Land Lease in BC

While freehold ownership, in which the homeowner owns the home and the land on which it sits, is most common in Canada, leasehold ownership structures also exist in a small fraction. In a leasehold, the homeowner owns the dwelling but leases the land from a landlord, which can be an individual, organization, government, or institution, typically under a renewable term.

Buying a leasehold home in BC is often cheaper than freehold, but the process is more complex. It's advisable to consult a real estate lawyer or realtor experienced in leasehold matters, and to carefully weigh factors like time remaining on the lease, mortgage rates, financing options, and associated fees.

An alternative to the traditional homeownership structure, land lease housing allows buyers to buy just the home without having to buy the land under it. This can significantly reduce the upfront cost, but there are many other factors that one should consider before buying a leasehold property.

• Ownership: Homeowner owns the home but not the land beneath it. The land may be owned by an individual, company, First Nations community, institution, or government.
• Land Rent: The homeowner typically pays a monthly rent to the landowner for the entire duration of the lease. Some leases are prepaid upfront, in which case rent isn't required to be paid.
• Lower Purchase Price: Since the land isn't included in the sale, leasehold properties typically cost less than comparable freehold homes.
• Strata / Community / HOA fees: If the property is part of a planned community, you may have to pay an additional community association fee on top of land rent.
• Financing Challenges: Traditional lenders are often reluctant to finance leasehold properties. Alternative mortgage lenders may be willing to finance, but may charge higher interest rates than for freehold properties.
• Surrender Clause: A surrender clause may require you to surrender all structures built on the land when the lease expires.
• Eviction Risk: If the conditions of the lease are not met, the leaseholder may be evicted.
• Registration: All long-term residential leases, and many other leasehold interests, are registered with BC's Land Title Office to protect the leaseholder's interest.

Some of BC's best-known leasehold communities include False Creek South, Champlain Heights, and the West End in Vancouver (all City-owned), as well as leasehold strata developments on UBC endowment lands and Musqueam Nation land near Pacific Spirit Park.

There are four main types of land available for leasehold in British Columbia.

• 1. Privately Owned Land: Individuals and private organizations can lease land owned by them for a long term through a residential lease agreement. Some key facts about such leases are:
  • Such leases are filed in the land registry of BC.
  • The lease tenure in such cases is usually 99 years.
  • Leases are usually transferable; however, the transfer often requires the landlord’s consent.
• 2. Public Land: Land owned by the provincial or federal government is called crown land or public land. 94% of the land in BC is owned and controlled by the BC government.
  • Such lands can be leased for residential, recreational, industrial, research, and other purposes.
  • Applications for Crown land in BC are generally submitted through FrontCounter BC, the provincial government's single-window portal for natural resource applications, administered by the BC Ministry of Water, Land and Resource Stewardship.
  • The lease term length varies depending on the intended use of the land.
  • Residential leases normally have a term length of up to 30 years.

1. 3. Institutional Land: Public institutions such as universities and municipalities also lease out land owned by them. For example, the land owned by the University of British Columbia (UBC) is leased to generate revenue from land development. The UBC Properties Trust is a leaseholder of UBC lands that oversees the rental housing and development activities on the lands.
   • The lease term length is usually 99 years.
   • The leases are registered in the BC land registry.
2. 4. First Nations Owned Land: These are lands owned by the federal government but reserved for the First Nations. The First Nations have the right to occupy and lease these lands.
   • The lease may be registered in the BC land titles registry, the First Nations Land Registry, or both.
   • Many cottages in Canada are built on lands reserved for First Nations.

While residential leaseholds aren’t very common in British Columbia, you may occasionally come across leasehold homes available for sale. Leasehold properties can be bought and sold at the end of each contract, or even during the lease tenure. The new leaseholder acquires the right to occupy the property under the lease. The common characteristics of a long-term residential lease in BC are as follows:

• A long-term residential lease term is usually for 99 years.
• The leaseholder is typically responsible for paying property taxes on the home, as well as a monthly fee to the landlord covering maintenance and upkeep of common areas or the land itself.
• The lease can be sold on a real estate market; however, the landlord may reserve some rights in these matters.
• The Residential Tenancy Act or the Strata Property Act doesn’t govern these leases.

The British Columbia government offers an opportunity for individuals and developers to lease crown land for permanent residential development as a part of the Residential Program. Crown land may also be sold for residential purposes in some cases. The land may be made available in urban as well as rural areas through a public tender or public lot draw. There are certain circumstances under which crown land may be made available by application:

• In remote areas where the privately available land cannot meet the residential sector’s requirement, crown land may be available for lease.
• Some land is required for residential development to support industries or commercial activities.

Notably, the BC government no longer accepts applications for leasing shorelands that haven’t been leased previously; however, existing shoreland residential lots may be available for purchase on the Crown land sales inventory. Lease tenure is restricted to existing urban and rural residential lots that do not conform to the subdivision standards of the Land Title Act, as well as to lots located within an existing subdivision where neighboring lots have been approved for leasing and infilling is taking place.

The tenure type — lease or licence of occupation — depends on the intended use of the land, the required term length, and available services and access. To lease Crown land for residential purposes, an annual rent must be paid to the BC government, calculated as a percentage of the BC Assessment (BCA) actual land value.

The minimum annual rent for Crown land is $850. Some Crown land may be available for sale for residential use at fair market value (FMV).

See BC Residential Land Use Policy for full details and exceptions.

Note: Crown land rents are not subject to BC's residential rent increase caps and rise in line with BC Assessment values. A provincial rental freeze was in place from May 2022 to April 2024; following its expiry, some leaseholders saw significant rent increases. Prospective leaseholders should factor in the potential for rent volatility over the tenure period.

Applications for Crown land in BC are submitted through FrontCounter BC, the provincial government's single-window portal for natural resource applications, managed by the Ministry of Water, Land and Resource Stewardship.

Direct applications are available in limited circumstances, including remote areas for ancillary uses, thermal loops, and, in rare cases, float homes. Before applying, review the current requirements on the FrontCounter BC website, as documentation requirements may vary by tenure type. A typical application package includes:

• an application form
• site maps
• a management plan
• a completed application checklist

Buying a property along with leasing the land where it's located provides the lessee with the benefit of exclusive use of the property without the obligation to purchase the land. In addition, leasehold arrangements can provide landowners with the opportunity to earn income from lands that cannot be sold, such as property belonging to institutions or indigenous communities. Leasehold properties can be an affordable choice for those seeking to downsize in retirement or for first-time homebuyers looking to enter the market. Nonetheless, potential buyers of leasehold properties should thoughtfully evaluate factors such as the remaining time on the lease, additional fees that may arise, and the terms of any surrender clauses.