When you think “land lease community,” what comes to mind?
“Traditionally, people think of land lease as older mobile home parks,” says Sandy Higgins, vice president of planning for Parkbridge, Canada’s largest owner, operator and developer of land lease communities. However, today’s land lease communities are different.
“We’re talking about very attractive neighbourhoods comprised of single-family homes, semis and townhouses that look like any other housing community,” he says. “These are ideal opportunities for young families entering the housing market or seniors looking to downsize in retirement. They often have recreation centres, pools, tennis courts, lots of green space and other amenities. The big difference is in the price of the homes.”
The very nature of land lease — in which the homeowner pays a rental fee for land that is owned by the developer — makes it extremely affordable to purchase. “We can provide attractive housing for significantly less money,” explains Higgins. Conventional developers need to get all their money on the sale of the homes. Condominium developers have lots of additional costs associated with the complexity of their development. All of those costs go straight to the purchase price.
“With land lease,” says Higgins, “we’re recovering costs over the lifetime of the community. Many of those costs — land transfer, infrastructure, recreational facilities — are not recovered upon the sale of the home but over a long period of time through reasonable, steady rental fees, which makes this an affordable and achievable form of home ownership.”
Urban planners may not realize the opportunities land lease presents, even as the gap between full rental and full home ownership continues to grow. “The ‘missing middle’ is being ignored,” says Higgins. “Government officials are starting to recognize this. People are getting trapped in rental housing because they can’t bridge the gap to become owners, and that gap is getting wider all the time.”
Land lease developers are working with the province to modify the Ontario Planning Act. “At the moment, there are barriers and obstacles for land lease development,” explains Higgins. One limitation is that land leases are 21 years less a day. This can complicate matters for lending institutions, which won’t extend amortizations longer than the lease term.
“Longer leases would give better tenure and security to homeowners, which is a win-win for everyone,” says Higgins. “It would unlock financing for those with limited resources or who are trying to break into the home market. And there is a ripple effect for young families as they get into the market faster and their rental is open to someone else who needs rental accommodation.”
But it’s municipal governments where land-lease developers have their primary contacts, and that’s why educating municipalities about the benefits of land lease is so critical.
“One real benefit is that while there are dozens or hundreds of homes in the development, the municipality only has one customer to collect from in terms of property tax and utility bills,” says Higgins. “Another benefit is that these communities generally provide their own amenities like recreation centres and pools. And there’s a real sense of community in these neighbourhoods that benefits the entire municipality. They’re supporting each other in a vibrant, engaged, socially active way.”
To learn more about land lease opportunities, visit parkbridge.com.