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. This often means a lower purchase price in prime locations like Auckland's Viaduct.

However, there are major risks:

- Unpredictable ground rent increases

- Difficulty securing finance

- Limited capital gains

While freehold is better for most buyers, leasehold can suit some downsizers or investors. Always conduct thorough due diligence with a property lawyer before purchasing.

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.