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What is freehold land & leasehold land difference

Posted by Sushant Bhilare on January 28, 2024
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What is differences between freehold land & leasehold land

Sr. NoFreehold land leasehold land
1Full and permanent ownership of the land and any structures built on it. You essentially “own the direct under your feet.”You only own the right to occupy the land and any structures for a specific period, typically under a lease agreement with the landowner. Think of it as renting the land for a long term
2You have complete control over the land and can use, modify, or sell it as you see fit, within legal limitations. It’s your property to do with as you please.Control is governed by the lease agreement. You may need permission from the landowner for major alterations or renovations. Restrictions on usage can also apply.
3Ownership is perpetual, passing down through generations if desired. It’s yours foreverOwnership has a limited lifespan specified in the lease, typically ranging from decades to centuries. When the lease expires, the land reverts to the landowner, unless explicitly negotiated otherwise.
4Generally pricier due to full ownership rights. Purchasing costs are higher, but there are no ongoing lease payments.Initial purchase cost may be lower, but you’ll pay recurring lease payments to the landowner throughout the lease term. Costs can also fluctuate depending on market conditions and lease renewal terms
5Offers long-term stability and security as you own the land outright. Investment value is potentially higher due to complete ownershipCan feel less secure due to the limited ownership period and reliance on the landowner’s terms. Value depreciation is possible as the lease approaches its end.
6Mortgage financing: Obtaining loans may be easier for freehold properties due to the stronger ownership right.Maintenance responsibility: Freeholders manage all land maintenance, while leasehold agreements may specify shared or tenant responsibility for certain upkeep.

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