What Does Leasehold and Hawaiian Homeland Mean?

Shopping for a home in Hawai‘i? If you're browsing listings in Honolulu, you’ve probably seen terms like leasehold and Hawaiian Homelands. These aren’t just technical labels—they directly affect what you’re buying, how long you can own it, and whether the investment makes sense for your goals. Understanding the difference is essential if you want to navigate the Honolulu real estate market with confidence.

On the mainland, the vast majority of homes are fee simple, meaning you own the house and the land it sits on. That’s what most buyers expect. However, in Hawai‘i, leasehold properties are still a part of the landscape.

So, what’s the difference?

With leasehold, you’re buying the structure or unit, but not the land underneath it. Instead, the land is owned by a separate entity—often a trust, a private landowner, or even a legacy estate—and you pay them monthly or annual lease rent to use it. Lease terms can span decades, but eventually, that lease will expire, and what happens next depends entirely on the landowner.

This arrangement can be a surprise for out-of-state buyers. In some cases, it works well, especially if you're planning to live in the home short-term or are purchasing with cash. But there are definite limitations and risks to understand first.

Leasehold properties are most commonly found in areas like Waikīkī, Moiliili, and parts of Makiki, where older developments were built on land retained by trusts or large private owners. While the initial purchase price is usually lower than a similar fee simple unit, there are trade-offs that matter., there are trade-offs that matter.

Here’s what to consider:

• Lease terms vary, but many existing leases are nearing expiration. The remaining lease term directly affects resale value and financing eligibility.
  
  
• Lease rent isn’t fixed forever. Most leases have renegotiation points or scheduled increases (called “step-ups”). Make sure you understand when those happen and by how much.
  
  
• At lease expiration, you don’t automatically get to renew. The landowner could offer to extend the lease, sell you the land (converting it to fee simple), or take the property back.
  
  
• Financing can be tricky. Many lenders won’t finance leasehold units with less than 30 years remaining on the lease, so you may need a larger down payment or a cash offer.
  
  
• You’re paying for a depreciating asset. As the lease term shortens, the property’s market value typically drops, since buyers are essentially getting fewer years of ownership.

That said, leasehold can still make sense in certain situations. Buyers looking for a second home, investors eyeing short-term rental potential, or cash buyers who don’t need financing may find excellent locations at more accessible prices.

This is the biggest concern for most buyers—and rightly so. Once a lease ends, one of three things can happen:

• The lease is renegotiated. This could mean a new lease term with new rent terms, often higher than before.
  
  
• The land is offered for sale. Sometimes, landowners offer leaseholders the chance to buy the land outright and convert to fee simple, but the price can be steep.
  
  
• The land reverts to the owner. In this case, the property returns to the landowner, and the leaseholder walks away with nothing.

That uncertainty is why leasehold properties are priced lower. You're not just buying a home—you’re entering into a legal agreement with an end date and no guarantee of extension.

Now, Hawaiian Homelands are something entirely different—and often misunderstood. Hawaiian Homelands refers to land managed by the Department of Hawaiian Home Lands (DHHL). This land is held in trust by the state specifically for Native Hawaiians under the Hawaiian Homes Commission Act of 1920. Unlike leasehold properties, this is not about affordability or traditional investment—it’s about land rights, cultural preservation, and long-term access for Native Hawaiian families.

Here’s how it works:

• Only Native Hawaiians with at least 50% blood quantum are eligible to apply for a lease on Hawaiian Homelands.
  
  
• Leases are long-term—typically 99 years—and offered at nominal rates. Many include opportunities to build, farm, or live on the land, depending on the zoning.
  
  
• The land itself remains in the trust and cannot be sold, mortgaged, or transferred outside of eligible family members.
  
  
• It’s not available for most buyers, but it plays a significant role in Hawai‘i’s real estate and cultural landscape.

If you’re browsing listings and see a property near Hawaiian Homelands, or hear the term referenced in a development conversation, it’s important to understand this isn’t a typical public land transaction. It’s a specialized, purpose-driven program with its own rules, priorities, and benefits.

Both leasehold and Hawaiian Homelands play a role in shaping the Honolulu real estate landscape.

For leasehold, it's all about access to neighborhoods that might otherwise be financially out of reach. If you're willing to trade long-term ownership for a lower upfront cost, leasehold can open doors. But make sure you work with a knowledgeable agent who can explain the lease details, help you evaluate the risks, and guide you through financing hurdles.

As for Hawaiian Homelands, while not accessible to most buyers, it’s vital to understand how this land is used and protected. These areas contribute to Honolulu’s cultural fabric and housing strategy and may influence surrounding property development, zoning, or availability.

In a market as nuanced as Honolulu’s, terms like “leasehold” and “Hawaiian Homeland” can’t be treated as footnotes. They’re central to understanding how ownership works in Hawai‘i—and what kind of commitment you’re actually making.

Buying a home here is more than picking a price point. It's about knowing what you’re getting, what you’re not, and how that affects your future.

Whether you're trying to make sense of a lease term or just want expert insight into your Honolulu real estate options, Kina Knisley can help. With years of experience guiding buyers through Hawai‘i’s unique market, Kina provides honest, informed advice every step of the way. Reach out today to understand your options and move forward with clarity and confidence.