Property Types

Leasehold

A form of property ownership where you own the building or unit but not the land beneath it. Instead, you lease the land from the landowner (often for 49 or 99 years) and pay a ground rent. When the lease expires, the land and any structures revert to the landowner unless the lease is renewed. Leasehold properties are less common in the GTA but do exist.

Why It Matters

Leasehold properties are typically cheaper upfront but come with unique risks. The declining lease term can make the property harder to sell and harder to finance as it shortens. Ground rent can also increase over time. Make sure you understand the lease terms and remaining duration before buying.

Real-World Example

You find a condo in a waterfront building near the Harbourfront Centre listed at $420,000 -- significantly below comparable units nearby. The catch: it is leasehold. The land is owned by a government agency and leased to the condo corporation for 49 years, with 22 years remaining. Your mortgage options are limited because most lenders will not finance a property with fewer than 25 years left on the lease. The ground rent is $350 per month on top of your maintenance fees, and it increases every five years.

Ontario & GTA Context

Leasehold condos are relatively rare in the GTA but do exist, particularly in waterfront areas and on government-owned land. When the lease expires, the property reverts to the landowner unless the lease is renewed. Ontario does not have legislation requiring landowners to renew leases, so the terms are entirely negotiated. Some leasehold properties have faced significant value declines as their lease terms shortened.

How It Works in Practice

If considering a leasehold property, check the remaining lease term, ground rent amount and escalation schedule, renewal options, and whether your lender will finance it. As a general rule, avoid leasehold properties with fewer than 30 years remaining unless the price discount is substantial and you plan to hold for a short period.

Common Questions

Why are leasehold condos cheaper than freehold?▾

Leasehold condos are priced lower because you do not own the land. You also pay ground rent to the landowner, the property may be harder to sell as the lease term shortens, and financing options become limited. The declining lease term creates uncertainty about the property's long-term value.

Can a leasehold be converted to freehold?▾

It is possible but depends entirely on the landowner's willingness to sell the land. In practice, this is rare and typically requires the collective action of all unit owners negotiating a purchase. The cost can be substantial and there is no guarantee the landowner will agree.

Related Terms

Freehold

Condo Apartment

Related Guides

First Time Buyer

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