The Market Value Life Lease Advantage
Under a Life Lease arrangement, there is a single owner of the property who is responsible for operating and maintaining the property and buildings in accordance with an agreement signed with the purchasers and residents
Life Lease housing developments have been established in Ontario and Canada for over 40 years and has become the preferred choice for the rapidly expanding retirement population. There are currently over 150 Life Lease communities in Ontario, representing nearly 12,000 units. Life Lease housing has proven to be a creative option for providing housing, programs and support services, plus an opportunity for investment today for tomorrow.
Life Lease is a form of real estate tenure (conditions under which a land or building are held or occupied) that has been in existence throughout North America and Europe for many years, and in Canada for nearly 50 years. There are an estimated 150 Life Lease projects now operating in Ontario, representing some 12,000 residential units. These communities are geared to mature adults and seniors.
Under a Life Lease arrangement, there is a single owner of the property who is responsible for operating and maintaining the property and buildings in accordance with an agreement signed with the purchasers and residents. The residents purchase an exclusive interest in the unit of their choice from these owners, and have the right to sell or transfer this interest when they wish to vacate their unit. This is similar to purchasing a unit within a condominium; however, the resident is acquiring a Life Lease interest as opposed to a freehold interest. Also, similar to a condominium, residents share in the use and operating costs associated with the common areas and amenities. At the heart of every Life Lease community is an agreement or contract with the property owner which governs how the residential units are acquired, subsequently sold or transferred, and the ongoing relationship and responsibilities of both the owner and the residents.
In Ontario, there are three primary Life Lease structures, the most common and popular model being based on the market value of the residential unit. Under this model, residents acquire their Life Lease interest based on the market value of the unit, and sell or transfer this interest at the market value when they wish to sell, like buying a single-family home or condominium. The Life Lease agreement used at St. Elizabeth Village is based on market value, has no termination date, and the interest can pass to a resident’s family upon death. Therefore, residents can protect their investment and earn a return similar to the equity growth in a home or condominium.
The actual age criteria may differ slightly between communities; however, most are geared to individuals 55 years of age and older. This is the age requirement for St. Elizabeth Village. There are no medical assessments or other criteria which restrict the purchase. In cases where one spouse or partner is not yet of the required age, the spouse of the partner is still able to reside in the unit. However, he or she can only appear on the Life Lease Agreement as a “Purchaser” until attaining the age of 55 years. This occupancy restriction is intended to maintain a harmonious environment for mature adults and seniors, and create a stronger, more supportive community. Children may also purchase a Life Lease interest for their parent’s; however, they may not occupy it until they reach the prescribed age.
There are numerous benefits of living in a Life Lease community. The most important benefit is that residents retain the equity in their home or unit – unlike typical ‘retirement’ communities where residents pay a monthly rent with no opportunity to preserve their equity. When the unit is sold, the equity (the appreciated value of the property) belongs to the purchaser or their estate. In addition, the Life Lease structure ensures residents that the community will remain age-exclusive and focused on mature adults and seniors. Life Lease is more about creating a community of people with shared interests and values than it is about bricks and mortar. Life Lease communities are designed for active adults with similar interests and backgrounds enabling them to fully enjoy their retirement years without the headaches associated with maintaining a single-family home.
Life Lease developments also have more extensive amenity areas than condominium projects which creates a stronger sense of community and provides more age-specific programs and activities for residents. As residents age, support services may also be provided allowing residents to maintain their independence for a longer period. These communities are designed to enhance the resident’s quality of life through facilities such as wellness and fitness centers and easy-living features such as wider doorways, walk-in shower stalls with a grab bar.
In summary, under a Life Lease arrangement, residents have exclusive use of their unit, an opportunity for market value return, and many of the same benefits as traditional home ownership. Life Lease enables active adults and seniors to acquire a unit and live in communities designed to meet their changing needs.