A fraction of listings in Vancouver's West End are leaseholds. These long-term residential leases offer a unique form of ownership where individuals purchase the right to occupy a property for an extended period—typically more than 20 but less than 99 years. These leases are provided by various entities, including the government, city, CMHC, and private owners or companies. In the West End, leaseholds are predominantly privately owned, with popular buildings such as The El Cid (1850 Comox), Surfcrest (1250 Burnaby), WestSea Towers (1330 Harwood), and The Chelsea (1219 Harwood).
Leaseholds operate outside the purview of the Residential Tenancy Act and the Strata Property Act. The initial owner secures the right to occupy a unit through a lease agreement, which is then registered at the Land Title Office. Much like freehold properties, leaseholds can be bought and sold, though the lease owners typically need to approve any sales or purchases. This requirement is often included as a condition in the contract of purchase and sale.
One of the main attractions of leaseholds is the potential for an attractive lifestyle at a more affordable price point. Many leaseholds in the West End are situated in prime locations but are more affordable than their freehold counterparts. Depending on the lease expiration date, property transfer tax may or may not apply. Generally, purchasers might be exempt from paying this tax if the lease provides the right to occupy the property for 30 years or less from the registration date at the Land Title Office.
Leaseholders, like strata owners, pay monthly fees for maintenance and other provisions. These fees typically include tax payments, but extraordinary expenses are usually covered through special assessments. Unlike strata fees, residents do not vote on these expenses; once assessed, they must be paid monthly, in addition to the regular fees. There has been considerable discussion and concern within the West End community about the disproportionate increase in fees in some buildings, forcing some residents to sell.
Do Leaseholds Appreciate in Value?
Historically, leaseholds have appreciated in value since they were first sold. While these properties do not typically appreciate at the same rate as freehold properties, their value tends to increase, driven primarily by inflation and market conditions. It's essential to consider market trends when investing in leaseholds, as their value can fluctuate.
Is Financing Available for Leaseholds?
Financing leaseholds can be challenging. Only a few financial institutions are willing to finance these properties, and they do so with specific terms and conditions, usually requiring at least a 20% down payment. If you're considering a leasehold, it's crucial to explore your financing options early. Feel free to contact me at mustafa@mywestend.ca for more detailed information on financing.
Who Might Consider a Leasehold?
Leaseholds can be an excellent and affordable option for living in the West End, provided the purchaser has the means for a down payment. This option is popular among various demographics, including retirees, students, and young professionals, all seeking the vibrant lifestyle the West End offers without the hefty price tag of freehold properties.
If you are considering purchasing Real Estate in the West End, consider contacting us for a consultation.
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