Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Leasehold is a scam. It is a way for freeholders to retain ownership rights into perpetuity. It doesn’t make homes cheaper as leasehold properties are driven by markets in the same way as freeholds (fee simple). You will pay the same amount for a 99 year lease as a comparable freehold. Prices only radically shift when leases are close to expiration, which is when nobody would want to buy anyway. The illusion is created by the 99 years, which is longer than most will hold a home. Therefore, the arguments goes, what does it matter? It matters because you can’t pass that home down through the generations, you can’t build wealth, lease expiration means your leasehold loses value, and most importantly you don’t own your home, so it’s not yours to do with what you want. It is a massive land transfer to large entities and is one of the biggest rip-offs in the history of real estate. Resist it, or regret it! How do I know? My country invented it.
Leasehold is a scam. It is a way for freeholders to retain ownership rights into perpetuity. It doesn’t make homes cheaper as leasehold properties are driven by markets in the same way as freeholds (fee simple). You will pay the same amount for a 99 year lease as a comparable freehold. Prices only radically shift when leases are close to expiration, which is when nobody would want to buy anyway. The illusion is created by the 99 years, which is longer than most will hold a home. Therefore, the arguments goes, what does it matter? It matters because you can’t pass that home down through the generations, you can’t build wealth, lease expiration means your leasehold loses value, and most importantly you don’t own your home, so it’s not yours to do with what you want. It is a massive land transfer to large entities and is one of the biggest rip-offs in the history of real estate. Resist it, or regret it! How do I know? My country invented it.
But the same is not true for a shorter term comparison, which many people still do. And they save a lot of money in doing so.
Still, saving money isn't always the reason why people do leaseholds. As has been mentioned in this thread, some just want the increased stability (compared to renting) that leaseholds bring. They know that, at least for a particular term that is going to be longer than a standard lease (and a lot longer) term, they have pretty stable housing and don't have to worry about increasing rents or being evicted by a LL for whatever reason.
Location: Southernmost tip of the southernmost island in the southernmost state
982 posts, read 1,167,166 times
Reputation: 1652
Quote:
Originally Posted by prospectheightsresident
But the same is not true for a shorter term comparison, which many people still do. And they save a lot of money in doing so.
Still, saving money isn't always the reason why people do leaseholds. As has been mentioned in this thread, some just want the increased stability (compared to renting) that leaseholds bring. They know that, at least for a particular term that is going to be longer than a standard lease (and a lot longer) term, they have pretty stable housing and don't have to worry about increasing rents or being evicted by a LL for whatever reason.
Also, here on the Big Island a lot of coffee farms are owned by Hawai'ian Homelands or Bishop and are leased out to folks who want to have a small 5 acre farm, but don't have to 2-3 mil it might cost for a fee simple farm.
Also, here on the Big Island a lot of coffee farms are owned by Hawai'ian Homelands or Bishop and are leased out to folks who want to have a small 5 acre farm, but don't have to 2-3 mil it might cost for a fee simple farm.
Grassy, did you see the article in today's Ka'u Calendar about the farmers being able to buy their plots that they've been renting for so long? What a great deal for them!
Leasehold is a scam. It is a way for freeholders to retain ownership rights into perpetuity. It doesn’t make homes cheaper as leasehold properties are driven by markets in the same way as freeholds (fee simple). You will pay the same amount for a 99 year lease as a comparable freehold. Prices only radically shift when leases are close to expiration, which is when nobody would want to buy anyway. The illusion is created by the 99 years, which is longer than most will hold a home. Therefore, the arguments goes, what does it matter? It matters because you can’t pass that home down through the generations, you can’t build wealth, lease expiration means your leasehold loses value, and most importantly you don’t own your home, so it’s not yours to do with what you want. It is a massive land transfer to large entities and is one of the biggest rip-offs in the history of real estate. Resist it, or regret it! How do I know? My country invented it.
Scam: The meaning of SCAM is a fraudulent or deceptive act or operation.
