Lease vs Freehold Property in Pakistan: What’s the Difference?
Lease vs Freehold Property in Pakistan: What’s the Difference?
Author: Fazal Muhammad Bhutto Advocate High Court.
When buying property in Pakistan, one of the first things every buyer should understand is whether the property is leasehold or freehold. These terms define the nature of ownership, duration of rights, and obligations associated with the property. Unfortunately, many buyers are unaware of these distinctions, leading to confusion and potential legal or financial issues later on.
This article will clearly explain the difference between lease and freehold property in Pakistan, so you can make an informed decision before buying your dream home or investment.
What is a Leasehold Property?
A leasehold property means that the land on which the property is built is not owned by the buyer. Instead, the buyer has the right to use the property for a specified number of years – usually between 33 to 99 years – as per the lease agreement.
Key Characteristics of Leasehold Properties:
- The land belongs to the government or a private authority (like a housing society).
- Buyers receive rights to occupy and use the property for a fixed duration.
- After the lease period expires, the property reverts to the original owner unless renewed.
- You may need permission from the authority to renovate or sell.
- Property tax and lease renewal charges apply periodically.
Examples:
Properties in areas like Karachi Cantonment, LDA (Lahore), or KDA schemes are often on a lease basis.
What is a Freehold Property?
A freehold property means that the buyer owns both the land and the structure on it indefinitely. There is no time limit to the ownership, and the owner has full rights to sell, lease, or transfer the property as they wish.
Key Characteristics of Freehold Properties:
- Complete and permanent ownership of land and structure.
- No need to pay lease renewal charges.
- Fewer restrictions on construction or alterations.
- Can be inherited, sold, or transferred freely.
Examples:
Properties in private housing societies such as Bahria Town, DHA, or private cooperative societies are often sold as freehold plots or houses.
Major Differences Between Lease and Freehold Property
| Feature | Leasehold Property | Freehold Property |
| Ownership Duration | Fixed term (e.g., 33 or 99 years) | Permanent |
| Land Ownership | Remains with government or authority | Buyer owns land and building |
| Permission for Changes | Required from authority | Not required (within legal limits) |
| Resale Restrictions | May have conditions | Usually none |
| Property Value | Slightly lower due to limited tenure | Higher due to full ownership |
| Ideal For | Budget-conscious buyers | Long-term investors and homeowners |
Which One Should You Buy?
It depends on your needs and long-term goals:
- Buy Leasehold if you are looking for a shorter investment period or more affordable prices.
Buy Freehold if you want full ownership, long-term stability, and freedom to modify or transfer property.
Legal Documents You Must Check Before Buying
- For leasehold: Verify lease deed, authority NOC, and validity period.
- For freehold: Confirm title deed, registry (inteqal), and ownership certificate.
Conclusion
Understanding the difference between lease and freehold property is essential for every property buyer in Pakistan. It not only affects how you use the property but also determines your legal rights, future plans, and resale value.
Whether you choose a lease or freehold, always verify documents, consult a legal expert if needed, and make an informed decision.
