Posted by Maryann Quenet on Wednesday, July 16th, 2025 1:32pm.
Finding the perfect home in Toronto’s competitive market often means looking beyond the traditional freehold model—and leasehold properties can open doors to some of the city’s most desirable neighbourhoods at a fraction of the cost. With a leasehold, you own your home’s walls, finishes, and interior upgrades while leasing the land beneath it, making it easier to step onto the property ladder. Before you decide, it’s essential to understand how lease terms, ground rent and renewal clauses can shape your investment—so you can weigh the benefits of lower upfront costs against the responsibilities and potential limitations of leasehold ownership.
A leasehold property means you own the building or dwelling but not the land it sits on, which you lease from a landlord for a fixed term. Typically, residential leasehold terms range from 50 to 99 years, after which the property interest reverts to the landowner unless the lease is renewed.
Fixed-Term Lease: The duration is set in the lease agreement—common terms in Ontario start at 40 years and can extend up to 999 years in some provinces.
Renewal Options: Many leases include renewal clauses, but extensions often require negotiation and may involve significant fees.
Building Ownership: As the leaseholder, you may renovate the interior but often need the landowner’s consent for structural changes.
Ground Rent: You pay periodic ground rent to the landowner, which can escalate over time based on the lease terms.
Maintenance: The landlord typically maintains the land and exterior common areas, reducing some homeowner responsibilities.
Leasehold and freehold represent two distinct ownership models with unique legal and financial implications.
Freehold: You own both the land and the building indefinitely, granting permanent rights.
Leasehold: Your interest lasts only for the lease term, after which ownership reverts back, unless renewed.
Freehold: Full autonomy to renovate, sell, or bequeath without third-party approvals.
Leasehold: Major alterations, subletting, or changes in use often require landlord approval, limiting flexibility.
Freehold: You cover property taxes, maintenance, and all improvement costs.
Leasehold: In addition to mortgage and taxes, you pay ground rent and possibly service charges for communal upkeep.
Despite its limitations, leasehold ownership can offer compelling benefits, especially for first-time buyers.
Leasehold properties often carry a lower purchase price than comparable freeholds, improving affordability in high-demand markets.
Since the landowner handles exterior and land maintenance, leaseholders can enjoy fewer upkeep responsibilities.
Leasehold arrangements on municipally or institutionally owned land (e.g. university lands, First Nations reserves) can open doors to desirable neighbourhoods at a lower cost.
It’s crucial to weigh potential drawbacks before committing to a leasehold purchase.
Escalating ground rent clauses can substantially increase ongoing costs, potentially impacting affordability.
Leasehold interests may appreciate more slowly than freeholds, and a shortening lease term can erode property value unless renewed.
Landlords may demand steep premiums or decline renewals altogether, placing the leaseholder in a vulnerable position at term end.
When evaluating a leasehold in the GTA, keep these local factors in mind:
Ontario imposes no special leasehold rules but encourages review of lease terms, especially ground rent review mechanisms.
Leasehold condos exist but are less common than freeholds; their resale market and financing can be more complex, so verify lender requirements.
Engage a lawyer experienced in Ontario leaseholds to scrutinize renewal options, rent review clauses, and landowner obligations before purchase.
Navigating the leasehold market in Toronto and the GTA can be a smart way to access sought-after neighbourhoods with a more affordable entry point, while still enjoying the pride and freedom of homeownership. By understanding how lease terms, ground rent adjustments and renewal options affect both your budget and long-term value, you’ll be empowered to make an informed decision that aligns with your lifestyle and financial goals. With the right guidance—especially when negotiating complex lease provisions and comparing leasehold versus freehold opportunities—you can secure a home that meets your needs today and protects your investment tomorrow.
The Johnson Team’s deep knowledge of local market dynamics, combined with our commitment to prioritise your best interests, ensures you’ll have expert support every step of the way—from evaluating leasehold contracts to crafting competitive offers and handling all the paperwork. If you’re ready to explore leasehold properties or any other housing options in Toronto and the GTA, let us simplify the process and negotiate on your behalf. To start working with an agent right away, please contact us.