What’s the Difference Between a Lease & Leasehold Property?

The United States loves to pride itself on freedom, and owning property is no exception. Nearly every property in the US is a freehold property, in which you own a place or land, free and clear.

But in many other places around the world, leasehold properties are more common. It’s important to know the distinction between freehold vs. leasehold, as well as leasing vs. leasehold, especially if you ever want to buy property abroad.

What is a leasehold property?

A leasehold property is where you lease, or, rent, the property, but don’t own it. In some countries, leasehold properties are common, if not the exclusive way to live in a house. In Vietnam, for example, no resident can own a house outright.

In many other countries, residents can own freehold properties but foreigners cannot.

How is a leasehold property different from a lease?

Even though we don’t call them “leasehold properties,” we still have leases in the US, right? Aren’t they the same thing?

Duration of Lease

One of the biggest differences with a leasehold property and a traditional lease that we think of here in the states is the length of the lease. The concept of leasing is the same, but leasehold titles last for much longer — anywhere from 25 to 99 years — whereas leases are for 6 months, a year, month-by-month, etc. 

Corporate vs. Residential

The US almost exclusively deals with freehold properties, but not always with commercial properties. Foundations, companies, and nonprofits will allow for leasehold properties — but again, even in this instance we still refer to this as a lease.

“Lease” vs. Title

Leasehold properties still provide residents with a title to prove “ownership.” As most of us who have ever rented know, tenants sign and get a copy of the lease, but it’s all temporary. There are also restrictions that renters often have to deal with that leasehold property “owners” don’t. Painting the walls, hanging certain things up, and smoking in the property are just a few examples.

Is a leasehold property my only option for owning internationally?

Not necessarily. If you’re hellbent on owning a freehold property, there are two ways to make this happen:

  1. Find a country where foreigners are allowed to own property (Belize is one of the most popular countries where US residents buy).
  2. Own a condo or apartment. This works in some instances because you’re not technically owning the land.

Keep in mind, however, that other countries’ rules and customs should be respected, not treated as something that you’re exempt from. If you think another country’s way of doing things is “wrong” or “backwards,” you probably shouldn’t be buying there.

Now comes the fun part: finding an international property! RealtyHive has a mix of freehold and leasehold properties around the globe. Look through our listings and find your ideal vacation abode, rental, or home away from home.

Emily Wottreng
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