📖 Estimated reading time: 8 minutes

Leasehold vs. Freehold Property in the Okanagan: What Buyers Need to Know

If you're looking at homes in Kelowna or West Kelowna, you may notice something interesting.

Two seemingly similar properties can have very different prices—and sometimes one of the biggest differences isn't the house itself.

It's the land underneath it.

Most residential properties in the Central Okanagan are freehold, but you'll also encounter leasehold properties, particularly when searching in parts of West Kelowna and on Westbank First Nation lands.

Leasehold isn't necessarily good or bad. But it is different.

And before buying one, it's important to understand exactly what you're purchasing, how long the lease lasts, what it costs, whether your lender will finance it and what happens when you eventually sell.

Here's what buyers should know.

🏡 What Does Freehold Mean?

Freehold—also commonly called fee simple—is the standard form of residential property ownership in British Columbia.

In simple terms, you own the land and the home or other permanent improvements on it, subject to things like mortgages, easements, restrictive covenants, zoning and other registered or legal restrictions.

Your ownership doesn't expire after a certain number of years.

Most detached homes in Kelowna and West Kelowna are held this way.

But here's an important distinction:

Freehold does not mean non-strata.

A condo or townhome can still be freehold. In a typical freehold strata, you own your strata lot and share ownership of the common property through the strata corporation.

📄 What Does Leasehold Mean?

With a leasehold property, you do not own the underlying land in the same way a freehold owner does.

Instead, you're purchasing the right to use and occupy the property for a specified period under a lease.

The land itself remains owned by someone else.

Depending on the property, that landowner could be a First Nation, government body, institution, private landowner or another entity.

And this is where one of the biggest misconceptions about leasehold starts:

There isn't one standard leasehold arrangement.

Every lease needs to be looked at individually.

⏳ The Remaining Lease Term Matters

One of the first things I'd want a buyer to know is:

How many years are actually left on the lease?

Don't look only at how long the original lease was.

If a lease started decades ago, what matters to you is the remaining term when you buy.

That can affect:

• Financing
• Resale
• Purchase price
• Your future buyer pool
• What happens at the end of the lease

Some leases also contain renewal or extension provisions.

Others don't.

Never assume a lease will simply be renewed when it expires. That needs to be confirmed by reviewing the actual lease.

💵 What Is Ground Rent?

Some leasehold properties require the homeowner to make ongoing payments for use of the land, often called ground rent or lease payments.

Other leases may have been prepaid for all or part of their term.

If there are ongoing payments, you need to understand more than just what they cost today.

Ask:

Can they increase?

If so:

When—and how is the increase calculated?

A lease might use scheduled increases, an inflation-based formula, periodic market-rent reviews or another method entirely.

That means the purchase price isn't the only number that matters when comparing leasehold and freehold properties.

🌄 What About Leasehold Property on Westbank First Nation Land?

This is particularly relevant in the Central Okanagan.

Westbank First Nation lands are interspersed throughout the West Kelowna area, and a number of residential communities are located on WFN land.

Westbank First Nation is self-governing and operates its own land-management and land-registration system. That means purchasing a leasehold interest on WFN land isn't the same process as purchasing an ordinary freehold property registered through BC's Land Title Office.

For a buyer, the important takeaway isn't to become an expert in First Nations land law.

It's simply to recognize that the ownership structure is different and requires the appropriate due diligence.

You'll want a lawyer or notary who understands the particular lease and, ideally, has experience with transactions on Westbank First Nation lands.

If you're deciding between the two sides of Okanagan Lake generally, my Kelowna vs. West Kelowna guide is a good companion to this article.

🏘️ Leasehold Isn't the Same as Strata

This causes quite a bit of confusion.

Strata and leasehold describe two different things.

Strata describes the ownership and governance structure of a development.

Leasehold versus freehold describes the underlying land tenure.

That means you can have:

A freehold strata — common with condos and townhomes.

Or:

A leasehold strata — where the development itself sits on leased land.

If you're purchasing a leasehold strata property, you'll need to review the ordinary strata documents and understand the underlying lease.

💰 Why Can Some Leasehold Properties Look Less Expensive?

This is often what catches a buyer's attention.

You may see a home with a great view, attractive location or more space than expected at a price that looks surprisingly low compared with nearby freehold properties.

Sometimes the leasehold structure is part of the reason.

But I wouldn't automatically describe a leasehold property as a bargain.

The price may reflect things like:

• Remaining lease term
• Ground-rent obligations
• Financing availability
• Lease restrictions
• Resale considerations
• Renewal uncertainty
• A smaller potential buyer pool

On the other hand, leasehold can sometimes give a buyer access to a community, location or type of home they might not otherwise reach within their budget.

The important thing is to compare the whole ownership structure, not just the list price.

🏦 Can You Get a Mortgage on Leasehold Property?

Yes—but don't assume every lender will finance every leasehold property.

CMHC has specific programs and guidance for certain leasehold mortgages, including some leasehold lending on reserve lands.

However, lender requirements can vary depending on:

• Who owns the land
• The lease structure
• Remaining lease term
• Mortgage amortization
• Whether mortgage insurance is required
• The particular property

As the remaining lease term gets shorter, financing can also become more difficult.

So if you're considering a leasehold property, talk to your lender or mortgage broker about that specific property before assuming financing will work.

This isn't something I'd leave until the end of the transaction.

