What is Leasehold Land?
Leasehold land refers to a property owned by the government or another legal entity, which is leased out to a person or organization for a specific period (usually 30, 60, 90, or 99 years). The lessee (tenant) gains the right to occupy, use, or construct on the land but does not own the land.
Legal Definition of Leasehold Land
Leasehold is a type of land tenure where the property is held under a lease agreement between the lessor (owner) and lessee (occupant), usually for a long-term period, subject to renewal and specific conditions.
In India, leasehold land is commonly seen in:
- Delhi Development Authority (DDA)
- Mumbai Metropolitan Region Development Authority (MMRDA)
- Hyderabad Metropolitan Development Authority (HMDA)
- Industrial zones (e.g., allotted by MIDC, APIIC, SIPCOT)
Features of Leasehold Land
| Feature | Description |
|---|---|
| ✅ Ownership | Retained by the government or original owner |
| ✅ Possession | Given to lessee for fixed tenure |
| ✅ Tenure | Commonly 30 to 99 years |
| ✅ Rights | Use, develop, mortgage (with permission) |
| ❌ Full ownership | Not allowed without conversion |
| 🔁 Renewal | Lease can be extended by application |
Rights of a Leaseholder (Lessee)
- Right to Possession & Use
- Right to Construct (as per lease terms)
- Right to Mortgage (often requires NOC from lessor)
- Right to Transfer (subject to conditions)
- Right to Renew Lease
Legal Restrictions on Leasehold Land
| Restriction | Explanation |
|---|---|
| ❌ Cannot Sell Freely | Needs permission from the lessor |
| ❌ Limited Inheritance | Subject to original lease terms |
| ❌ No Freehold Rights | Unless converted legally |
| ❌ May Be Reclaimed | If lease conditions are violated |
Difference Between Freehold and Leasehold Land
| Aspect | Freehold Land | Leasehold Land |
|---|---|---|
| Ownership | Full ownership | Usage rights only |
| Duration | Unlimited | Fixed term (30–99 years) |
| Transferability | Freely transferable | Restricted, needs approval |
| Mortgage | Easy, no NOC required | Needs lessor’s consent |
| Conversion | Not applicable | Can be converted to freehold |
How to Convert Leasehold Land to Freehold?
In many states, especially in urban areas, leaseholders can apply to convert their leasehold land into freehold by:
- Submitting application to the local development authority
- Paying the conversion fee and dues
- Providing NOCs and lease documents
- Receiving the conveyance deed or patta in their name
Examples:
- DDA (Delhi)
- CIDCO (Maharashtra)
- HMDA (Telangana)
Example Lease Agreement Clause
“The leaseholder shall not sell, sublet, or mortgage the property without the prior written permission of the Lessor. The lease shall be valid for 99 years from the date of possession…”
Case Law Reference
DDA vs Anant Raj Agencies (1994)
The Supreme Court held that even though the leaseholder has substantial rights in the property, the ultimate control rests with the lessor unless converted to freehold.
Leasehold in Real Estate Development
In India, many residential societies, industrial plots, and SEZs are developed on leasehold lands. Builders or developers construct flats or factories on these lands and sell units with limited rights unless the lease is transferred or converted.
