Mumbai Real Estate: Weighing the Risks of Leasehold vs Freehold Apartments
As Mumbai's luxury real estate market expands, the debate over leasehold versus freehold properties intensifies. Legal experts advise homebuyers to carefully review lease deeds to avoid future complications.
Mumbai Real EstateLeasehold LandFreehold LandLuxury ApartmentsHomebuyersReal EstateJul 10, 2025
A growing number of netizens are discussing the pros and cons of freehold versus leasehold properties, especially as many high-end residential towers in Mumbai are constructed on leased land. One Reddit user recently highlighted this trend, posting, “I have been seeing a lot of premium residential towers in Mumbai (priced ₹5 crore and upwards) that are actually constructed on leased land, not freehold. It is surprising how many people are buying into these projects, knowing that the land is not permanently owned.”
The user raised critical questions. “What happens after the lease period (usually 30, 60, or 99 years) ends? Do the residents have to vacate? Will the land go back to the original lessor, or is there an option to renew the lease by paying a hefty premium, and who will pay that amount?” The user also expressed concern over whether homebuyers fully understand the risks and whether property values decline as the lease nears expiry.
In a leasehold arrangement, buyers own their apartments, but the land itself remains under lease. This means the housing society does not receive outright ownership of the land through a conveyance deed. In Mumbai, leasehold land is commonly controlled by government agencies such as the Maharashtra Housing and Area Development Authority (MHADA), City and Industrial Development Corporation (CIDCO), and Mumbai Metropolitan Region Development Authority (MMRDA), or by private entities such as family trusts.
In contrast, in a freehold land model, the developer permanently transfers ownership of the land to the housing society. The conveyance deed is executed in the society's name, giving it complete ownership rights over the land.
According to legal experts, homebuyers should study the lease deed signed between the landlord and developer before deciding to purchase an apartment in a housing society built on leasehold land. “There are several factors homebuyers should consider before purchasing an apartment on freehold or leasehold land. In the case of leasehold properties, experts recommend obtaining a legal opinion on the lease deed signed between the developer and the landowner to ensure it is watertight. If the deed lacks clarity or strong legal safeguards, there’s a risk the landowner could seek a vacate order once the lease period ends. A thorough review of the lease agreement is essential to avoid future complications,” said Nilesh Gala, an advocate based in Mumbai.
“The lease deed should also include clauses outlining what happens after the lease period ends. It should clearly state the lease renewal premium, how much it will be, and who is responsible for paying it, whether it's the individual flat owners, the housing society, or an incoming developer in case of redevelopment,” said Gala. “Homebuyers should make informed decisions based on these details. I also believe MahaRERA should introduce a standard format for lease deeds and conveyance deeds, similar to the model agreement for sale, to ensure uniformity and clarity.”
Real estate advertisements should also clearly mention whether the project is being constructed on leasehold or freehold land, Gala added. This transparency is crucial for homebuyers to make well-informed decisions and avoid potential legal and financial pitfalls.
Frequently Asked Questions
What is the main difference between leasehold and freehold land?
In a leasehold arrangement, buyers own the property but not the land, which remains under lease. In a freehold arrangement, buyers own both the property and the land outright.
What are the risks of buying an apartment on leasehold land?
Risks include potential legal complications, the need to renew the lease at a premium, and possible decline in property value as the lease nears expiry.
Who controls leasehold land in Mumbai?
Leasehold land in Mumbai is commonly controlled by government agencies like MHADA, CIDCO, and MMRDA, or by private entities like family trusts.
What should homebuyers consider before purchasing a leasehold property?
Homebuyers should review the lease deed for clarity and legal safeguards, understand the renewal process, and be aware of potential costs and risks.
What is the role of MahaRERA in regulating leasehold and freehold properties?
MahaRERA should introduce standard formats for lease deeds and conveyance deeds to ensure uniformity and clarity, helping homebuyers make informed decisions.
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