L&DO), the Delhi government, Delhi Development Authority (DDA), Delhi State Industrial Corporation (DSIDC), Waqf Board, and so on. If you want complete ownership of your property, it is best to pay the conversion changes and get the property converted. Conversion of flats and floors, shops and spaces in multi-storeyed buildings developed on leasehold plots has also been permitted, provided the buyer has a registered sale deeds, registered GPA (general power of attorney) or agreement to sell. Conversion is permitted after the lessee has paid his proportionate share of dues of lease rental.

PLUGGING THE GAPS

In order to prevent loss of revenue, some of the state governments such as those of Himachal Pradesh and the Chandigarh administration are laying stress on the use of POAs. In Chandigarh, the majority of commercial properties are on leasehold and cannot be sold under the law of the land. Registered with the Estate Office, these can only be transferred through POA. Flats in certain sectors of Chandigarh like sectors 41 to 52 and 38 West are also on lease. Hence the emphasis on POA.

MUST-DO POINTS FOR BUYERS

Since property deals involve vast sums of money, buyers must exercise all possible precautions.

The ownership status of the property is one of the first issues you must address. Confirm that the land has a clear and marketable title. Do not pay any advance before you have made sure that the person from whom you are buying the property is indeed its legal owner, and that the property is not entangled in any dispute. All this can be checked at the office of the sub-registrar. “Verify the seller’s title mentioned in the land-owing agency’s records. The land-owning agency records will tell you if the title is disputed and if the matter is in court, because usually the rival claimant would have sent a notice to that effect to the agency,” says Singh.

Several other papers also need to be examined: completion certificate of house or building; forms C & D and B-I which relate to electrical conduits and sanitation; building plan of the property (it should have the necessary sanction from the concerned authority); a copy of the latest property tax bill with a receipt to ensure that all property tax dues have been cleared; latest water and electricity bills with a ‘paid’ stamp to again ensure that these dues have been cleared.

From the legal standpoint, say experts, buying a freehold property is always preferable to buying a leasehold property.

Only after you have conducted all the checks mentioned above should you enter into a sale agreement. Thus, you need to exercise a lot of caution right from the site seeing stage till the property has been registered in your name.
Then why the GNoida and Noida rates are at par with most of their freehold counterparts ?

After 90 years one has to pay the lease rent again which would be according to the prevailing rates !

Rohit
 
Old January 22 2011, 10:04 PM   #5
 
 
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............because , most of the times, buyers r not aware . I think, this could be one of the reasons, but really not sure on it .
 
Old January 22 2011, 10:29 PM   #6
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Quote:
Originally Posted by MANOJa View Post
............because , most of the times, buyers r not aware . I think, this could be one of the reasons, but really not sure on it .
Exactly Most of the buyers are NOT aware that whole of Nodia and Greater Noida is Leasehold - The current buyers profile is mostly young generation who care less about these details.

Rohit
 
Old January 24 2011, 04:12 PM   #7
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Default Basic Difference: Loan Available v/s Loan Not Available

A freehold property will always have loan availability from any bank in India. The property can be mortgaged and kept as collateral for any financing activity.

A leasehold property has loan available only at the time of first allotment (that too when the builder has negotiated with certain banks). The following resale transactions will not have any loan from any bank, because the property does not get transferred in the buyer's name.

In Gurgaon, there is a subtle difference in the prices of freehold and leasehold properties. I can quote a recent example. 3-BHK Ansal builder floors in Sushant Lok 2, GGN were available for 35-40 lakhs till the time they were leasehold. In 2009, when Haryana govt. allowed registry of such floors, the properties immediately quoted a price of 45-50 lakhs and within a year, they were above 55 lakhs.
 
Old January 24 2011, 05:05 PM   #8
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Quote:
Originally Posted by gotiyaa View Post
A freehold property will always have loan availability from any bank in India. The property can be mortgaged and kept as collateral for any financing activity.

A leasehold property has loan available only at the time of first allotment (that too when the builder has negotiated with certain banks). The following resale transactions will not have any loan from any bank, because the property does not get transferred in the buyer's name.

In Gurgaon, there is a subtle difference in the prices of freehold and leasehold properties. I can quote a recent example. 3-BHK Ansal builder floors in Sushant Lok 2, GGN were available for 35-40 lakhs till the time they were leasehold. In 2009, when Haryana govt. allowed registry of such floors, the properties immediately quoted a price of 45-50 lakhs and within a year, they were above 55 lakhs.
well said now people will relook at the deals of leasehold
 
Old January 28 2011, 12:14 PM   #9
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Few comments:

1. There isn't big difference between the prices of freehold and leasehold properties because
a. It's 90/99 years, so most of the people are ok with such a long duration.
b. It is mostly expected that at the time of expiry of lease duration, the Govt. will bend and renew the leases at a very nominal fee. Consider the fact that the lease for most of the properties in that entire area will be expiring nearly at the same time, so there will be huge "vote bank pressure".
c. As rightly said by others, many a times people are simply not aware

2. ManojA: Commenting on the line quoted below from your post -- Usually an irrevokable "Will" should also be signed alongwith the POA to ensure that there are no issues incase of death of Seller.

Quote:
Originally Posted by MANOJa View Post
Here is a nice article -

Most transactions involving leasehold properties are done through Power of Attorney (POA). Such a transaction does not confer a clear title on the buyer. It also ceases to be effective on the seller’s death. If you are the buyer in such a transaction, ensure that you get a general as well as a special, irrevocable POA, which allows you to transfer the property. Moreover, buying properties involved in multiple POAs is usually fraught with difficulties.
 
Old February 12 2013, 09:07 PM   #10
 
 
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Default Leasehold Versus Freehold: The Basic Difference Between The Two Is Land Ownership And Control

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9 Feb 2013, Hindustan Times By Ashoo Gupta
 
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