What's a Leasehold?

What's a Leasehold?

  • When you buy, you don't buy the land, you buy the Right Of Exclusive Possession of your unit
  • Right Of Exclusive Possession terminates at the end of the lease period
  • Types Pre-Paid/Not Pre-Paid Strata/Non-Strata:

    - Pre-Paid for the term of the lease

      - Not-Prepaid: A monthly lease payment which can be raised according to the   

           terms of the lease

      - Strata – Rules are governed by the BC Strata Property Act.

       - Non-Strata - Not ruled by the BC Strata Property Act

              Older buildings pre-1980's

  • End of the lease payout:

- Strata – Outlined in section 214 of the Strata Property Act

     - Landlord must purchase the Tenants interest

      - Based on Schedule in the Strata plan

     - If no Schedule is in the strata plan then Fair Market value

- Non-Strata be outlined in the head lease

  • When or If rent increases can happen is outlined in the lease. Note that pre-paid leases generally don't get any increase during the life of the lease.
  • When you sell, you assign the lease to the next buyer
  • Schedule of Restrictions tells you what you can and can not do with the property. (Examples: Can you rent it out or have pets)
  • Property can only be leased from

- Federal Government

- Provincial Government

- Municipal Government

- University or School Board

- Native bands (NorthShore and close to UBC)

  • Leasehold apartment buildings may be owned by developer, corporations or individuals
  • Taxes are often included in the monthly maintenance fee


Leasehold Advantages

  • Price
  • Only choice in places like UBC Endowment Lands and on Native Lands

Leasehold Disadvantages

  • Each year you have one less year on your lease so you are buying a decreasing asset
  • Uncertainty, especially in a Non-Strata with no payout formula in the lease (I have read that there are some leases that have a zero payout at the end, and those with converted to Rental)
  • Less people are willing to buy a leasehold, so your resale will take longer
  • Leaseholds don't increase in value as quickly as freehold's
  • Leaseholds require a larger down payment (25%-30%) depending on the bank or mortgage broker that you are dealing with.
  • Banks will only lend for 5 years less than the remaining lease. For example, you would only be able to get a 15 year amortization on a lease that expires in 20 years.
  • Potentially huge increases when the lease runs out.
  • Very hard to re-sell when their are less than 15 years remaining on the lease


For more information on Leaseholds please contact Adam Knight at 604.916.9940

Adam Knight

Adam Knight

CENTURY 21 In Town Realty
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