With Fee Simple you own the land. You are not obliged to pay lease rent.

With Leasehold you have not purchased the land. You are obligated to pay the landlord-land owner monthly rent on the land. If the land owner doesn't wish to offer the land to you for sale, you cannot force them to sell it to you. If that doesn't happen before the end of the lease or you don't purchase the land before the end of the lease, you must move out and receive no compensation for the contents of the four walls you left behind. That is why leashold property should cost less since it's like renting. In a sense, when you purchase leasehold property you are pre paying part of your rent at the point of sale and paying lease rent monthly on the land until the end of the land lease. Some folks initial reaction is "what a raw deal" but, it's a) a common practise with commercial property and b) it depends on the net discounted cash flow total compared to renting or buying fee simple.

When you purchase a home that is leasehold, all you own is the building. In a Condo, it's the space between the walls, floor and ceiling.

Although the landlord could offer to sell you the land, there is no guarantee they will and you cannot force them to sell the land to you. And, they could sell the land to a third party.

We recommend calculating the net present value of a Leasehold purchase to a comparable Fee Simple purchase and a Rental. That exercise tends to quantify the true value of a Leasehold purchase.

About Rights of Lessees

Sample Leasehold Disclosure