Michael A. Jones - PREC* | Royal LePage Kelowna
If you are looking at property in the Okanagan, you are going to encounter two types of ownership: freehold and leasehold. The distinction matters. It affects what you actually own, how you are taxed, how your strata is governed, and whether your lender will fund the purchase.
I work with buyers on both sides of this line regularly. Some of the best-located properties in the Kelowna and West Kelowna area sit on Westbank First Nation land under a leasehold structure. Others sit on fee simple land within municipal boundaries. Neither is inherently better. But they are different, and the differences are not cosmetic.
This post covers the basics so you know what questions to ask before you write an offer.
Freehold: The Standard You Already Know
Freehold ownership — also called fee simple — is the most complete form of property ownership in BC. You own the land. You own whatever is built on it. There is no lease term, no expiry date, and no landlord. You can sell, mortgage, renovate, or pass the property to your heirs without restriction beyond normal municipal zoning.
Your title is registered at the BC Land Title Office under the Torrens system, which guarantees ownership. Property taxes are collected by your municipality and assessed by BC Assessment.
Most buyers understand this structure intuitively. It is the baseline.
Leasehold on First Nations Land: What You Actually Own
First Nations reserve lands in Canada are held by the Crown (the federal government) and set aside for the use and benefit of a particular First Nation. The land cannot be sold in fee simple. To allow residential development, a leasing structure is used.
Here is how it works:
- The Crown holds underlying title to the reserve land.
- The First Nation is granted use of the land. A Head Lease is established between the Crown and the Band or its development entity.
- The developer enters into Subleases with individual buyers.
- When you purchase, you receive an Assignment of Sublease. You own the right to use the land and you own the improvements — the building — for the term of the lease.
You own your home. You do not own the ground it sits on.
Westbank First Nation: Self-Governing Since 2005
Westbank First Nation is the primary First Nation in the Kelowna and West Kelowna area, and it operates differently from most bands in Canada. WFN has been self-governing since April 1, 2005, under the Westbank First Nation Self-Government Act. WFN lands are not governed under the Indian Act for land management purposes.
WFN has its own constitution, its own law-making authority, and its own Lands Registry — separate from both the BC Land Title Office and the federal Indian Land Registry System. Nearly 10,000 residents and 500 businesses operate on WFN lands, including major retailers.
This self-governance structure is relevant because it means WFN sets its own rules for land use, taxation, and development on its territory.
Lease Terms: 99 Years, Moving to 125
Historically, head leases on WFN land have been structured as 99-year terms. By the time a development is built and units are sold, approximately 95 years typically remain.
The current trend is toward 125-year non-cancellable leases. These provide greater security for buyers and better financing flexibility. In most developments, the rent for the entire lease term is pre-paid in full at the time of purchase. There is no clause permitting the landlord to demand additional rent during the term.
If you are purchasing on WFN land, ask whether the lease is a 99-year or 125-year structure. It matters for financing and long-term value.
How Strata Differs on Leasehold Land
This is where buyers are often surprised.
Freehold strata is governed by BC's Strata Property Act. You have a strata corporation, a strata council, and a set of rules that flow from provincial legislation. Your strata lot is registered at the BC Land Title Office.
Leasehold strata on First Nations land works differently. Reserve lands are federal jurisdiction, and the Strata Property Act is provincial legislation. On most First Nations developments, the governance structure is created through the head lease and sublease documents rather than through the Strata Property Act.
In practice, this means:
- Instead of a strata corporation with a strata council, most developments use a Homeowner Association (HOA) with a board of directors.
- The HOA handles the same functions — maintenance, common areas, fee collection, rules enforcement — but operates under the lease structure rather than under provincial strata law.
- The specific covenants, insurance requirements, and governance rules vary by development. You must review the head lease, sublease, and HOA documents for the specific property you are considering.
WFN has its own comprehensive set of community laws governing land use, zoning, and development. WFN laws prevail over federal laws in the event of conflict under the Self-Government Agreement. This is another reason to read the documents carefully for each development.
Depreciation Reports and the Lease Clock
All BC strata corporations with five or more lots must obtain depreciation reports on a five-year cycle. Leasehold strata corporations are included in this requirement.
Here is the consideration that is unique to leasehold: as the lease term shortens, owners must weigh the cost of major repairs and capital improvements against the remaining years on the lease. Spending significant money on a building that reverts to the landlord in 20 years is a different calculation than spending it on a building you own indefinitely.
With 90 or 100 years remaining, this is academic. With 40 years remaining, it becomes a real discussion at the HOA level.
Taxation: Where Leasehold Has Clear Advantages
This is the section that gets people's attention.
