Land lease is becoming an increasingly popular way for Canadians to purchase a home. It’s a more affordable homeownership option because it allows people to own their homes without buying the land on which the house sits.
But did you know that in Canada, there is more than one form of land lease?
The typical model is private ownership of land lease communities, where a company – like Parkbridge – owns and operates the community for its homeowners.
However, there is another type of residential land lease, mainly found in British Columbia, where more than two-thirds of the land belongs to First Nations. These communities sell parcels of land to developers, who then build homes to sell to buyers.
From the homeowner’s perspective, there are some key differences in how land lease homeownership works in Parkridge’s privately-owned communities compared to First Nations land. Here are four:
Who holds the lease?
When a homebuyer purchases a land lease home in a Parkbridge community, the lease is registered with Parkbridge, owner of the land. In the case of a land lease home on First Nations land, the lease is actually registered with the federal government (the Crown).
How long are the leases?
The length of a lease in a privately-owned community can vary, depending on the province’s legislation that regulates land lease. In Ontario, for example, leases for homes are generally 21 years less a day. In British Columbia, the length of leases is 99 years – and this is true for homes in both privately-owned land lease communities and on First Nations land.
How is the lease paid?
In privately-owned land lease communities like Parkbridge, homeowners make a monthly lease payment to the land owner. These payment amounts can vary from one community to another, depending on local market conditions and the ongoing needs of managing the community.
In the case of a land lease home on First Nations land, there are no monthly payments. Instead, the lease payment is a one-time fee, pre-paid as part of the purchase price.
What happens to the lease if you want to sell?
With Parkbridge, you face no restrictions or penalties if you want to sell your home. The buyer has two options: either assume the existing lease and the time left on it, or sign a whole new lease for the full term (whether it’s 21 years less a day in Ontario or 99 years in B.C.)
If you want to sell your home on First Nations land, the buyer assumes what is left on the original lease. For example, if you sell your home after 25 years, the buyer would have a lease for 74 years, not the full 99. It’s worth noting that as the length of the lease decreases, financial institutions can become more wary of providing a mortgage.
The differences in how these two models of land lease work are good to keep in mind, especially if you are looking to purchase a land lease home in British Columbia.
We love to hear from you! Please reach out to us with your questions about land lease at www.parkbridge.com/en-ca/contact-us