Oct 17, 2017
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Lease Property India

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What is lease property in India?

A leasehold land (lease property) simply means, land let out for development purposes for a definite time period.

Usually, land leased for construction purposes, ordinarily lets out on a long-term lease of 99 years onward.

Specific to land leased for residential purposes, the land leases to various developers on a long term basis for selling the units constructed on an outright basis. The developer ordinarily pays a substantial value for the long-term lease to the lessor up front. An example of leasehold property is the MMRDA’s Wadala development plan.

Additionally, on completion of the construction work, the lease granted, transfers in the name of a society formed.

The future of the properties post the lease term is uncertain. It also depends on the extent of the amount, the lessor demands for renewal, that finally the society pays.

Pros of Lease Property

Leasehold property price is relatively cheaper for a developer in comparison to him a piece of land in the same location. It simply means that he can construct in a good location at lower cost.

 Usually, the intention of having the property leased for 99 years and onward, makes part for a larger arrangement. It looks at the aspect of a well-planned development, by providing the comfort of a sound location and planned infrastructure. It basically focuses on utilizing the land sensibly for the betterment of people and society.

For eg. Developers are ordinarily bound by certain timeline commitments towards the lessor, ensuring the interests of owners. A good example are the plots at Bandra Kurla Complex. A plot with clear title and also a developer having good credentials secure the lease of property.

Therefore, most developers prefer to build on leasehold property, because cost plays an important factor in construction. Moreover, it’s sensible than buying free-hold land because not all of cost benefit passes on to the buyer.

In most cases, the builder completes all tasks and responsibilities associated with the plot long before its due renewal.

Cons of Lease Property

1.Uncertainty after the lease tenure

  • Possible additional and substantial liabilities in the future for renewing the lease.
  • Domained leasehold property have chances of devaluation, once the lease expires.
  • Also a possible transfer charge levied by the lessor on any transactions in the premises.




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