Freehold vs. Leasehold Property Ownership

Last updated April 6th, 2025. 

We’ve mentioned many times before that buying property in Asia can be confusing for a foreign investor. The differences between freehold and leasehold real estate in some countries certainly complicate matters.

When buying your first condo in Bangkok or a villa in Bali, you must overcome more than just linguistic and cultural barriers. You must also contend with local property ownership laws and customs often unheard of in the West.

One of the most common issues you might encounter is the idea of leasehold vs freehold ownership.

Several places don’t allow foreigners – or anyone, for that matter – to own real estate outright. Yet they’ll allow you to own property by purchasing a long-term lease, lasting anywhere between 30 to 999 years.

While leasehold ownership allows you to effectively own property, these leases function differently from traditional freehold ownership. Therefore, in this article, we’ll break down:

• The differences between leasehold and freehold real estate ownership;
• Countries in Asia that only allow leasehold ownership; and
• When (and if ever) you should consider buying a leasehold property).

Leasehold vs. Freehold: What’s the Difference?

To understand how leasehold ownership works, let’s begin by discussing an ownership system that you’re likely more accustomed to – freehold real estate ownership.

If you own your property through a freehold title, then you have complete and total ownership until you sell it or pass it on.

So unless your assets are seized, your real estate belongs only to you until you sell it. And you may transfer ownership of the property at will.

Leasehold property ownership, on the other hand, is slightly more complex. Under such a system, you sign a lease that allows you to own real estate for a certain amount of time. Once that time has passed, you may or may not be able to renew your lease on that property.

Unlike renting an apartment or a house from a landlord, buying leasehold property essentially allows you to own real estate for a set period of time. For the most part, you can change and maintain the home as you desire until the lease term has ended.

However, this system of ownership does not give you the same amount of control as freehold ownership. That’s because you might need to abide by the rules and regulations set out in your lease agreement.

Perhaps more importantly, your lease on the property is a depreciating asset. As your lease term becomes shorter, its price declines substantially, which in turn depresses the value of your property. Even if it’s in mint condition in a prime location.

If you are allowed to sell your leasehold property, the interested buyer will only be able to obtain the property and own it for the amount of time left in the lease. 

Finally, after your lease expires, ownership of the property will revert to the government or the original owner unless you choose to renew your lease.

Nonetheless, renewing your lease isn’t always easy or straightforward. The original owner may choose to charge substantially more for the next lease term. Or they may deny you the option to renew at all.

Thanks to these potential complications, we rarely recommend purchasing any kind of leasehold real estate.

Under a long-term lease, you’ll never truly own your property. And due to the lease’s depreciating value, you won’t get much – if any – return on your investment.

Singapore’s two most desirable neighborhoods are Marina Bay and Sentosa Island. But despite the city allowing foreign condo ownership, you won’t find any freehold buildings available in these areas. Leasehold titles are your only choice.

Countries with Freehold Property Ownership

You’ll be pleased to hear that many countries in Asia, and elsewhere in the world, do allow foreigners to own real estate outright on a freehold basis.

Below are several places that offer straightforward ownership and greater financial security compared to a leasehold system.

Thailand

One of Asia’s most popular countries for foreign property ownership, it’s easy for anyone to buy a condo in Thailand on a freehold basis.

While foreigners can’t own land directly, they can freely buy condominium units under their own names, provided that foreign ownership doesn’t exceed 49% of any single condo building. 

Despite these limits, Thailand is a top choice for investors and retirees seeking a second home thanks to its vibrant culture, developed infrastructure, and attractive cost of living.

Malaysia

Malaysia stands out as one of the friendliest countries for foreigners looking to own real estate. Unlike many other places in the region, Malaysia allows foreign nationals to own landed houses outright on a freehold basis, which is a rare luxury in Asia.

Additionally, Malaysia’s “My Second Home” (MM2H) visa program offers simple long-term residency options, making it even more appealing for foreign property buyers.

Cambodia

Cambodia has also emerged as a popular investment destination due to its open foreign ownership laws and affordable property prices.

In Cambodia, foreigners can purchase property in condominiums with freehold titles without significant restrictions, making it an enticing entry point for investors looking to capitalize on the country’s rapid economic growth.

The Philippines

Here in the Philippines, we have another mixed scenario: foreigners can own condo units on a freehold basis, but they can’t own land directly.

Nonetheless, the country’s rapidly growing economy, favorable demographics, and strong urbanization trends create investment opportunities in cities like Manila and Cebu for those willing to accept these constraints.

Countries With Leasehold Property Ownership

We don’t recommend buying leasehold real estate in most cases. All other things equal, freehold ownership is simply a superior form of title.

Unfortunately, some countries in Asia give you no other choice than to buy leasehold property if you wish to own a home.

