A Homeowner’s Guide On Selling Leasehold, Freehold Property

When it comes to selling real estate in India, a crucial fork in the road often goes ignored until it causes trouble. Leasehold or freehold? That one word can change everything about the transaction. For the seller, understanding the distinction isn't optional. It can decide whether your property sale gets sealed in weeks or spirals into paperwork.

Leasehold vs Freehold: Can Leasehold Property Be Sold?

Freehold means you own both the building and the land it sits on. You can sell, renovate, transfer, and rebuild, as long as it’s legal. There’s no authority hovering with conditions and no extra approvals are needed. Buyers love that kind of clarity.

In case of a leasehold property, you may own the flat or house, but the land is leased usually from a government authority. That lease could be 30, 60, 99 years. But it ends. And it comes with conditions.

In Noida, Greater Noida, and Navi Mumbai, much of the residential stock sits on leasehold land. In Gurgaon, Ghaziabad, and Delhi, you will find more freehold land.

Why Buyers Get Cold Feet With Leashold Properties

Sellers often run into financing roadblocks when selling their leasehold properties.

Says Paras Joshi, managing partner at Verdienta Law: “Buyers worry about renewal terms, limits on making changes, and the headache of transferring ownership. That can mean dealing with things like a memorandum of transfer, verification steps, and sub-lease registration. It’s a slow grind that puts off people who don’t know the process.”

Adds Sachin Gawri, founder and CEO of RISE Infraventures: “In India’s urban property markets, leasehold assets, specifically those with under 30 years of tenure remaining, often face reduced financing eligibility. Many banks decline home loans for such properties.”

The impact? Slower deals, more cautious buyers. 

"Converting leasehold to freehold can enhance a property’s market value by 10-15 per cent and reduce average resale timelines by up to 25 percent,” Gawri added.

Selling a Freehold Property

This is the easy road. Seller and buyer agree on terms. They sign a sale agreement. Once conditions are met, a sale deed is executed and registered.

Here’s the step-by-step guide to sell your freehold property.

Step 1: Sale Agreement and NOC

The seller and buyer sign a sale agreement. Just like with a freehold sale, the agreement is registered and stamp duty is paid.

But from here, it forks. You will need a No Objection Certificate (NOC) from your housing society, confirming no pending dues. The buyer usually covers any charges here.

Step 2: Apply for Memorandum of Transfer

This is where you notify the lessor in most cases, a development authority that you are transferring rights. You will need to submit ID proof, NOC, the sale agreement, and pay transfer charges.

Transfer fees vary. In Noida, it’s typically 2.5 per cent of the circle rate. Road width and location (green belt or not) also affect cost.

Step 3: Face-to-Face Verification

Both parties appear before the authority. They confirm the seller's intent to transfer. Once approved, the Memorandum of Transfer gets issued within a week or two.

Step 4: Sub-Lease Deed

Finally, a sub-lease deed is prepared and registered with the Sub-Registrar’s office. This document replaces the sale deed used in freehold transfers. It confirms that the buyer now holds the lease rights.

Stamp duty and registration charges apply here too. Once signed, the buyer gets the deed. The seller should keep a copy for records.

How To Leasehold Property To Sell

You can only convert a leasehold property to freehold only if the authorities allow it.

Says Joshi: “That means applying, paying the fee, submitting the right documents, and getting the title updated.”

It’s not always possible. But if it is, go for it, as conversion boosts value, simplifies resale, and speeds up loan approvals for the buyer.