Guide
Freehold, leasehold and power of attorney: the three tenures and what each costs you
Tenure decides whether you can sell easily, borrow against the property, and pass it on without argument. The practical differences, and the discount that should make you cautious.
Freehold
You own the land and the structure outright and in perpetuity. Selling requires no permission from anyone. Lenders are comfortable, buyers are comfortable, and resale is straightforward.
Most of the established South and West Delhi colonies — Greater Kailash, Defence Colony, Punjabi Bagh and the rest — are substantially freehold, which is a large part of why resale there is comparatively easy.
Leasehold
The land belongs to a government body — the DDA, for example — and is leased for a long term. You own the building and hold the land under lease.
In practice this means transfers may require the lessor's permission, conversion to freehold is possible but takes time and money, and the property carries a modest discount. Our own price model applies a downward adjustment of about seven per cent for leasehold, which is roughly what the market does.
Leasehold is not a problem. It is a process, and it should be reflected in the price rather than discovered after it.
Power of attorney, and why the discount is not free money
In parts of Delhi, properties change hands on a general power of attorney with an agreement to sell, rather than a registered sale deed. They are noticeably cheaper, and the reason is that you are not, in the eyes of the law, the owner.
What that costs you:
- Mainstream lenders will generally not fund the purchase.
- Your buyer will face the same problem when you sell, so your exit is narrower than your entry.
- The chain depends on documents and people that must remain available and alive.
- Courts have repeatedly held that a GPA transaction does not convey title.
Some people buy this way with their eyes open and are fine. The mistake is buying this way without being told, and then finding out at resale.
How to find out which one you are looking at
Ask for the current registered document and read what it is. A sale deed conveys ownership; an agreement to sell with a power of attorney does not.
On FlatsFloors, tenure is a field on every floor's page and one of the sixteen checks, and the registry status sits beside it. Where a property is on power of attorney we say so on the page. It is not our job to talk anyone out of a purchase — it is our job to make sure nobody finds out at the sub-registrar's office.
Frequently asked questions
Can leasehold be converted to freehold?
Often yes, through the lessor's conversion process, at a cost and on a timeline that varies. If the seller has already begun it, ask to see where it has reached.
Why are GPA properties so much cheaper?
Because the buyer pool is smaller, loans are hard to get, and the legal position is weaker. The discount is the market pricing those facts, not an opportunity somebody missed.