If you're out searching for condo's in and around the Vancouver area, odds are you've come across properties that have the distinction "Leasehold Strata." Appealing because they may be, understanding what you're buying can save you headaches when you eventually opt to sell the property later on.
You're initial fascination with these properties might have been triggered by the low price of these units by incorporating units being offered at tens of thousands of dollars less than what it would cost to get a similar unit using a Freehold Strata distinction. Not only is the price enticing, but in addition many of the Leasehold Strata units in round the Downtown Vancouver area are in prime locations along False Creek.
Condo buyers' shouldn't run for your hills the minute they begin to see the Leasehold distinction on a property, but work as they would when buying any property and look at a number of options before they commit. What could be right for some is probably not right for others.
A leasehold strata distinction happens when a public authority or leasehold landlord who owns a parcel of land leases the land out for any set number of years to some developer or leasehold tenant. When a developer sells a person strata lot, the developer sells the developer's interest like a leasehold tenant to the buyer who then assumes the interest as a leasehold tenant.
Because the buyer is getting the interest of a tenant within lease, he or she buys the authority to exclusive possession of the strata lot for the balance of the term remaining under the lease and the to trade that interest. What goes on at the end of the term of the lease will have a big bearing on the value of the home and should be carefully scrutinized. It is critical that when looking to buy a leasehold strata property, the purchaser takes a close look on the model strata lot lease for that formula of the ultimate payout.
Real Estate - The Triton on 10th, the industry development built on land belonging to the Vancouver school board at Broadway and Granville falls into such a category where upon expiration from the lease in 2096, the college board must purchase each interest at the current market rate. The price of a two-bedroom unit within the Triton is about $500-$600 per sq . ft . depending on the layout, direction it faces and which floor readily stored away on. The building is 13 years of age, in a location close to shops and restaurants, and minutes far from downtown.
A recent sale of your two-bedroom, 1240 square foot unit was $623 000 which is $502 per square foot. That's hundreds of dollars less per square foot than a comparable freehold strata unit. The Triton on 10th might be a good fit for somebody who doesn't' have the plan for a freehold strata unit. But buyers' should realize that with leasehold properties banks have stricter approval standards, the unit can be less liquid when the time comes to sell, and they usually do not see the value appreciation much the same way a comparable freehold unit would.
There are more developments in the downtown Vancouver area along False Creek whereas once the lease expires, there is NO payout. Meaning when the lease expires, the leasehold landlord becomes the rental landlord, as well as the leasehold tenants become rental tenants paying rent in the current market rate. This kind of Leasehold property will depreciate in value and many more so as the lease date approaches. In cases like this as the expiration date methods to within 30-40 years any owner could have a very difficult time selling the house, namely because you would have to find someone capable of paying with cash because banks will be very reluctant to mortgage such a property.
Vancouver Real Estate - Many properties along Beach Avenue are quickly approaching their lease expiration dates, but despite the desirable location, sellers realize that in order to sell such a property they must lower the price. But as a buyer, careful consideration must be taken in to the price of the unit and also the number of years until the lease expires.