Leasehold vs Freehold

Difference Between Leasehold vs Freehold

Leasehold vs freehold both are legal terms which describe the type of ownership of a property by the respective owner.

Leasehold

Refers to the type of ownership wherein the flat/home on the land is leased to flat-owner for a certain tenor (lease period) but ownership of the land belongs to original owner/freeholder. Therefore, the home/flat- owner only holds the leasehold ownership on the property for the lease tenor and holds no ownership of the land.

The common example of leasehold ownership is owning a flat by way of leasehold ownership wherein a flat owner has the ownership of the flat and not the land on which the flat has been built. Generally, the lease tenor is 99 years and above in most cases. The ownership of the land and lease renewal remains uncertain in the case of leasehold property after the expiry of the lease period.

Freehold

Refers to ownership of both the property and the land on which the property has been built. In freehold, there is no time limit on the property as the land also belongs to the same owner. Freehold ownership is better as it does not have any uncertainties related to ownership issues or lease renewals, unlike leasehold ownership.

Example of freehold ownership is owning a standalone property/house, wherein one purchases the property with freehold ownership. In the case of freehold ownership, the owner doesn’t need to go through the issues of expiry of lease and ownership post expiry etc.

Head To Head Comparison Between Leasehold vs Freehold (Infographics)

Below is the top 11 difference between Leasehold vs Freehold

Key Differences between Leasehold vs Freehold

let us discuss some of the significant differences Between Leasehold vs Freehold :

• Leasehold is the type of ownership wherein the flat/home on the land is leased to flat-owner for a certain tenor (lease period) but ownership of the land belongs to original owner/freeholder. However, Freehold refers to ownership of both, the property and land on which the property has been built.
• Leasehold ownership has the disadvantage of uncertainty on ownership and renewal of a lease for the property. However, freehold ownership is free of any such uncertainty and ownership of the entire property clearly remains with the owner.
• One may need to pay annual land rent in case of leasehold ownership, which doesn’t hold true for the freehold.
• Leasehold ownership may require payment of maintenance fee for maintaining the society’s common infrastructures. However, in freehold ownership, the owner needs to maintain the property on its own and bear the expenses for the same.
• In leasehold ownership, there is a certain tenor for lease holding rights. However, in freehold ownership, the owner retains the ownership rights forever.
• In leasehold, the owner of the home may not be able to do major work in the property. However, in freehold ownership, there is no such restriction.
• Availing mortgage loan for a freehold property is relatively easier than leasehold property.
• Owners in case of freehold property have a lot more flexibility in selling or transferring the ownership.
• Cost of ownership for a leasehold property is relatively lesser than freehold property. Freehold properties are costlier due to the higher land purchase cost.

Leasehold vs Freehold Comparison Table

Let’s look at the top 11 Comparison between Leasehold vs Freehold

Conclusion – Leasehold vs Freehold

Leasehold vs freehold ownership both is legal terms which describe the type of ownership of a property by the respective owner. In leasehold ownership, the flat/home on the land is leased to flat-owner for a certain tenor (lease period) but ownership of the land belongs to original owner/freeholder. Generally, the lease tenor is 99 years and above in most cases. Freehold refers to ownership of both the property and the land on which the property has been built. Freehold ownership is relatively better in terms of clarity on ownership, flexibility in selling the property and availing mortgage loan in comparison to leasehold ownership. Leasehold ownership is suitable for the cases where there is budget constraint otherwise freehold ownership is always desirable.

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