The short answer
A leasehold strata purchase involves an interest governed by a lease. The remaining term, payments, restrictions and end-of-lease provisions need close review. A freehold strata and a leasehold strata should not be compared on asking price alone.
BC: strata leaseholdsCheck the title
Confirm the exact ownership interest being offered.
Read the lease
Understand remaining years and renewal or expiry provisions.
Read beyond strata fees
Ground rent and other lease obligations may also apply.
The basics
What you own in each kind of strata
Most stratas in BC are freehold. A freehold owner owns the strata lot outright, with no end date. In a strata leasehold, the landlord keeps ownership of the land. Buyers purchase a lease for a set term, often 99 years. When the term ends, the land goes back to the landlord.
Only certain public bodies can be strata leasehold landlords. The list includes the Province, the Government of Canada, local governments, school districts, universities, BC Housing, and some First Nations and related companies. Both kinds of strata run under BC’s strata law, with a council and annual general meetings.
Why it matters
Why time left on the lease changes everything
BC’s guidance says the value of a lease tends to fall as it nears its end date, though it moves with the market. Lenders may ask for a larger down payment on a leasehold. They may also hesitate to lend or renew near the end of the term.
The lease must state an end-of-lease payment, but that amount can be $0. Leasehold sales are also excluded from the three-day cooling-off right.
How it works
How to review a leasehold strata before you offer
Confirm it is a strata leasehold
Long-term tenures that are not under the Strata Property Act are private contracts. The Civil Resolution Tribunal cannot hear disputes about them.
Find the lease end date
Read the start date and term in the lease. Work out how many years will remain when you buy and when you plan to sell.
Read the ground rent terms
Ground rent is paid to the landlord. It may be fully prepaid, paid over time with possible increases, or partly prepaid with later market adjustments.
Find the end-of-lease payment
The lease must set it out. Check the amount and how it is worked out, since it may be zero.
Talk to your lender early
Ask whether they will finance this lease term and what down payment they need. Use the down payment calculator to test a larger amount.
Keep subjects in your offer
With no cooling-off right, contract conditions are your main way out. Give yourself time for legal review of the lease.
Avoid these
Leasehold mistakes that are hard to undo
Comparing price per square foot
A lower price may reflect fewer years of use, not a bargain. Compare the price with the years you will actually get.
Expecting an extension
BC’s guidance says landlords and leaseholders occasionally negotiate extensions. Occasionally is not a promise. Plan as if the term ends on the date in the lease.
Forgetting strata costs still apply
Leaseholders pay the same strata fees and special levies as freehold owners, plus any ground rent.
Writing a subject-free offer
Leasehold sales have no three-day cancellation right. Without subjects, you may have no way out after acceptance.
Example
Counting the years you would really get
Illustration only. The dates are invented to show the arithmetic. Use the dates in the actual lease.
| Lease start year | 2000 |
|---|---|
| Lease term | 99 years |
| Lease end year | 2000 + 99 = 2099 |
| Years left if you buy in 2026 | 2099 − 2026 = 73 years |
| Years left if you sell in 2046 | 2099 − 2046 = 53 years |
Your next buyer will be looking at fewer years than you did, and their lender will too. Ask your lawyer or notary to confirm the exact end date.
Questions to ask
Questions to ask about a leasehold
Your lawyer or notary
- What is the exact end date of this lease?
- What does the lease say about ground rent increases?
- What end-of-lease payment, if any, is set out?
- Is this a strata leasehold or a long-term tenure?
Your lender or mortgage broker
- Will you finance this lease term?
- What down payment do you need for a leasehold?
- Would you renew my mortgage later in the term?
The listing agent or strata
- Has the ground rent been prepaid?
- Have owners discussed an extension with the landlord?
- Can I see the strata documents and minutes?
FAQ
Common questions
Do leasehold strata owners pay strata fees?
Yes. BC’s guidance says strata leaseholders pay strata fees and special levies the same way freehold owners do. Ground rent may come on top. Check the building’s budget and the lease.
If ground rent is prepaid, can I skip reading the lease?
No. Prepaid rent settles one cost, but the lease still sets the end date, the end-of-lease payment and other terms. A lawyer who knows strata leaseholds can explain them.
Can I cancel a leasehold purchase within three days?
No. Leasehold properties, including strata leaseholds, are excluded from the Home Buyer Rescission Period. You can only leave if a contract condition is not met.
What happens when the lease ends?
The land reverts to the landlord. The lease must state an end-of-lease payment, but it may be $0. Read that clause before you buy.
Who can be a strata leasehold landlord?
Only certain public authorities, such as the Province, the federal government, local governments, school districts, universities, BC Housing and some First Nations.
