Kai Ioh | Nov 2025
Understanding Land Ownership: Leasehold vs. Fee Simple
One of the most common questions we get from buyers, especially those from the mainland or overseas, is this:
“Do I actually own the land if I buy property in Hawaii?”
It’s a great question- and one that makes perfect sense. Hawaii’s land history is unique, deeply rooted in native traditions and modern legal structures. So let’s unpack it simply, the way we would if we were chatting over a cup of Kona Coffee or after a round of golf.
Fee Simple Ownership
If you’re buying a home on the mainland, this is likely what you’re used to.
Fee Simple means full ownership of the land and everything built on it. You can live in it, rent it, remodel it, sell it, pass it to your kids, no expiration date, no lease to worry about.
Why people love Fee Simple:
- Most homes and luxury properties in Hawaii fall under this category
- You own the land forever (unless you choose to sell). You still have to pay real property tax or mortgage to keep the ownership, though!
- Easier financing options (lenders prefer it)
- Stable long-term investment potential
What Is Leasehold?
Now here’s where Hawaii gets unique.
With Leasehold, you own the building, but someone else owns the land. You’re essentially leasing the land from that owner, whether it’s a private trust, a family, or a legacy landholder like Kamehameha Schools or Queen Liliʻuokalani Trust. The leasehold concept is also well known in Japan, though becoming rare in modern times.
These leases are typically 30 to 55 years long, and when they expire, one of three things can happen:
- You may have the option to extend or renegotiate the lease.
- The landowner may reclaim the land.
- You could be offered a chance to purchase the fee interest (buy the land).
Why people consider Leasehold:
- Typically lower upfront cost. Our recent data shows that leasehold properties sell 30-40% less than fee simple properties. But it all depends on the market condition and property.
- Opportunity to buy in desirable areas at a lower price point
But remember: Leaseholds can depreciate over time—especially if the lease is nearing expiration. Financing becomes more difficult, and resale value can be limited. But in some cases, it makes sense.
What’s the Purchase Process for Leasehold Property?
The purchase process for Leasehold property in Hawaii follows the same timeline as Fee Simple transactions with a couple of key differences:
The lease itself must be fully disclosed and reviewed.
Here’s what to expect:
- Full lease disclosure document provided during escrow
- Details provided on:
- Ground rent and lease fees
- Expiration and renegotiation dates
- Any restrictions on usage or resale
- Condo leases are easier and straight forward.
- Single-family leasehold homes, often on farm land, are more complex.
- Lessor (e.g. Kamehameha Schools) may require an active farm plan to maintain the lease.
- Some cases allow “gentleman’s farms”—non-income producing but agriculturally respectful operations.
- Lessor needs to approve Assignment of Lease(deed). We need to factor in about 2 week extra time for Leasehold escrows.
Note: Not all leaseholds are created equal. Terms vary by lessor, region, and land use.
What About Hawaiian Homelands?
You may have heard of land leased for $1 for 99 or 100 years—this refers to Hawaiian Home Lands, available only to Native Hawaiians (with at least 50% Hawaiian ancestry).
These leases are not part of the open market and are administered by the Department of Hawaiian Home Lands (DHHL). So we will exclude this type of lease from the discussion here.
Quick Comparison: Fee Simple vs. Leasehold
| Feature | Fee Simple | Leasehold |
|---|---|---|
| Land ownership | Yes | No |
| Lease expiration | No | Yes (often 30–50 years) |
| Financing | Easy | Limited (especially under 30 years left) |
| Long-term resale | Strong | Depends on the market condition and duration |
| Cost | Higher upfront | Lower upfront |
| Farm plan required? | No | Sometimes |
🤔 So Which Is Right for You?
If you’re planning to stay long-term, build equity, or pass the property to future generations, Fee Simple is your best bet. It offers stability, flexibility, and peace of mind.
If you’re looking for a second home or short-term investment, and are comfortable with the risks, Leasehold can offer a lower entry point into a premium location.
Either way, you deserve the full picture – no surprises, just clarity. We are seeing fewer leasehold properties on the island, as many have been converted to fee simple.
Let’s Talk
Buying property in Hawaii is more than just a transaction—it’s a journey rooted in culture, lifestyle, and legacy.
Let’s find the right ownership structure for your goals—and make your Hawaii dream a reality.
📩 Reach out anytime