Leasehold Properties in BC – Pros & Cons Explained

A leasehold property means you own the home or unit, but you do not own the land underneath it.
Instead, you lease the land from the landowner for a set period of time (example: 30, 50, 75, or 99 years).

Leasehold properties are commonly found on:

• First Nations land
• City-owned land
• University lands
• Resort communities
• Some condo developments

Pros of Buying a Leasehold Property

Lower Purchase Price

• Leasehold properties are often much less expensive than freehold properties
• Can help buyers enter the market sooner
• Allows buyers to purchase in areas that may otherwise be unaffordable

Lower Down Payment Needed Overall

• Since the purchase price is lower, buyers may need less cash upfront
• Monthly mortgage payments can sometimes be lower as well

Opportunity to Own in Desirable Locations

• Leasehold homes are often located in prime areas near:
  • Waterfronts
  • Downtown cores
  • Universities
  • Golf courses
  • Resort communities

Good Option for Shorter-Term Ownership

• Can work well for buyers who:
  • Want affordability
  • Do not plan to stay long term
  • Are purchasing for lifestyle reasons

Some Leaseholds Include Maintenance Benefits

• Depending on the development, some costs may already be included in lease payments or strata fees

Cons of Buying a Leasehold Property

You Do Not Own the Land

• This is the biggest difference
• The land remains owned by another party
• You are paying for the right to use the land for a specific time period

Financing Can Be More Difficult

• Not all lenders finance leasehold properties
• Fewer lender options may mean:
  • Higher rates
  • Larger down payment requirements
  • Shorter mortgage terms
• Some lenders will not finance properties with shorter remaining lease terms

Resale Can Be More Challenging

• Leasehold properties can take longer to sell
• Buyers are often unfamiliar with leaseholds
• The shorter the remaining lease, the harder resale may become

Property Value May Not Increase the Same Way

• Leasehold properties may appreciate slower than freehold properties
• As the lease gets shorter, value may decline

Lease Payments May Increase

• Some leaseholds require monthly or annual lease payments
• Certain leases have scheduled increases over time
• Buyers should review:
  • Current lease payment
  • Future increases
  • Lease expiry date

Lease Expiry Matters

• The closer the property gets to lease expiry:
  • Financing becomes harder
  • Property values can decrease
  • Buyer demand may shrink

Restrictions May Apply

• Some leasehold agreements may limit:
  • Renovations
  • Rentals
  • Pets
  • Property use
  • Subletting

Important Questions Buyers Should Ask

Before purchasing a leasehold property, buyers should confirm:

• How many years remain on the lease?
• Who owns the land?
• Are lease payments fixed or adjustable?
• Are there future lease increases?
• Are there restrictions on the property?
• Which lenders will finance it?
• What happens at lease expiry?
• Is the lease renewable?

Good Candidates for Leasehold Properties

Leasehold properties may work well for:

• First-time buyers wanting affordability
• Buyers focused on location over long-term appreciation
• Buyers comfortable with shorter ownership timelines
• Investors familiar with leasehold risks
• Buyers looking for vacation or recreational properties

Final Thoughts

Leasehold properties can offer excellent value and affordability, but buyers must fully understand:

• The lease terms
• Financing limitations
• Future resale implications
• Remaining lease length

The key is reviewing the lease agreement carefully and making sure the property still fits your long-term goals and budget.

For personalized guidance on leasehold financing options across BC, please contact:

Trish Pigott
Mortgage Broker at Dominion Lending Centres Primex Mortgages
📞 604-729-7940
🌐 www.trishpigott.com

Serving clients across BC