We all have heard the term leasehold property. In Noida and Greater Noida, most properties are on leasehold for a period of 90 or 99 years as mentioned on lease dead with the builder. While you do own the property for this period, scepticism pertaining to renewal post this 90/99 years period is something that may bother you. Before we go deeper in to the topic, let’s understand a few significant aspects of a leasehold properties.
Why leasehold and not freehold?
The government and the development authorities want cities to be developed in an effective and controlled fashion. In new townships such as Noida, this would also ensure minimum encroachments and unauthorized constructions.
What are the advantages of a leasehold property?
- The civic authorities are more liable to for external developments around the area.
- The house ownership is with you and no further charges for the given year needs to be paid to the authorities.
What are the disadvantages of a leasehold property?
- In the event of sale of the property, transfer charges need to be paid to the competitive authority.
- At the end of the lease period a nominal amount needs to be paid to the competitive authority for lease renewal.
So what will happen at the end of the lease period?
There could be three situations. Let us discuss them one by one:
- Land gets converted to freehold: Since 2012, Noida resident welfare association club as well as political parties are pitching in for converting the land into a freehold property. In the event this option is made available then a nominal amount would have to be paid to convert the property from leasehold to freehold to the competitive authority. The prevailing conversion charges are 5 – 10% of the allotment rate in other parts of the country.
- Lease extension: The lease period can be renewed. With this option, the property owner would have to pay lease rent at the end of lease period. In case of societies and apartments the rules are very clear whereby it would be the property owners who would be bearing the charges of the common areas and not the promoters. This means you would be paying as per super built area and not as per covered area of your apartment.
- Neither Lease extension nor freehold conversion becomes a reality: Now this one is a total hypothetical and unforeseen scenario wherein neither conversion nor extension options are given. The country is yet to face such a situation however there are no guidelines set for such a situation throughout the country.
Based on the past statistics, it wouldn’t be wrong to hope for conversion into a freehold property in the near future. Parts of Delhi were initially on leasehold. As the population grew such land were converted into freehold with a nominal conversion charge.
With present market scenario in real estate, this is the optimum time to buy your dream apartment. All you need is a trusted broker who can give you a pre-screened list of apartments and projects based on your needs and you can make your choice.