Two homes that look the same can be owned in very different ways. Freehold, leasehold and condominium ownership decide whether you own the land, how long you own the home, who maintains what, and how a lender will treat the purchase. This page compares the three structures. It is part of our guide to property types in Canada; the building types themselves (detached, townhouse, duplex and others) are compared in types of houses in Canada.
Overview of ownership types
| Feature | Freehold | Leasehold | Condominium |
|---|---|---|---|
| Own the building? | Yes | Yes, for the lease term | Your unit |
| Own the land? | Yes | No, it is leased from the landowner | Shared, as common elements |
| Time limit? | No | Yes, the lease term | No |
| Monthly fees? | No (your own costs only) | Ground rent, plus your own costs | Condo fees |
| Control over the property | Full, subject to bylaws and permits | Limited by the lease | Limited by the condo corporation’s rules |
| Maintenance | All yours | Set by the lease | The condo corporation handles the common elements |
| Financing | Standard | Fewer lenders, depending on the lease | Standard, plus a review of the condo corporation |
| Resale | Sold with the land | Value depends on the years left on the lease | Depends on the building and its finances |
Freehold ownership
With freehold ownership you own the home and the land it sits on, with no end date. You answer to the municipality’s bylaws and zoning, but to no landlord or condo board.
Which homes are freehold?
| Property type | Freehold? | Notes |
|---|---|---|
| Detached house | Usually | The classic freehold home |
| Semi-detached | Usually | Each half is separately owned, with a shared wall |
| Freehold townhouse | Yes | No condo corporation: you own the lot and the building |
| Condo townhouse | No, it is a condo | A condo corporation and fees, even though it looks like a freehold townhouse; see freehold vs condo townhouses |
| Duplex, triplex, fourplex | Usually | One owner owns the whole building and the land; see buying a duplex, triplex or fourplex |
Freehold costs beyond the purchase
Rough ranges for illustration; actual costs vary widely with the home, its age and the region.
| Cost | Rough range | How often |
|---|---|---|
| Property tax | $3,000 to $10,000+ | Each year |
| Home insurance | $1,200 to $3,000 | Each year |
| Maintenance savings | 1% to 3% of the home’s value, a common rule of thumb | Each year |
| Roof replacement | $8,000 to $25,000 | Every 20 to 30 years |
| Furnace or air conditioner replacement | $5,000 to $12,000 | Every 15 to 20 years |
| Driveway and landscaping | $2,000 to $10,000 | As needed |
| Water heater | $1,500 to $3,000 (or a rental) | Every 10 to 15 years |
Freehold advantages and disadvantages
| Advantages | Disadvantages |
|---|---|
| Full control over the home and land | All maintenance and repairs are yours |
| No fees to a corporation or landowner | Usually a higher purchase price than a condo |
| You own the land, which carries much of a home’s value | Large repairs come without warning or a shared fund |
| Privacy and autonomy | More time spent on upkeep |
| Renovations and additions need only permits | |
| No special assessments from a condo corporation |
Leasehold ownership
How leasehold works
- A landowner (the lessor) owns the land.
- The homeowner (the lessee) leases the land for a set term.
- The lessee owns the building and uses the land during the lease.
- The lessee pays ground rent to the landowner, on top of any mortgage payment.
- When the lease ends, the land, and usually the building, goes back to the landowner unless the lease is renewed.
Common leasehold arrangements in Canada
| Type | Landowner | Examples |
|---|---|---|
| First Nations land | A First Nation, through leases on reserve land | Musqueam and Squamish Nation lands in the Vancouver area |
| Government land | A federal, provincial or municipal government body | Varies by location |
| Institutional land | An institution such as a church or university | Varies by location |
| Developer leasehold | A developer that keeps the land and sells the homes on leases | Uncommon |
Lease terms vary from one arrangement to another and are set out in the lease itself, which is the document a buyer’s lawyer reviews.
Leasehold costs
| Cost | Details |
|---|---|
| Ground rent | Set by the lease, and very different from one property to another |
| Rent increases | Some leases raise the rent by fixed steps, with inflation, or by resetting it to market value |
| Renewal | The terms of any renewal are negotiated or set by the lease, and can be costly |
| Prepaid leases | Some leases are prepaid in a lump sum for the whole term |
Lease renewal risk
The main risk with leasehold is what happens as the lease nears its end. As the years left on the lease shrink, fewer lenders will finance the home, and buyers pay less for it, because whoever buys gets fewer years of use. Near the end of a lease, a purchase may only be possible with cash.
Financing leasehold properties
Lenders and mortgage insurers look at how many years are left on the lease compared with the amortization, and at whether the lease is registered. Fewer lenders offer leasehold mortgages than freehold ones, and terms vary from lender to lender, so the lease is usually checked early in a mortgage application. Mortgage insurance on a leasehold home depends on the lease meeting the insurer’s requirements; the insurance rules are covered in CMHC mortgage rules.
Musqueam leasehold example (Vancouver)
Homes on Musqueam leasehold land in Vancouver are a well-known example of leasehold risk:
- The homes sold at prices well below comparable freehold homes.
- When the ground rent came up for review under the leases, it rose many times over.
- Property values fell sharply.
- Owners who bought late in the lease term faced large losses.
The example shows why the lease term, the rent review terms and the renewal conditions matter as much as the house.
Condominium ownership
When you buy a condo, you own your unit, as defined in the condo’s declaration, and a share of the common elements: hallways, elevators, parking, amenities and the building structure. The condo corporation, run by a board elected by the owners, maintains the common elements, insures the building, holds the reserve fund and enforces the rules.
What condo fees pay for, how they compare between buildings, and how reserve funds and special assessments work are covered in that guide. Before a purchase, the corporation’s finances and rules are reviewed through its disclosure documents; in Ontario that is the status certificate. The buying process is covered in buying a condo in Canada.
Co-operative housing (co-op)
A co-op is a fourth structure: members hold shares or a membership in a corporation that owns the building, rather than owning their unit. Financing, membership approval and resale work differently from the three structures above, as explained in co-op housing in Canada.
Matching ownership type to priorities
| If you want… | Ownership type that fits |
|---|---|
| Control and autonomy | Freehold |
| Low-maintenance living | Condo |
| A lower entry price | Condo or co-op |
| Freedom to renovate | Freehold |
| A discounted purchase price, with the lease risk that comes with it | Leasehold |
| Amenities such as a pool, gym or concierge | Condo |