Leasehold Properties in Kelowna and the Okanagan: Frequently Asked Questions

Leasehold ownership is common in the Kelowna and West Kelowna area, particularly on Westbank First Nation land. It is a different form of ownership from freehold with distinct advantages around taxation and distinct considerations around financing, governance, and long-term value. This page covers what buyers need to know before they make an offer on a leasehold property.

What is leasehold property in BC?

Leasehold property means you own the right to occupy the land and you own the improvements on it, but you do not own the land itself. In the Kelowna and West Kelowna area, most leasehold properties sit on Westbank First Nation land. You purchase a long-term sublease, typically 99 or 125 years, that gives you the right to use the land for that term. Freehold ownership, by contrast, means you own both the land and everything built on it indefinitely.

Where are most leasehold properties located in the Kelowna area?

The majority of leasehold properties in the Kelowna area sit on Westbank First Nation land in West Kelowna. Westbank First Nation became self-governing in 2005 under the Westbank First Nation Self-Government Act and operates its own lands registry, constitution, and law-making authority. Several significant residential developments sit on WFN land, including properties with prime lake views and proximity to major amenities.

Do you pay Property Transfer Tax on leasehold property in BC?

Generally no. Most leasehold properties on Westbank First Nation land are exempt from BC's Property Transfer Tax. On an $800,000 purchase, that exemption saves approximately $14,000 compared to a standard freehold purchase. Buyers should confirm the exemption applies to their specific transaction with their lawyer, as treatment can vary by development.

Is leasehold property subject to the BC Speculation and Vacancy Tax?

No. The BC Speculation and Vacancy Tax legislation specifically excludes reserves of Indigenous nations and treaty lands. Leasehold properties on Westbank First Nation land are exempt, even though Kelowna and West Kelowna are designated taxable regions for freehold properties. This is a meaningful advantage for investors and owners who might otherwise be subject to the tax.

Can you get a mortgage on leasehold property in the Okanagan?

Yes, but the pool of lenders is smaller than for freehold. CMHC will insure mortgages on qualifying leasehold properties. Several BC credit unions and some major banks including TD, BMO, RBC, and Scotiabank have leasehold mortgage products, though each has its own approved development list. The critical factor is the remaining lease term. Most lenders require the lease to exceed the amortization period by at least five years. Properties with fewer than 25 years remaining on the lease become very difficult to finance.

How does strata governance work on leasehold land in BC?

On most First Nations leasehold developments, a Homeowner Association with a board of directors governs the property rather than a strata council under BC's Strata Property Act. The governance rules come from the head lease and sublease documents rather than from provincial legislation. The association handles maintenance, common areas, and fee collection in a similar way to a conventional strata corporation, but the legal framework is different. Review the specific head lease and HOA documents carefully for any property you are considering.

What is the difference between a 99-year and a 125-year lease?

Historically, head leases on WFN land have been structured as 99-year terms. The current trend is toward 125-year non-cancellable leases, which 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, with no clause permitting the landlord to demand additional rent during the term. If you are buying on WFN land, confirm whether the lease is a 99-year or 125-year structure, as it affects both financing and long-term value.

How does leasehold affect property value and resale in the Okanagan?

Leasehold homes are typically priced lower than comparable freehold homes because you are not purchasing the land. This can allow buyers to access locations that would otherwise be out of reach. Long-term appreciation on leasehold tends to be lower than comparable freehold because the leasehold interest is a wasting asset: its value declines as the term shortens. With 90 or more years remaining this effect is negligible. With 40 years remaining it becomes measurable. The resale process also differs: you are assigning a sublease rather than transferring title, and documents require in-person signing at the WFN Lands Registry.

Do leasehold property owners pay property tax in BC?

Yes. Leasehold property owners on WFN land pay annual property tax directly to Westbank First Nation rather than to 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 and is applied through WFN rather than through the province.

What should I review before buying a leasehold property in the Okanagan?

Before removing subjects on a leasehold purchase, confirm the remaining lease term, the lease structure (99 or 125 years), whether ground rent is pre-paid or ongoing, the HOA governance documents and fee structure, the property tax rate, and which lenders will fund the specific development. Have a lawyer experienced in First Nations land transactions review the head lease, sublease, and assignment documents. Do not rely solely on your REALTOR for legal interpretation of these documents.

More Questions About Buying in the Okanagan

• Buying a Home in Kelowna BC
• Strata Properties in Kelowna and the Okanagan
• BC Property Transfer Tax and Closing Costs
• Peachland to Vernon Real Estate Guide
• Working With a Buyer's Agent in Kelowna BC
• Back to the FAQ Index

Have a question not covered here? Call or email directly.

Phone: 250-258-4663
Email: michaeljones@royallepage.ca

All for now,
Michael

This page 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.