Kapil Tiwari (export executive) 12 November 2012

Purchase of flat in a building developed on lease-hold land

A close relative intends to purchase a flat in a building which has been developed on a property whose lessor is the Municipal Corporation(Mumbai).My queries are:

1) Is it safe to buy a flat in such a building, if the intention is for investment?

2) Is it a wise investment proposal, if the property rate is lower than that in similar flats which are "free-hold"?

3) What basic precautions should one take while purchasing a flat in a "lease-hold" land of which the Municipal Corporation is the lessor?

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2 Replies

S Jadhav 98336 98330 (Jadhav & Associates) 12 November 2012

Nowadays local authorities do not transfer the land to the builder or the society, they only lease the land typically for 30 or 60 years. The society or builder can build a building on the said land and this building is owned by the society or the builder though the land under it is leased.

This is a valid transaction and the authorites are nowadays resorting to it so that they earn their share whenever the lease comes up for renewal.

You can purchase the flat in such a property. The value of such ownership flats on leased land may be a little lower than that on free hold land.

S Jadhav

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Kapil Tiwari (export executive) 15 November 2012

Dear Sirs,

Is it true that, unlike a flat in a free-hold property, no nomination is possible if the flat is in a lease-hold property? Which means that on the death of a purchaser of a flat in a lease-hold property, the flat does not automatically and easily get transferred to the legal heir of the original purchaser?