The facts on leasehold at Spirit Bay
Spirit Bay is what’s commonly known as a ‘title leasehold’ development.
The term ‘leasehold’ is one of the most misunderstood concepts in home ownership, despite being commonplace in the world of commercial real estate.
To stay ahead of all the misinformation (or lack of information) swirling about, we wanted to give our readers a few facts on title leasehold. We hope this helps demystify the concept for you. Feel free to share this with your friends the next time they ask about buying at Spirit Bay!
What is title leasehold?
Most private residences in BC are ‘freehold.’ You own the property and the right to remain on the property in perpetuity, provided you make timely payments to your lender.
With title leasehold, on the other hand, you’re buying the structure and buildings, while subleasing the land from the owner.
Leases can last up to 99 years (that’s the term of leases of homes at Spirit Bay). Each prepaid lease at Spirit Bay ‘starts’ the moment the first owner purchases.
You have the option to sell your home anytime, reassigning the remaining time on the sublease.
Once the leasehold agreement runs out – at the end of 99 years – the owner may choose not to renew it, or may renew it at the current market value.
Leaseholds can be much more attractive buys than freehold, as their prices tend to be significantly lower. In fact, Spirit Bay properties enjoy proximity to freehold properties in Victoria, while offering extremely attractive pricing.
Some common misperceptions
There are a few misperceptions that – despite the facts – continue to linger. We thought we’d tackle the two most common here.
Misperception: Leaseholds are difficult to finance
Fact: Spirit Bay has a solid relationship with a variety of local financial institutions. While you would work with them independently, they all recognize Spirit Bay as a good partner. We are also CMHC approved, and titles are backed by First Canadian Title, adding peace of mind.
Misperception: Leaseholds don’t hold their value
Fact: Leasehold properties behave like freehold properties on the market. The only difference is, as the time of the lease dips below 30 remaining years, the properties typically stop appreciating. Spirit Bay buyers can feel confident that we construct our homes to withstand the test of time, ensuring the value of your investment holds, and your home remains attractive on the market.
Who leasehold is right for?
While leasehold is a great idea for almost anyone considering real estate, it’s particularly attractive if you’re one of the following:
- A long time renter who doesn’t view real estate as an investment. With leasehold, you may find you pay less for a mortgage than you would pay in rent – particularly in a city like Victoria, where rents are extremely high.
- A retiree who has built up equity from previous properties. In your case, you may choose to pay cash to avoid any down payment, and still leave a legacy to your heirs, albeit not as attractive as would with freehold.
- Someone looking to make a lifestyle investment in a vacation property. If this is you, you may see the great upside of buying a property on land unlocked for the first time – land not available to freehold developers.
Of course, these facts may spark even more questions. If that’s the case, we’d be happy to walk you through the full story on title leasehold. Just reach out to one of our Community Builders by clicking here, and we’ll chat.