Leasehold may or may not be a good idea for various folks. But I don’t see how it’s a “scam” by any definition. It is what it is. Right up front and out in the open for anyone to see.
Location: Southernmost tip of the southernmost island in the southernmost state
982 posts, read 1,167,166 times
Reputation: 1652
Quote:
Originally Posted by Dreaming of Hawaii
Grassy, did you see the article in today's Ka'u Calendar about the farmers being able to buy their plots that they've been renting for so long? What a great deal for them!
I have been reading about this, great win for our local coffee farmers!
But the same is not true for a shorter term comparison, which many people still do. And they save a lot of money in doing so.
Still, saving money isn't always the reason why people do leaseholds. As has been mentioned in this thread, some just want the increased stability (compared to renting) that leaseholds bring. They know that, at least for a particular term that is going to be longer than a standard lease (and a lot longer) term, they have pretty stable housing and don't have to worry about increasing rents or being evicted by a LL for whatever reason.
If you are referring to a lease that has only a few years to run, they do appear to offer relative value, but relative is the operative word here. You are paying probably closer to the value based on fundamentals of a comparable fee simple. Hawaii real estate is very over-priced. So, it might seem you are saving money, but really you are throwing it way. You still need to pay rent on a leasehold, and your lease can be forfeited for any number of reasons. So, it is not like owing a home, and it is not cheap, and your landlord can exercise control over you.
I own several leaseholds. I had to fight a repossession in court. I won but the freeholder still came after me. The government is going after freeholders for mandated repairs, only to find the owners are hidden behind layers of offshore companies. Money laundering is rife in real estate. Leaseholds date back to the 1600 when a feudal system was in place. It is a system open to abuse. I grew up with it and there’s been huge pressure to do away with it, because of the reasons I state.
Also, here on the Big Island a lot of coffee farms are owned by Hawai'ian Homelands or Bishop and are leased out to folks who want to have a small 5 acre farm, but don't have to 2-3 mil it might cost for a fee simple farm.
I’m not aware of the arrangements with farm land, but it does strike one as being pretty feudal. However, businesses are a bit different. Many companies lease their properties because of the huge tax advantages afforded them. I do think though that for farmers who would like to own their own land, but can’t because of the huge price of land, that is sad and unfortunate. Agricultural land should not have to compete with other commercial or residential land uses. If that is indeed the case here.
Scam: The meaning of SCAM is a fraudulent or deceptive act or operation.
Leasehold may or may not be a good idea for various folks. But I don’t see how it’s a “scam” by any definition. It is what it is. Right up front and out in the open for anyone to see.
I am well aware of the meaning of the word scam, thank you, and “It is what it is” is never an argument for anything. If I am guilty of being rhetorical, it’s to get the debate energized. That said, leasehold is deceptive for the reasons I state. Don’t confuse leasing with leasehold. It’s one thing to lease (as in rent long term) and quite another to purchase a leasehold.
I own several leaseholds and could tell you stories that would make your hair stand on end. It is a feudal system that I grew up with and is under pressure to reform, because it is open to abuse and is unjust. So why on earth would Hawaii want to plunge itself into the dark ages by expanding its use? It’s because it is very profitable, not because it solves the housing crisis. It won’t do that. It will make it worse.
This is what will happen if Hawaii adopts the Singapore model. Developers and institutional investors (Wall St), will build, covert into leases, and own into perpetuity larges swathes of Honolulu real estate. They will continually sell the same leasehold properties over and over by taking back possession. It is a model for selling the same property multiple times while retaining the title deeds. The market will eventually become so saturated with leaseholds, they won’t be any cheaper than fee simple properties. Those on lower incomes will be targeted, denying them the opportunity to build wealth. Laws will very likely be stacked in favor of the freeholder, creating an unjust system open to abuse. It will become a vehicle for money laundering, where freeholders hide behind layers of offshore entities, not even governments will be able to hold them to account. I have experienced it.
If you buy a property, you should own it outright, and not have to hand it back, or have its value depreciate on a sliding scale.
Last edited by Freckles212; 06-02-2022 at 09:24 PM..
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