If you are looking to buy real estate in Asia or elsewhere, you should be aware of how each country regulates property ownership, along with what kinds of restrictions are placed on foreigners.

Many Asian countries allow foreigners to buy freehold property in some form. Yet five nations, specifically Vietnam, China, Indonesia, Hong Kong, and Laos, do not allow you to own real estate outright.

Each of the above five countries approaches leasehold property ownership differently. Some nations, like China and Vietnam, have leasehold title systems rooted in their government’s communist origins.

Others, like Indonesia, let their citizens own freehold real estate while banning foreign nationals from permanent ownership of any type of land or structure.

Thus, whether you want to invest in up-and-coming Vietnam or secure your dream beach villa in Indonesia, you should understand how the following countries approach leasehold property ownership.

Vietnam

Although Vietnam became quite capitalist in many respects, the country’s communist roots are still quite evident in its land ownership laws.

In Vietnam, all land is collectively owned by the state. Consequently, in order to “own” a house or condo, you must lease it from the government.

Leaseholds in Vietnam are something you must deal with as a real estate owner, whether as a foreigner or a citizen. Most of these leases last either 50 or 70 years.

Over the past few decades, however, Vietnam’s leasehold ownership system has become more of a formality than anything else. Most leases in the country are renewed with little objection, and as the country liberalizes, its leasehold ownership system may become a thing of the past.

China

Like Vietnam, China’s property ownership laws reflect its communist origins. In China, all plots of land are technically owned by the state.

Still, Chinese citizens and foreigners alike can lease from the government for periods between 40 and 70 years, depending on the land’s purpose and location.

China’s fairly recent embrace of the free market is causing foreign real estate laws to liberalize further, though.

While leaseholders must eventually renew once their term expires, the process is more akin to registering and paying tax on a car than re-signing a property lease.

Provided you can spend some cash, you probably won’t face any difficulties when renewing a land lease in China.

Indonesia

While Indonesia allows its citizens to own freehold real estate within the country, foreigners can only purchase leasehold property. Lease terms in Indonesia can range from 1-80 years.

Additionally, while buyers in China and Vietnam can only lease from the government, buyers in Indonesia will often lease their homes from other private citizens. This can, and oftentimes, will complicate the process.

Foreign buyers in Indonesia may want to include specific stipulations in their lease agreements. Remember also: your ability to renew leases will depend on the whims of an individual, making leaseholds here less reliable.

Hong Kong

Hong Kong also uses a leasehold ownership system that dates back to the island’s history as a British protectorate. Like mainland China, all land is technically owned by the government, and buyers must purchase long-term land use rights from the state.

However, unlike other places with fixed terms, land leases in Hong Kong can potentially range anywhere from 50 years to 999 years. While Beijing has attempted to standardize lease terms in Hong Kong, those regulations mostly apply to new leases. Not existing ones.

Additionally, questions remain surrounding the validity of land leases after China’s “One Country, Two Systems” policy ends in 2047. Beijing insists all leases will remain valid, although leaseholders remain concerned about their property rights after the handover.

Laos

Laos still lags behind its neighbors in terms of economic development. Regardless, the construction of high-speed rail has reignited investors’ interest in buying Laos real estate.

However, to buy property in Laos as a foreigner, you must lease it from either the government or a private Laotian citizen. You cannot own freehold real estate in Laos.

Lease terms in Laos can vary, yet they can be extended for up to 75 years in special economic zones. Additionally, as the country develops, Laos may change its land lease policy to be more friendly toward foreign investors.

When Should I Buy Leasehold Property?

From a professional standpoint, we suggest avoiding leasehold real estate titles as much as possible. However, purchasing a long-term lease may nonetheless be a viable option in rare circumstances.

When considering Leasehold vs Freehold property, first, you should only buy leasehold real estate when you have no other choice. For instance, if you want to live permanently in Hong Kong, then you’ll need to buy leasehold property if you want to own a home.

You should also consider the length of the lease that you are purchasing since that will impact the resale price of your asset.

Suppose you buy an apartment in Hanoi on a 50-year lease and intend to live there for ten years. In that scenario, you can recoup much of the value of your original purchase since there is plenty of time left on your lease.

On the other hand, if you had bought an apartment or condo on a 25-year lease, then you’d face difficulty reselling it with just 15 years left.

You should also factor in ease of renewal. In Vietnam, you’re practically guaranteed to be able to renew your lease easily with the government. In Indonesia, you may have a difficult time with a private citizen.

Finally, you absolutely shouldn’t lose sight of regular considerations (such as location) with any investment property. If you ever resell, for example, a prime area or updated features can help overcome a buyer’s reservations about lease length.

Overall, if you do decide to purchase leasehold real estate, you should ensure there aren’t other options available. Check if your lease term is favorable and if the property is generally a solid investment.

FAQs: Freehold vs. Leasehold Property