If you have started searching for a home in Hawaii, you have probably noticed something that does not show up in most mainland markets: two nearly identical condos, same building, same floor plan, and one is priced hundreds of thousands of dollars below the other. Nine times out of ten, the difference is one word in the listing. Leasehold or fee simple.

I have been selling Hawaii real estate since 2005, and this is the single most misunderstood thing I see buyers walk into. Get it wrong and you can end up owning a home on land you do not control, with a payment that resets on you and a resale that gets harder every year. Get it right and leasehold can occasionally be a smart, eyes-open choice. Here is the honest breakdown.

Fee Simple: You Own the Land

Fee simple is what most people picture when they think of owning a home. You own the building and the land underneath it, outright and indefinitely. You can live in it, rent it, remodel it, pass it to your kids, and sell it whenever you want. There is no ground lease, no lease rent, and no expiration date on your ownership. The vast majority of homes on Oahu are fee simple, and for most buyers it is the cleaner, safer way to own.

Leasehold: You Own the Building, Someone Else Owns the Land

With leasehold, you buy the improvements (the house or the condo unit) but you do not own the land. Instead, you lease the land from the owner, called the lessor or fee owner, for a set number of years. You are the lessee. That arrangement carries a few moving parts that every buyer needs to understand before writing an offer:

  • Lease rent. You pay the landowner an ongoing amount for the use of the land, often monthly. This is on top of your mortgage, property taxes, and any association fees.
  • Lease term and expiration. Every ground lease has an end date. As that date gets closer, the property becomes harder to finance and harder to sell.
  • Lease rent renegotiation. Many leases have fixed periods after which the lease rent resets to current market rates. A payment that looked affordable can jump substantially at a renegotiation date.
  • Reversion (surrender). When the lease finally expires, ownership of the improvements can revert to the landowner. In plain terms, at the end of the lease you can be required to surrender the property, sometimes without being paid for the building you have been maintaining for decades.

None of this is hidden or shady. It is all spelled out in the lease document. The problem is that buyers get excited about the lower price and do not read the terms that actually determine what they are buying.

Why the Price Gap Exists

Leasehold homes are cheaper up front for a simple reason: you are buying fewer rights and a shrinking clock. The market prices in the lease rent, the remaining term, and the reversion risk. A leasehold condo with 30 good years left and low, fixed lease rent will hold value far better than one with 12 years left and a renegotiation coming. Two units that look identical online can be completely different investments once you open the lease.

The Financing Reality

This is where leasehold trips up the most buyers. Lenders are cautious about leasehold because their collateral disappears when the lease ends. As a general rule, a lender wants the lease term to extend well beyond the life of the loan. If the remaining lease is short, you may find that few lenders will finance it at all, which shrinks your future buyer pool when it is your turn to sell. Cash becomes king, and cash buyers expect a discount. Talk to a lender who actively does Hawaii leasehold loans before you fall in love with a unit. Financing that works today may not work for the person you eventually sell to.

Where You See Leasehold on Oahu

Leasehold shows up most often in certain condominium buildings, and in some pockets of single-family lots where the land has historically been held by large estates and trusts. You will run into it across Honolulu and in some resort and beachfront condos. As you browse neighborhoods, always confirm the land tenure on each listing. When you use the Hawaii MLS search on this site, you can filter for fee simple so you are only looking at what you actually want.

Is Leasehold Ever a Good Idea?

Sometimes. If the lease has a long remaining term, the lease rent is low and fixed for many years, and the discount to comparable fee simple is large, leasehold can make sense for the right buyer with the right time horizon. Some buyers use it to get into a building or a location that would otherwise be out of reach, planning around the lease terms rather than being surprised by them. The key word is planning. Leasehold is a math problem, not an emotional one. If the numbers only work when you ignore the renegotiation date or the reversion, that is your answer.

A Note on Hawaii's Newer Leasehold Housing Programs

You may have seen headlines about leasehold in the news recently. In June 2026, Governor Green signed SB2061 into law as Act 121, which strengthens Hawaii's Ninety-Nine Year Leasehold Program to support affordable, owner-occupied condominium development on public land. That is a very different animal from the older private ground leases described above. These state programs use long leasehold terms deliberately to lower land costs and create pathways to homeownership for local families, with affordability and owner-occupancy requirements built in. If you are looking at one of these programs, the terms are structured to protect the buyer, but you still want to read exactly what you are signing.

How to Protect Yourself

Before you make an offer on any leasehold property, get answers in writing to these questions: How many years are left on the lease? What is the current lease rent, and when does it renegotiate? How is the new lease rent calculated at renegotiation? What happens at reversion? Is there any option to buy the fee (convert to fee simple), and at what price? Then have your agent and, ideally, a real estate attorney review the lease itself. This is exactly the kind of nuance you will not get from a national listing portal, and it is where a local team earns its keep.

Frequently Asked Questions

Is fee simple always better than leasehold in Hawaii?

For most buyers, fee simple is the safer choice because you own the land and there is no expiration or lease rent. Leasehold can work for specific buyers when the remaining term is long, the lease rent is low and stable, and the discount is significant, but it requires careful math.

What is lease rent?

Lease rent is the amount a leasehold owner pays the landowner for the use of the land. It is separate from your mortgage and property taxes, and it can increase at scheduled renegotiation dates.

Can I get a mortgage on a leasehold property in Hawaii?

Sometimes, but it depends heavily on how many years remain on the lease. Lenders generally want the lease to extend well past the loan term, so short remaining leases are difficult to finance and often require cash.

What happens when a Hawaii ground lease expires?

At expiration, ownership of the improvements can revert to the landowner and you may be required to surrender the property. The exact terms are defined in the lease, which is why reading it is essential.

How do I know if a listing is leasehold or fee simple?

Land tenure is disclosed on the listing. You can filter for fee simple in the search on this site, and your agent can confirm the tenure and pull the lease details before you make an offer.

Have Questions About a Specific Property?

If you are weighing a leasehold home or condo and want a straight answer on whether the numbers work, reach out. My team and I will pull the lease, run the real cost, and tell you honestly what we would do. You can start by exploring Oahu communities or searching current Hawaii listings, and call us when you are ready.

Tony Kawaguchi, R(B), is a licensed Hawaii real estate broker (RB-21841) and leads The Kawaguchi Group at eXp Realty in Honolulu. This article is general education, not legal, tax, or financial advice. Ground leases vary, so consult a licensed attorney and lender about your specific situation before purchasing a leasehold property.