A UBC leasehold property is a property on the university land that has been rented to a developer. UBC leasehold properties are a great purchase to make in the Vancouver real estate market. Provincial law prohibits UBC from selling freehold properties. Not many people are aware of this. But what exactly does that mean?
This blog covers the difference between leasehold properties and freehold properties. We take a closer look at what leasehold properties entail, specifically relating to UBC leasehold properties.
What is a leasehold property?
A leasehold property is a property where the owner owns the home but not the land it is built on. The land is leased to the developer by the land owner.
Leasehold land is rented out to a developer. The developer then builds on the land and rents the property out. The lease on the land is typically pretty long. They can be up to 100 years or even more than that! Oftentimes, they are pre-paid up front so there are no worries of changes in pricing of the lease later on.
What is a freehold property?
A freehold property is a property where the owner has full control of the land and buildings on it. This is subject to any rights of the Crown, bylaws or restrictions on the property.
What is the difference between a leasehold property and a freehold property?
The difference between a leasehold and freehold property is that the leasehold has a limited time of ownership of the land whereas the freehold owner does not.
The leasehold owner is renting the land for a set lease period. On the other hand, the freehold owner has full use and control to the land for an unlimited period of time.
Are leasehold properties a tangible asset?
Yes. Leasehold properties are a tangible asset. They are registered at the Land Titles Registry and you have the same rights as a freehold property owner. Similarly to a freehold property, you can buy, sell and will the property to someone else. This is true for the length of the lease, which is up to 99 years at UBC.
What is the difference in price compared to a freehold property purchase?
Prices are dictated by the market, just like a freehold property. So this will depend on the location and properties nearby. It accounts for the qualities and characteristics of the property itself and all aspects need to be accounted for. It is best to find a local realtor to work with as they know how to calculate a fair market price for your home. If you are in the Vancouver area, contact top local realtor Leo Wilk with any inquiries about real estate in the area!
Homeowners of UBC leasehold properties will also pay City of Vancouver property taxes and strata maintenance fees (for strata titled properties). This is standard for real estate properties regardless of the status of leasehold and freehold.
What should I know about a UBC leasehold property?
At UBC, homeowners are buying into a community. This means that when you buy a UBC leasehold, you are paying for part of the maintenance for streets, infrastructure, and amenities in the community.
This is different from freehold properties as the developer takes on the role of maintaining the land and community. This can be seen as a benefit to homeowners as they are no longer dependent on the government for maintaining the community.
In addition, a portion of property taxes are automatically set aside and administered by the University Neighbourhoods Association to provide reserves for the inevitable replacement and upgrading of this infrastructure in the future.
What happens at the end of the 99 year lease for UBC leasehold properties?
There are two potential outcomes that occur at the end of the 99 year lease. The first is the university negotiates an extension of the lease or they pay the leaseholder fair market value for improvements to the property.