Long-term residential leases aren’t popular in North America like they are in other parts of the world, but a Vancouver-based company endeavours to change that.
With Eventide, Deecorp Properties is offering a three-unit luxury boutique condominium on the sunniest part of the downtown peninsula. The kicker: Chosen residents will be living there on a 30-year lease.
“There are quite a few advantages,” said Stanley Dee, Deecorp’s president and CEO. “There’s no transfer tax if ever someone wants to move, but there’s also less cash outlay, meaning we’re in a situation where we can rent on an annual basis or it can be prepaid for 30 years. They pay slightly under half of the value, which is essentially the freehold value on a 30-year prepaid lease.”
The British Columbia government recently introduced a few regulatory measures to curb rapid price escalation in Vancouver, Canada’s third-largest, yet most expensive, city. But where there’s no purchase, there’s no tax, says Dee.
“It helps avoid the vacancy tax and the foreign buyer tax,” he said, “because there’s no purchase; just a lease. In Canada, if you’re 30 years or less there’s no transfer tax, which starts at 2% and goes up to 5%, so that would be $500,000 on a $10 million home.”
Dee stresses that the 30-year lease wasn’t conjured in a bid to circumvent existing tax schemes; rather, it works within the rules and, in essence, functions as a substantial security deposit that’s returned at the tenancy’s conclusion.
Another major advantage is that there’s no risk of losing home equity if the market plummets, however unlikely that may be.
“The tenant doesn’t care about appreciation, and that’s the whole idea,” said Dee. “They’re not buying for appreciation nor are they taking the same gamble homeowners do that the market won’t go down. What we’re offering gives them certainty, and that is arguably the biggest advantage.”
Ron Antalek, a REMAX sales agent, says long-term leases can generally be an excellent way to save money.
“It’s for sure viable,” he said. “The attraction is the monthly cost. If it’s below or at market rents, it’s great, and you can live there for, say, 10 years and then sell the rest of the lease.”
At Eventide, long-term leasing is a way to enjoy luxury living without the accordingly astronomical cost of freehold ownership.
In total, the building, slated for July completion, will be four storeys tall—including two levels for the penthouse—and sit by the beach. Deecorp Properties will also be the property manager, further elevating the Eventide’s value proposition, says Dee, because residents won’t be bothered by common issues with condo corporations.
“Normally the problem when you buy a condo is you’re part of a strata and the council makes poor decisions, often not properly maintaining the building,” he said, adding that, where long-term leases are concerned, well-maintained buildings are in everyone’s interest.
“You hear the horror stories.”
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