As Australia’s property market adapts to affordability concerns and urban growth, leasehold properties are emerging as both a practical solution and a subject of debate. While the concept is far from new, recent policy tweaks and renewed developer interest are pushing more Australians to consider leasehold as a viable path to homeownership or investment. But what exactly does leasehold mean in the current landscape, and how does it stack up against traditional freehold ownership?
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What is Leasehold? How Does it Work in 2026?
Leasehold means you own the right to occupy and use a property for a set period, but you don’t own the land it sits on. Instead, the land is owned by another party—typically the government, an institution, or a developer—and you lease it for a term that can range from 20 to 99 years. At the end of the lease, ownership reverts to the landholder unless the lease is renewed.
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Common in: Retirement villages, some apartments, and community housing developments
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Rare in: Detached suburban homes (except in certain ACT or NT suburbs, or Indigenous land)
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Structure: Lease terms, annual ground rent, and potential restrictions on renovations or subletting
In 2026, leasehold has been thrust into the spotlight in cities like Sydney and Melbourne as planners look for creative ways to unlock land value and support affordable housing. Notably, new mixed-use developments in major cities are offering leasehold apartments with 40- to 99-year leases at lower entry prices than comparable freehold properties.
Leasehold vs. Freehold: The Real-World Pros and Cons
Understanding the trade-offs is crucial before signing on the dotted line. Here’s how leasehold and freehold compare for today’s buyers:
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Affordability: Leasehold properties often have lower upfront prices, which can be attractive for first-home buyers or downsizers.
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Ongoing Costs: Expect annual ground rent and, sometimes, additional management fees. These can rise with inflation or market reviews.
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Resale Value: Leasehold properties can be harder to sell as the lease term shortens, especially if fewer than 40 years remain. This impacts both price and buyer pool.
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Financing: Major lenders in 2026 are more open to leasehold lending, but most require at least 40 years remaining on the lease at the end of the loan term. Some lenders still won’t touch leasehold at all.
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Security and Control: You may face restrictions on renovations, pet ownership, or subleasing. The landowner may have rights to approve changes or even terminate the lease under certain conditions.
Case study: A Sydney couple bought a 60-year leasehold unit in 2023 at a 20% discount compared to freehold equivalents. By 2026, annual ground rent had increased by 7% due to a market review clause, and their bank required a larger deposit than for a freehold property. They remain confident but are mindful of the resale complexities down the track.
2026 Policy Updates and Leasehold Trends
The leasehold sector is evolving, and 2026 has brought several changes and new proposals that affect buyers and investors:
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NSW Affordable Housing Initiatives: The NSW Government has expanded its use of leasehold arrangements for affordable housing projects, with capped ground rents and stricter renewal protections for tenants.
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ACT Leasehold Reforms: The ACT, where almost all land is technically leasehold, has streamlined lease extension processes and clarified rights for owners of expiring leases in older suburbs.
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Lender Policy Updates: Several major banks now publish clearer eligibility criteria for leasehold loans, including minimum lease term requirements and additional documentation for off-the-plan purchases.
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Transparency Measures: New federal consumer protection guidelines require full disclosure of lease conditions, ground rent escalation formulas, and renewal rights at the point of sale.
There’s also growing interest from developers in mixed-use precincts where leasehold can lower barriers to entry for both residential and commercial occupants, while retaining long-term control of precinct management and community standards.
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Review cover options before you switch
Compare policy types, exclusions, and broker pathways with the guide still fresh in mind.
Is Leasehold Right for You?
Leasehold isn’t for everyone, but for some buyers—especially those priced out of freehold suburbs or looking for city convenience without the sky-high price tag—it can be a strategic move. The key is to scrutinise every clause in the lease, understand your long-term costs, and assess your exit options.
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Always check the remaining lease term and ground rent review schedule
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Ask about restrictions on renovations, pets, or subletting
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Compare the total cost of ownership (including rent) against freehold alternatives
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Consult with a property lawyer experienced in leasehold contracts before committing