Starting your property search is always a difficult job. You might come across a number of unknown situations and circumstances. It can be an intimidating process, particularly when there are so many legal and technical jargons that are thrown at you. Be ready to handle any legalities that come your way during property search.
Types of property ownership:
In India, two different types of property ownership rights exist- freehold and leasehold.
The freehold form of property and land ownership is the most form of property ownership in India. It primarily means that the buyer has complete legal ownership rights over the property and land. Buyer can stay, sell or transfer the ownership to another party.
In the leasehold ownership of property, you merely own the building and not the land. This ownership is for a specified period of time extending up to 99 years. Once the set period of time in the lease expires, the property reverts back to the original owner.
Transfer of property
Leasehold properties cannot be transferred just like freehold properties. They always require a Power of Attorney (PoA) for conducting transactions, which terminates to exist with the death of the owner or the property seller.
A freehold property is considered a better investment option as there is no uncertainty about the future of the property. This ensures better marketability of the property. It can also be mortgaged or sold in a financial crisis.
A freehold property provides the complete legal ownership of the property to the buyer, however, in a leasehold property ownership, the property buyer is not an owner but only a lessee, with limited property rights.
Short term investment
If your property or land requirement is short term or only for a few years, you can simply get access to a property by the way of negotiating a lease.
If you are delaying your decision to invest in a property only because the price is too high, while you are ready to sacrifice your absolute ownership, you can surely get access to the property through the way of negotiating a lease.
Legal experts believe that given a choice, a property buyer should prefer freehold property as compared to leasehold because the title is absolute and clear. Moreover, freehold properties are more stable and are likely to hike in value in the longer term.
Also, a freehold property has much better marketability and can be easily sold, mortgaged or kept for the standing security, which cannot be done with the leasehold property.
It is always advised that it is better to hire a property management lawyer to take guidance related to property search, registry, title and then, getting the property and land ownership documents and records in order.