Term Of The Day: Leasehold Property
Leaseholder of a property has rights over the property according to the terms of the agreement, but not the land on which it stands on.
PropTiger Explains Leasehold Property
On leasehold property, the leaseholder (lessee) does not have absolute rights. The lessee has no right to use the property for any other purpose other than the specified one. If the leaseholder wants to transfer the property, he needs the permission of the lessor. The leaseholder must pay the annual lease rent and a lease premium. To transfer property on leasehold, the land-owner must pay stamp duty and obtain a transfer memorandum from the local municipal corporation. But, the transfer of ownership of a leasehold property is a complex process, and you may require the services of legal experts.
The lessee ceases to have rights over it when the term of the lease ends. After the lease period is over, the leaseholder may renew the lease by paying the rent. The value of the leasehold property is likely to decline at the end of the lease term, and the lessor might change you for any transaction done on the premises. Most developers prefer to build on leasehold property because land on leasehold property costs less than freehold property on which the developers' ownership rights would be absolute.
While buying a leasehold property, you must find out the duration of the lease. In India, the duration of the lease is often 30, 60, 99 or 999 years. The ownership of a leasehold property is with the developer or the state authority. For instance, the land to develop residential projects in Noida are given by the New Okhla Industrial Development Authority (Noida) on leasehold.
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