Leasehold vs freehold

Miriam asks:
(updated on Wednesday, April 10th 2019)

I'm interested in finding out more about apartments with a view to investing in one. What is the difference between a leasehold and a freehold apartment? And what are the pros and cons with both?



Our Experts Answer:

Leasehold is when a property purchaser buys the buildings on a property, but the land itself remains the property of another party. The purchaser is effectively renting the land from the owner. Freehold property is where you own the land and buildings.

The pros of leasehold property is that often it is cheaper and you can own your property earlier without having to pay extra for the freehold land. It can also sometimes be used an an alternative finance option, where you may be able to buy the freehold at a later date.

The cons of leasehold property are that the ground/land rent is often continuously re-assessed. You also receive no benefit from any increase in the value of land. Also, banks will often require higher deposits or it could even be difficult to obtain finance.



Heartland Bank - Online 1.85
HSBC Premier 2.19
HSBC Special 2.25
Kainga Ora - First Home Buyer Special 2.25
China Construction Bank Special 2.65
Kainga Ora 2.88
SBS Bank Special 3.15
TSB Special 3.29
The Co-operative Bank - First Home Special 3.29
ICBC 3.29
Select Home Loans 3.34
Heartland Bank - Online 2.35
HSBC Premier 2.45
China Construction Bank Special 2.65
Select Home Loans 2.99
Kainga Ora 3.28
SBS Bank Special 3.69
ICBC 3.85
Resimac 3.89
Bluestone 3.89
TSB Special 3.94
Wairarapa Building Society 4.05
China Construction Bank Special 2.99
HSBC Premier 3.19
Select Home Loans 3.54
Kainga Ora 4.22
Bluestone 4.29
Resimac 4.29
SBS Bank Special 4.49
TSB Special 4.70
ICBC 4.79
The Co-operative Bank - Owner Occ 4.85
Westpac Special 4.95
ANZ Blueprint to Build 2.03
Heartland Bank - Online 2.25
ASB Back My Build 2.29
Resimac 3.39
Select Home Loans 3.49
Bluestone 3.74
ICBC 4.15
Kiwibank Special 4.25
Kiwibank 4.25
Kiwibank - Offset 4.25
Kainga Ora 4.43