What Is Freehold Property? | Merits | Demerits | Freehold Land Title | Property Rights | Insurance | Converting Property | FAQ

Have you come across the term freehold property? Do you know what it is? Would you like to buy a freehold property? If you have answered yes to the above questions, it infers that you have landed on the right page.

Here, we will talk about the basics of a freehold property, what it means, and why you should buy it. Is it an asset, how to convert from a leasehold to freehold property and so on? Make sure to digest the details to make the most out of it.

What Is A Freehold Property?

Freehold land is mainly the one where the owner’s welfare association or the society’s welfare association owns both the building and the land upon which the building stands. They own it in perpetuity. So, these properties are usually sold whether through an auction or a lottery.

So, how do you relate the meaning with the word? Let us break it down for you.

A freehold property infers any property that is legally free from the hold of any entity other than the owner. As the owner has full rights to the property, they are free to use it the way they deem fit. However, the only regulation they need to know is the rules about the land where the property is located.

For instance, some areas don’t have clearances for industries. At the same time, if it is a polluted or very congested locality, you may not get clearance for schools and hospitals.

The good thing about freehold property is that you don’t need any clearance from the state so procuring it has comparatively fewer legal hassles. But remember the advantage comes with a tradeoff. As the legal hassles are less, it also means that when compared to leasehold property, these properties are usually much more expensive.

The Merits Of Freehold Property

There are several advantages of opting for freehold property and here we are going to list the key ones among them.

  • The owner has complete control over the freehold premises and can therefore do whatever he wants of the land.
  • The amount of legal papers that are involved in buying a freehold property is very less as one is not answerable to the state
  • There are no restrictions with regards to the visitors’ timing, and so on.
  • The owner is not answerable to anyone and he can do whatever he wants on his property.
  • Such properties are very easy to sell because the complete ownership lies with the owner
  • It is very easy to get financing and even bank loans for such property
  • When you compare it to the leasehold property, the capital appreciation is more.

The Demerits Of Freehold Property

While there aren’t a lot of demerits and most people have a preference for buying a freehold property, here are some of the few demerits that these properties have. It is important to know these so that you know what you are getting into.

There is no denying the fact that buying a freehold property will be a lot more expensive as compared to leased property. As the owner owns the building and the land where it stands, it is imperative that when he will sell the property, he will also includes the price of the land.

The owner has no other charges to pay. The property is free from ground rent service charge and likewise. So, when he sets off to buy it, it is going to be a costly affair.

The down payment is going to be comparatively more as you will need to pay a heftier price for the sake of blocking the units of a freehold property

What Do You Mean By Freehold Land Title?

As the name implies, the freehold land title refers to the title by which the owner of the property is going to own it for perpetuity. There is not going to be any hold of the property whatsoever. The title is not going to have any limits as far as the ownership and even the beneficiaries are concerned. 

The Property Rights Of The Owners

Owners have full rights of the freehold land and therefore they can transfer the ownership completely sans any kind of restrictions whatsoever. These properties can be easily inherited as well.

You will need to register a sale deed to initiate the ownership transfer process. This will allow you to get absolute ownership of the property, including the land where it is built.

If the property in question is an apartment, the owner will end up becoming a shareholder in the property. You will have complete rights to live in the house for whatever duration you want and you also have the authority to make any changes that you deem fit.

Source: Schluesseldienst / Pixabay

In India, most houses are usually sold as freehold land; however, apartments may also be sold on lease. But, if you study the property trend, you will find that mostly it has been seen the properties selling is gradually moving to freehold. This is because even buyers feel a whole lot more confident when they know that the owner from whom they are purchasing the land owns the property completely sans any frills.

Is The Freehold Property An Asset?

Freehold land and buildings are considered to be fixed assets.  Both the land and building will be hailed as an asset. When you are filing income tax, you will have to show certain fixed assets. These could be the plants and machinery, the furniture and even the office buildings.

So, if you own a freehold property, always account for it under fixed assets.

Does A Freehold Property Depreciate?

No, when you are doing your returns, you need to know that freehold properties do not depreciate. These lands are assumed to have a useful life for eternity and therefore there is no depreciation associated with them.

Other assets including the likes of land improvement, equipment, furnishings tend to have limited shelf life and so you can associate them with depreciation when filing your returns.

For leasehold property, the owners of the assets do not have the right to sell the property. So, the depreciation isn’t accounted even for a leasehold property.

The Freehold Insurance

As the owner owns full responsibility for the land, freehold land is prone to a lot of risks. If the land is damaged owing to fire or storm, you will end up facing a huge loss. This is why it is important to always have insurance that will allow you to cover up for the damage.

In most cases, the freehold property insurance is going it offers financial cover for both the freehold property and the freehold land as well. Even if either of them is damaged, you will be able to file a claim.

The premium amount will depend obviously on the worth of the property and the size of the land as well. The insurance also offers financial cover to the owner in case there is a loss of rent or even if the property is found uninhabitable because of any unforeseen reasons.

Converting Leasehold Property To Freehold

If you want to convert a leasehold property to a freehold, you need to have a clear sale deed and a general power of attorney. A no objection certificate will also be needed when the land in question is either mortgaged or on rent. Apart from this, a conversion charge is levied.

Based on the state you live in, the conversion charge can vary significantly. Always check the rules in your state when you are looking to convert the property from one land type to the other. The process can get carried out seamlessly.

Read here to know about how to become a real estate agent to deal in such properties


What do you mean by freehold property?

Freehold property refers to any property that is free from the hold of any other entity. The owner has complete rights to the building and the land where it is built

Can you build anything on a freehold property?

Mostly you are allowed to build anything you want because you have full ownership of the property. However, in some cases, government clearances may be needed. For example, if your property is located in a very industrial zone, you may not get clearance to make a school or a hospital.

Is freehold property expensive?

Yes, when compared to leasehold property, freehold land is comparatively expensive because you end up getting the complete rights to the property along with the land as well.

 Is a freehold land free of legal hassles?

You will need to do some legal documentation when you are looking to buy a freehold property, however, the amount of legalities is much reduced.

Does freehold land depreciate?

No, a freehold property doesn’t depreciate whatsoever. They are hailed as assets.

Can you convert leasehold property to freehold?

Yes, you can do so easily. Make sure to adhere to the documentation and the steps that are required. A conversion fee has to be paid which differs from one state to the other.