In Ontario, freehold usually means you own the property outright, including the land it sits on. Leasehold means you buy a right to occupy or use the property for a set term, but you do not own the underlying land. The basic difference is permanent land ownership versus a time-limited interest tied to a lease.
How it works
With freehold ownership, the owner typically holds title to both the home and the land. CMHC describes “fee simple” as the most common type of ownership and uses the example of a single-family home where the owner owns both the house and the land. In the condo context, Ontario also has freehold condominium corporations, where the land or property is jointly owned by the unit owners.
With leasehold ownership, the land is leased rather than owned. CMHC says buyers of leasehold units purchase an interest with limited duration because it depends on the length of the lease. In Ontario leasehold condo corporations, owners buy a leasehold interest in the unit and common elements but do not own the underlying land.
For Ontario leasehold condo corporations, the initial land-lease term is set between 40 and 99 years. Ontario guidance also notes that when the lease expires, the owner’s right to occupy the unit is automatically terminated unless the lease is renewed.
Why it matters to buyers
The ownership structure changes what you are actually buying. With freehold, land ownership is part of the purchase. With leasehold, your rights depend on the lease term and the lease conditions. In Ontario leasehold condos, common expenses can also include a portion of the rent payable to the landowner.
It can also affect affordability. CMHC notes that for debt-service calculations, 100% of the annual site lease for leasehold tenure may be counted, which can change how much a buyer qualifies for.
Common misunderstanding
Leasehold is not the same thing as condominium, and condominium is not the same thing as leasehold. Ontario has both freehold condo corporations and leasehold condo corporations. The key issue is not whether the property is a condo, townhouse, or house. The key issue is whether the land is owned outright or leased.
