A leasehold interest is the tenant’s right to use and occupy property for the lease term, without owning the underlying land.
A leasehold interest gives the tenant rights to use the property, but ownership remains with the landlord. The term often arises with ground leases, where the tenant's leasehold may include the buildings it constructs. The value of a leasehold depends on the remaining term, the rent, and the lease terms, and it generally declines as the lease nears its end. Leasehold ownership can make financing more complex, so lenders look closely at the lease.