Land lease? No thanks

by Shawn Lackie

A client called me recently, asking about the benefits of land leases. I had to choke back on this one but I did carry on. I asked, why on earth would they be asking about this. Strictly a personal opinion here, but a Land Lease is very similar to a condo purchase, and I have NOT been a fan of condo purchases, for my clients. For a myriad of reasons.

In short order, you are buying the air space you live in, and really nothing more. You are subject to monthly maintenance fees which could be raised at the whim of the condo corporation.

I helped a buyer, very early in my career, buy a condo in Bowmanville. At the time of purchase, the monthly fee was around $189, with a caveat the fee included, a “temporary” additional fee which would be removed in two years. Sure it will. I stayed in touch with this fine person, for years, and she was too proud to tell me they raised the rates every year. When I finally was able to talk to her and ask why, all she could say was, they kept saying it was for “upgrades.”

So what does this have to do with Land Leases? Good question. Developers in the last few years have been targeting the baby boomer generation (aka the one with money) because they look like an easy mark. I see the ads, all the time, for senior living and the “senior experience.” Just what is that? Halls wide enough to handle wheel chair races? Super large bibs? Free Diapers? Like condos, you don’t own the land. You lease it. Which means you are paying the developer a rather large monthly fee to carry the property. Many of these places have cute names, usually with an 'e' added to words like old. As in Olde. Ugh. We don’t need to be reminded. The bottom line is, you buy the air you are breathing and are paying a monthly fee to maintain the common areas. These could include a recreation centre, a pool, or, in extreme cases, a golf course. Those are areas I won’t go into, here, for obvious reasons.

If you live in Port you will know why. Land lease real estate sales involve purchasing a property and owning the structure, but only leasing the land it sits on from a landowner. This model typically has a lower initial cost, as the buyer doesn't purchase the land, outright, making it an attractive option for first-time home buyers and those looking to downsize. A lease agreement outlines the terms, including the lease duration, monthly payments to the land owner, and rules regarding property maintenance and use. All, again, similar to condo purchase.

My question remains. Why would you buy ANYTHING you don’t actually own? They stress the low initial payment which probably sucks a lot of people in, but, buyers beware and read the small print. If you don’t, you will be sorry. I can’t count the number of buyers who have told me they wish they never bought into some of these “deals.” Save your money and, in the new way, age in place.

Feel free to check out this story and more on my blog site, at https://slackie14.wixsite.com/buy-sell-and-more.