Buying guide

What is a leasehold property in NZ? Everything you need to know

Owning a property via leasehold works a little differently than freehold. Here’s everything you need to know.

Last updated: 25 February 2026 | 5 min read

AI summary

A leasehold property gives you the right to occupy a property for a set term, but you don't own the land and must pay ground rent to the landowner. This often means a lower purchase price in prime locations.

However, there are significant risks, including unpredictable ground rent hikes, difficulty securing finance, and limited capital gains, making them hard to sell. While freehold is better for most, leasehold can suit some downsizers or investors. Always conduct thorough due diligence and seek expert legal advice.

What does leasehold mean?

At a glance

Pros and cons of leasehold property
Pros	Cons
Lower purchase price: Generally much cheaper upfront as you aren't paying for the land.	Lower purchase price: Generally much cheaper upfront as you aren't paying for the land.	Ground rent hikes: Costs can spike significantly during periodic rent reviews.	Ground rent hikes: Costs can spike significantly during periodic rent reviews.
Prime locations: Often found in high-demand spots like Auckland's Viaduct or waterfronts.	Prime locations: Often found in high-demand spots like Auckland's Viaduct or waterfronts.	Harder to finance: Banks often require a much larger deposit (sometimes 50%+).	Harder to finance: Banks often require a much larger deposit (sometimes 50%+).
Lifestyle choice: Allows you to live in luxury areas that would be unaffordable as freehold.	Lifestyle choice: Allows you to live in luxury areas that would be unaffordable as freehold.	Limited capital gains: Without land ownership, you miss out on the main driver of property wealth.	Limited capital gains: Without land ownership, you miss out on the main driver of property wealth.
Lower maintenance: If it's an apartment, exterior and common area upkeep is usually managed for you.	Lower maintenance: If it's an apartment, exterior and common area upkeep is usually managed for you.	Ticking clock: The property’s value can drop as the lease gets closer to its expiry date.	Ticking clock: The property’s value can drop as the lease gets closer to its expiry date.