In cities like Delhi, Noida, Chandigarh and large parts of Mumbai, a significant share of residential and commercial property is leasehold rather than freehold — meaning the land underneath your building is technically owned by a government authority, and you hold a long-term lease on it, typically 90 or 99 years.
What Changes Between the Two
With a freehold property, you own the land and the structure on it outright, indefinitely. With leasehold, you own the structure and have exclusive use of the land for the lease term, but the underlying title sits with the development authority — DDA in Delhi, for instance, or the relevant housing board elsewhere. At the end of the lease, technically, the land reverts to the authority, though in practice lease renewals are routine and expected.
Why Leasehold Properties Often Sell Cheaper
The price gap between comparable freehold and leasehold units in the same micro-market can run anywhere from 10% to 25%, reflecting the perceived uncertainty and the extra paperwork leasehold ownership involves. That discount is real, but it's not free money — it usually comes with strings attached.
The Hidden Costs to Factor In
- Conversion charges: many leasehold properties can be converted to freehold, but the authority charges a conversion fee, often calculated as a percentage of the current circle rate or market value — sometimes a substantial amount.
- Resale and mortgage friction: some lenders apply slightly stricter terms on leasehold properties, and buyers down the line may negotiate harder knowing the leasehold status.
- Restriction on usage changes: converting a leasehold residential property to commercial use, or making certain structural changes, often needs explicit authority permission that a freehold owner wouldn't need.
How to Decide
If you're buying to hold long-term and the discount is meaningful, leasehold can still make financial sense — just budget for eventual conversion charges if you want a cleaner title, and confirm the remaining lease tenure before you buy; a property with 20 years left on a 99-year lease is a different proposition than one with 85 years remaining.