⚠️ An Important Difference: The Home Buyer Rescission Period

This is something buyers should know before writing an offer.

BC's Home Buyer Rescission Period does not apply to leasehold properties, including leasehold strata purchases.

That makes understanding the property and having the appropriate professional advice particularly important before you commit to the purchase.

🧾 What About Property Taxes and Property Transfer Tax?

This is another area where you shouldn't make assumptions based on a conventional freehold purchase.

A long-term leasehold interest can potentially be subject to BC Property Transfer Tax, while First Nations lands can involve different rules and exemptions depending on the property and buyer.

Annual property taxes can also be different.

For example, Westbank First Nation operates its own property-tax system on WFN lands rather than those properties simply being taxed by the City of West Kelowna.

For an actual purchase, I'd have your lawyer or notary confirm exactly what applies to that property and your transaction.

🔄 What Happens When You Sell?

Your future buyer will eventually be asking many of the same questions you're asking today.

But there will be one important difference:

There will be fewer years remaining on the lease.

Depending on the property, that can affect financing availability and the size of the future buyer pool.

That doesn't mean leasehold properties are automatically difficult to sell.

It means the resale picture depends partly on the lease.

A property with a long remaining term and attractive location can present very differently from one approaching the end of its lease.

🛡️ Don't Forget About Insurance

Insurance should also be confirmed early.

Leasehold interests can involve different insurance and title-insurance considerations than conventional freehold ownership.

Before removing subjects, make sure your insurance provider understands the specific property and ownership structure and can provide the coverage you need.

✅ Questions to Ask Before Buying a Leasehold Property

If you're considering one, these are some of the questions I'd want answered:

• Who owns the land?
• What exactly am I purchasing?
• How many years remain on the lease?
• Is the lease prepaid?
• Are there ongoing ground-rent payments?
• Can those payments increase?
• How are increases calculated?
• What happens when the lease expires?
• Is there a renewal or extension provision?
• Are there restrictions on selling or assigning the lease?
• Will my lender finance this specific property?
• Who collects the property taxes?
• Does Property Transfer Tax apply?
• Are there special insurance requirements?
• Is the property strata?
• If so, is the strata itself on leased land?
• Are there additional community or landowner rules?
• What documents should my lawyer or notary review?

And perhaps most importantly:

Has someone who understands this particular type of lease reviewed it with me?

⚖️ Potential Advantages of Leasehold

Depending on the individual property, leasehold ownership may offer:

• A lower entry price than comparable freehold properties
• Access to a desirable location or community
• More home, land or amenities for a particular budget
• No ongoing ground rent in some prepaid lease structures

None of these is guaranteed.

They're simply reasons some buyers decide that a particular leasehold works for them.

🤔 Potential Trade-Offs

Depending on the lease, buyers may also encounter:

• Fewer financing options
• Ground-rent payments or increases
• More complicated legal review
• Additional insurance considerations
• Restrictions on assignment or use
• A smaller future buyer pool
• Uncertainty around renewal or expiry
• Increasing financing challenges as the lease gets shorter

Again, these aren't universal.

The lease itself determines much of the risk.

🌿 Meghan's Local Insight

When buyers see an attractive leasehold listing, the first reaction is often:

“Why is this so much less than the other homes I've been looking at?”

And that's exactly when I think it's important to slow down and look beyond the price.

A leasehold property might genuinely make sense for your budget, lifestyle and long-term plans.

But the comparison shouldn't be:

$600,000 leasehold vs. $750,000 freehold.

It should be:

What exactly am I getting for $600,000, what will it cost me while I own it, what restrictions come with it, and what could it look like when I eventually sell?

Once you understand those answers, you can make a much more informed comparison.

❓ Frequently Asked Questions

Is leasehold property bad?

No. Leasehold is simply a different form of property interest. Whether a particular leasehold makes sense depends on the lease terms, price, financing, location and your own plans.

Can you get a mortgage on leasehold property in BC?

Yes, some leasehold properties can be financed. However, lender requirements vary, and not every lender will finance every leasehold structure. Confirm financing for the specific property before relying on it.

Is leasehold always cheaper than freehold?

No. Some leasehold properties may be priced lower than comparable freehold homes, but there is no universal discount. Location, property type, lease term, ground rent and market demand all affect price.

What happens when a lease expires?

That depends entirely on the lease. It may contain renewal, extension, compensation or other provisions—or it may not. Have the actual lease reviewed by an appropriate legal professional.

Are all homes on First Nations land leasehold?

No. First Nations land ownership and tenure can take different forms, and different Nations operate under different legal frameworks. Don't assume one First Nation's structure applies to another.

📚 Continue Exploring the Living Okanagan Resource Centre

• Moving to Kelowna
• Cost of Living in Kelowna
• Best Neighbourhoods in Kelowna
• Kelowna vs. West Kelowna
• Schools in Kelowna
• Healthcare in Kelowna
• Getting Around Kelowna
• Weather in Kelowna
• Utilities in Kelowna
• Things to Do in Kelowna
• Pros & Cons of Living in Kelowna

Thinking About Buying in the Central Okanagan?

If a leasehold property comes up in your search, don't dismiss it simply because it's leasehold—and don't choose it simply because the price looks attractive.

Start by understanding what you're actually buying.

I can help you compare properties, identify the questions we need answered and coordinate with the appropriate mortgage, legal and insurance professionals so you can make an informed decision.