Life Lease housing developments have been growing in Ontario for over 40 years and offer an attractive option for the rapidly expanding 55+ population. There are currently an estimated 150 Life Lease communities operating in the Province, representing some 12,000 residential units. Most of these developments (85%) operate under a Market Value Life Lease model.
Updated Feb. 2019: ZEST Communities has adopted the Market Value Life Lease for The Village at St. Elizabeth Mills. Under this popular model, residents purchase their Life Lease Garden Home or Upper Mill Pond suite based on the current market value of their selected unit. When they wish to sell, they receive the market value of the unit at that point in time, the same as traditional real estate. Therefore, Market Value Life Leases are subject to the same market forces as condominiums and detached homes, with residents retaining any equity which has built-up in their units. As the overall housing values increase, so does the value of their Life Lease interest! When residents sell their units, they establish the asking price and approve the offer to purchase, identical to traditional real estate.
A February article in The Globe and Mail indicated that the year-over-year increase of home prices in Hamilton (19.71%) was the second highest in Ontario, surpassed only by Toronto (22.96%). Overall, Canadian benchmark home prices rose 13.4% from a year earlier, the 13th straight month of gains and the largest 12-month increase since November, 2006. The 1% increase last month was the largest one-month gain for a February since the index began 18 years ago. These increases in the market value of homes in Hamilton is quite evident in the increase in value of the Garden Homes at St. Elizabeth Mills. For example, a two bedroom Garden Home which was purchased in the Fall of 2014 was resold in the Spring of 2017 at an average increase of 42% in value in just 30 months – that’s equal to a 16.8% annual return! With the launch of Upper Mill Pond, the newest 76-suite addition to The Village, which will start construction in 2019, the best time to buy is now at pre-construction prices. Experience has shown that the value of Life Lease units purchased early can easily increase by 10% to 15% by completion and occupancy.
Life Lease housing has proven to be a creative option for 55+ residents
to invest in their housing and future;
However, it is a different form of tenure than freehold or condominium ownership. Under a Life Lease plan, the owners of the properties retain ownership and are responsible for ensuring high quality management and long term maintenance benefits for all residents. Since these owners retain title, it is in their best interest to construct the project in a quality manner. It is also contingent upon the owners to manage and operate the project in an effective manner to retain value and facilitate ongoing marketability.
How it works;
Residents of the development purchase a Life Lease interest in their unit, as detailed in a contract called a Life Lease Agreement, as opposed to purchasing freehold ownership. This agreement or contract outlines the ongoing relationship between the residents and the owner of the project. This agreement can also be registered on title to the property, the same as a deed can be registered on title to a condominium or detached house. Residents then have exclusive use of their unit for as long as they wish, with the right to transfer this interest to their family upon death in accordance with their Will. They also are entitled to shared use of all the common areas and facilities. However, control and title to the property always remain with the owner to ensure that the age requirements and community are maintained in accordance with its mandate.
Once residents take possession of their unit, they pay a monthly occupancy fee, which is structured and calculated the same as a condominium fee. This fee represents the resident’s proportionate share of common project costs, including, maintenance, management, insurance, utilities, and contributions to a reserve fund.
What makes Life Lease housing attractive for 55+ adults;
Is the age and occupancy restriction; the strong sense of community; the shared attitudes and values of the residents; the homogeneous lifestyle; the ability to be involved in the programs and activities; the worry free maintenance and security; the opportunity for capital appreciation; and, the availability of amenities and services all within a setting designed for the residents’ maximum enjoyment.
