Freehold Property Mean

Discover what is freehold property, understand freehold ownership, and explore its benefits. Learn about the advantages, disadvantages, and tips for buying freehold property.
Loan Against Property
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3 min
21 August 2024

What is freehold property? This question often arises when discussing real estate ownership in India. Freehold property refers to land or buildings where the owner has complete and absolute ownership. This means that the property is free from any hold of the government or any other entity, and the owner can use it as they please. If you are considering purchasing property, understanding the concept of freehold property is crucial. It impacts your rights, responsibilities, and the value of your investment.

Owning freehold property offers numerous benefits, making it a preferred choice for many homebuyers. With Bajaj Finance, you can leverage your freehold property by availing Loan Against Property. This can help you unlock the potential of your property, offering flexibility and significant advantages.

Meaning of Freehold Property

Freehold property means that the owner has full ownership and control over the property. This type of ownership does not have a time limit, and the owner can sell, transfer, or pass it on to heirs without any restrictions. In contrast, leasehold properties have a fixed tenure, after which the ownership reverts to the original owner.

Types of Property Ownership

Property ownership in India can be broadly classified into two categories:

  • Freehold property: Complete ownership with no time limit.
  • Leasehold property: Ownership for a specific period.

For more information on property value and its importance, visit Bajaj Finance’s guide on property value.

Features of Freehold Property

Freehold property has several distinctive features:

  • Full ownership: The owner has complete control over the property.
  • No renewal hassles: Unlike leasehold properties, there is no need for renewal.
  • Right to transfer: The owner can sell or transfer the property without restrictions.
  • Property modification: Owners can make changes or modifications as per their needs.

Advantages of Freehold Property

Owning a freehold property comes with many advantages:

  • Permanent ownership: You own the property forever.
  • High market value: Freehold properties often have a higher market value compared to leasehold properties.
  • Flexibility: You can use the property for any purpose within legal limits.
  • Ease of sale and transfer: Selling and transferring freehold property is simpler and more straightforward.

Disadvantages of Freehold Property

While freehold properties have many benefits, there are some disadvantages to consider:

  • Higher cost: Freehold properties usually come at a higher price compared to leasehold properties.
  • Maintenance responsibility: The owner is responsible for all maintenance and repairs.
  • Complex legal procedures: Transferring freehold property can involve complex legal procedures and paperwork.

Freehold Property in Different Markets

The concept of freehold property varies across different markets. In India, freehold properties are highly sought after due to the permanent ownership they offer. In contrast, many Western countries have a mix of freehold and leasehold properties, with leasehold being common in urban areas. Understanding the local market and regulations is crucial when considering purchasing freehold property.

Freehold property: Pros and Cons

Pros

Cons

Full ownership: Complete ownership of both the land and the property, with no external landlord.

Higher initial cost: Freehold properties generally cost more upfront compared to leasehold properties.

No time limitation: Ownership is indefinite, allowing you to pass it down to heirs without worrying about lease expiry.

Maintenance responsibility: The owner is solely responsible for maintaining both the property and land, leading to potentially higher costs.

Higher property value: Freehold properties usually appreciate more steadily, making them a safer long-term investment.

Property taxes: Freehold properties are subject to higher property taxes due to full ownership.

Freedom to modify: Owners can make modifications, renovations, or expansions without needing landlord approval.

Land use restrictions: Zoning laws may limit how you can use or alter the property.

Greater control: You have complete autonomy over how the property is used, managed, and maintained.

Long-term commitment: Purchasing a freehold property is a significant investment, and it may take time to sell, especially in a slow market.

Easier to sell: Freehold properties tend to have higher demand, making them easier to sell.

Capital outlay: The initial financial burden may be higher due to the full purchase cost of the land and building.


Buying a Freehold Property: Tips and Considerations

When buying a freehold property, keep the following tips and considerations in mind:

  • Legal verification: Ensure that all legal documents are in order. Verify the title and ownership history.
  • Market research: Conduct thorough market research to understand property prices and trends.
  • Financial planning: Plan your finances, considering the higher cost of freehold properties.
  • Property inspection: Inspect the property for any structural issues or necessary repairs.
  • Loan against property: Consider availing a Loan Against Property from Bajaj Finance to fund your purchase and leverage your existing property.

Understanding what is freehold property and its benefits can significantly impact your investment decisions. Freehold ownership offers complete control, flexibility, and long-term value. Whether you are buying a new property or leveraging your existing one, freehold property provides numerous advantages. With Bajaj Finserv Loan Against Property, you can unlock the potential of your property, offering you financial flexibility and support.

Frequently asked questions

What is the meaning of freehold property?
A freehold property is a piece of real estate and the land on which it stands that the owner possesses outright indefinitely. The owner has the full right to transfer the ownership, sell the property, or bequeath it without any restrictions. This term can also refer to the property inherited owing to legal rights or through a will. The term predominately implies an unlimited, absolute, and permanent tenure.

Can a freehold property be sold?
Yes, absolutely. One of the foremost benefits of owning a freehold property is the freedom to sell it. The property owner has the outright authority to dispose of the property by sale at their discretion. They can perform this without requiring any consent from a third party or any superior landlord.

Is freehold property safe?
A freehold property indeed carries a high level of security. As you have total control and possession of the property and the land it is built upon, there is no risk of a diminishing lease or eviction. Consequently, one can state that a freehold property is safer than a leasehold property.

Is freehold better than leasehold?
Generally speaking, freehold properties are indeed viewed as more valuable than leasehold properties. This is predominantly because you own the property perpetually in the case of freehold, whereas with a leasehold, ownership is only for a specified period. Freehold owners do not have to deal with ground rent or other charges, nor do they need to worry about the lease running out, which can significantly devalue leasehold properties. From the perspective of extending a loan against property, financial institutions often consider freehold properties as more bankable.

Can freehold property be sold or transferred easily?

Yes, freehold property can be sold or transferred easily. Since you own the land and property outright, there are no restrictions like lease expiration, making the process simpler and quicker.

What are the rights of a freehold property owner?

A freehold property owner has complete control over the property and land. They can sell, lease, modify, or transfer ownership without needing approval from any external authority or landlord.

Is it better to buy a freehold property or a leasehold property?

Buying a freehold property is generally considered better for long-term ownership and investment, offering more control, no time limits, and fewer complications compared to leasehold properties, which have expiry dates.

Are there any risks associated with owning a freehold property?

While freehold ownership offers many benefits, risks include higher maintenance costs, property taxes, and the responsibility to adhere to zoning laws. Additionally, it can take longer to sell in a slow market.

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