Property Transfer Tax: When you purchase freehold property in BC, you pay the provincial Property Transfer Tax — 1% on the first $200,000, 2% on $200,000 to $2 million, and 3% on any amount above $2 million. On an $800,000 purchase, that is approximately $12,000. Most leasehold properties on WFN land are exempt from Property Transfer Tax. That $12,000 stays in your pocket.
BC Speculation and Vacancy Tax: Kelowna and West Kelowna are designated taxable regions for the Speculation and Vacancy Tax. Freehold properties are subject to it. Leasehold properties on WFN land are exempt. The legislation specifically excludes reserves of Indigenous nations and treaty lands.
GST: On a new freehold home, you pay 5% GST. On most WFN leasehold properties, GST generally does not apply. This can represent tens of thousands of dollars on a new build. Buyers should confirm the GST treatment with their lawyer for their specific transaction, as it can vary by development.
Property Tax: Leasehold property owners on WFN land still pay annual property tax. WFN collects property tax directly — not the municipality. WFN uses BC Assessment for property valuations, so the assessment process is consistent with off-reserve properties. WFN tax rates are generally comparable to surrounding municipalities. The BC Homeowner Grant is available — you apply through WFN rather than through the province.
Financing: Fewer Doors, but Doors Exist
Not every lender will fund a leasehold purchase. The pool is smaller than for freehold. But financing is available.
CMHC will insure mortgages on qualifying leasehold properties on reserve. Several BC credit unions — Vancity and Coast Capital among them — have specialized leasehold mortgage products. Some of the major banks, including TD, BMO, RBC, and Scotiabank, will fund certain First Nations leases, though each has its own approved development list.
The critical variable is the remaining lease term. Most lenders require the lease to exceed the amortization period by at least five years. Scotiabank's First Nations Leasehold Program requires at least 30 years remaining. As a general rule:
- 70+ years remaining: Financing is readily available. Minimal impact on lending terms.
- 50–70 years remaining: Some lenders start applying restrictions.
- 25–50 years remaining: Fewer lenders willing. The buyer pool narrows.
- Under 25 years remaining: Very difficult to finance. Cash buyers only in most cases.
If you are buying a property with a recently issued 99 or 125-year lease, financing is not a practical concern for your ownership period. If you are buying a resale where the lease has been running for decades, check the remaining term before you fall in love with the property.
Resale: What the Lease Clock Means for Value
Leasehold homes are typically priced lower than comparable freehold homes because you are not purchasing the land. This price difference can allow buyers to access locations — waterfront, prime West Kelowna — that would otherwise be out of reach.
Long-term appreciation on leasehold tends to be lower than comparable freehold. A leasehold interest is a wasting asset: the value of the lease declines as the term shortens. With 90 or 100 years remaining, this effect is negligible. With 40 years remaining, it is measurable. With 20 years remaining, it is significant.
The resale process itself also differs. You are not transferring title — you are assigning a sublease. Documents require wet ink signatures at the WFN Lands Registry. No electronic filing. Plan for in-person signing or notary courier arrangements.
A Recent Legal Development Worth Noting
In May 2024, BC passed Bill 13, the Land Title and Property Amendment Act. This legislation allows First Nations recognized as legal entities under federal law to acquire, hold, and register fee simple land, leaseholds, and other interests in the BC Land Title Office in their own name. Previously, most First Nations had to set up corporations or use proxies to hold off-reserve land. This removes a discriminatory administrative barrier and is a meaningful step forward.
The Bottom Line
Leasehold on First Nations land is not a lesser form of ownership. It is a different form of ownership with distinct advantages — particularly on taxation — and distinct considerations around governance, financing, and long-term value.
The questions you need answered before you buy are specific: What is the remaining lease term? Is it a 99-year or 125-year structure? Who governs the development — an HOA or a strata corporation? What are the property tax rates? Does your lender fund leasehold on this particular development?
If you are looking at property on WFN land or anywhere else in the Okanagan and want to understand what you are buying, call me. I will walk you through the documents and make sure you know exactly what you are getting into.
All for now,
Michael
This blog post is for general informational purposes only. It does not constitute legal advice, tax advice, or financial advice. Leasehold structures, taxation, strata governance, and financing terms vary by First Nation, development, and individual transaction. Property Transfer Tax exemptions, GST treatment, and Speculation Tax exemptions should be confirmed with a qualified real estate lawyer for your specific purchase. Strata and Homeowner Association governance documents should be reviewed by legal counsel before you commit to a purchase. Michael A. Jones is a licensed REALTOR® with Royal LePage Kelowna and is not a lawyer, tax advisor, or financial professional. For legal questions about leasehold property, consult a qualified real estate lawyer experienced in First Nations land transactions.