Leasehold’s

Jerome, it can mean one of two things:

Most commonly, if buying a business, the business does not own the property in which it resides hence it leases the shop/office/warehouse/service station etc. You are in effect buying the business, the goodwill, stock and having the vendor do the work to have the lease assigned to you.

Alternatively, you may find some properties which are owned by long-term leasehold eg Canberra, inside a national park, grazing land, The Rocks (Sydney) , Alpine Parks, boat moorings etc to name a few. Most of these leases range for a period of 20-99 years. Each leasehold scenario is different – in Canberra, there are generally no issues with banks providing finance as the lease is government guaranteed & renewed upon transfer/sale, in The Rocks old/derelict Dept of Housing buildings are sold with the expectation that the leaseholder upgrade, repair and refurbish the building. The value is greatly affected by the remaining term of the lease as you have to be able to recoup your purchase price, the remaining cost of the improvements, cost of removal of the improvements, outgoings & rent (utility) over the remaining term of the lease. Hence the price of leasehold can be substantially less than freehold.