The real estate market can be very intimidating for the first time owners or homeowners who want to invest in a property. The reasons for such confusion is mostly due to lack of correct information and due to widespread myths!
One such myth revolves around a Lease Hold Property.
Basically, properties are either of two — freehold property or leasehold property. The former refers to properties that are “free from hold” of any other entity except the owner for an indefinite period, the latter are properties usually leased for a defined period.
People believe that a leasehold property is less valuable and often avoid investing in one. Whereas, in reality, there is not much difference between the two – Freehold and a Leasehold property. A leasehold property is commonly leased for 99 years from the time of construction.
So what happens after 99 years? And who owns the property at the end of the lease period? This is a question to many.
The Planning Area or Development Authority is responsible and provides land development rights to developers. The authority can either sell or lease property for a defined period of time.
Upon the expiry of the said lease – the authority allows the conversion of a leasehold property to a freehold property or grants rights for the further lease of 99 years. Hence, rest assured there is no loss or damage in buying a leasehold property.
The normal practice for land allotted by the government is generally in the form of lease. However, the title of land is 100% clear when bought from the planning authority. No claim of the original landowner from whom the same has been acquired sustains. Therefore the land is 100% free from any encumbrances.