Leasehold Homes in BC: Prepaid Leases and How They Work

Some homes in Metro Vancouver are sold with a long-term lease instead of freehold title, often with the rent for the whole term paid up front. Here is how prepaid leases work in BC, where you'll find them, and what to check about the years left, financing and taxes before you buy.

The short version

Leasehold, freehold and prepaid leases

With a freehold home, you own the land and the building with no end date. With a leasehold home, the landowner keeps the land and you buy the rest of a lease, often 99 years when it was new, though some older strata leases were for 60. I compare the main types of ownership in Freehold or Strata?; here is how the lease itself works.

• Prepaid rent. The ground rent for the whole term is paid up front, often by the developer, which the Province describes as quite common in BC.
• Regular rent. Some leases charge ground rent through the term, and increases can be substantial. On designated reserve land, leases that aren't prepaid must include rent reviews, usually every five years. Rent the developer didn't prepay may fall to later owners.
• The end of the lease. When the lease expires, the land and building go back to the landowner. Any compensation is set in the original lease and may be nothing, though landowners and leaseholders sometimes negotiate an extension.

Leasehold homes are also excluded from BC's three-business-day home buyer rescission period.

Where you'll find leasehold homes

Only certain public bodies can be landlords of a strata leasehold in BC, including governments, universities and treaty First Nations, so leaseholds cluster in a few places:

• UBC. The university enters into 99-year prepaid leases for residential properties, and every resale needs an assignment of lease signed by UBC.
• The University Endowment Lands. Musqueam's leləm̓ village sits on Block F, land a reconciliation settlement transferred to the Musqueam. Its development company's website said in 2017 that the lots would be sold to developers as 99-year leaseholds, as at UBC.
• False Creek South. The City of Vancouver owns 80% of the land there. Its 60-year leases from the 1970s and 1980s mostly expire between 2036 and 2046, and the great majority of the residential strata leases are prepaid.
• Reserve lands. Musqueam reserve land lies south of Marine Drive near the mouth of the Fraser River, Tsleil-Waututh reserve land runs along Dollarton Highway in North Vancouver, and the Squamish Nation has lands in Vancouver and on the North Shore. Market homes on reserve are generally sold as leases or subleases.
• Tsawwassen. On Tsawwassen First Nation's treaty lands, homes are bought and sold as residential leaseholds, with the Nation as the registered owner of the land.

Where the lease is registered

Where the lease is recorded decides which searches, forms and consents apply.

• The land title office. Leases at UBC and on Tsawwassen lands are registered in BC's land title system, which LTSA runs.
• Federal registries. On reserve land administered under the Indian Act, leases and related documents are recorded in Indigenous Services Canada's Indian Lands Registry. First Nations with their own land codes use the First Nations Land Registry System.
• A Nation's own rules. Tsleil-Waututh's registry, a sub-registry of the First Nations Land Registry System, doesn't accept BC land title forms. Each market housing development there is run by a homeowners' corporation in which buyers must hold shares, and every assignment of a sublease needs a certificate of independent legal advice.

Consents matter too. On designated reserve land, the assignment of a head lease is valid only once the old and new lessees, Indigenous Services Canada and, where it is a party, the Band Council sign a consent agreement.

Financing a leasehold home

The Province notes that lenders may ask for a higher down payment on a leasehold home and may be reluctant to lend or renew near the end of the lease. Some lenders set a minimum. The Canadian Bar Association's sample lender instructions, and CMLS Financial's report form for lawyers, call for the remaining term to exceed the amortization by at least five years.

• An example. With a 25-year amortization, a five-year margin means the lease needs at least 30 years left; with 30 years, at least 35.
• Extra paperwork. At UBC, each mortgage needs a tripartite agreement signed by you, your lender and UBC, and Tsawwassen First Nation signs tripartite agreements too. On designated reserve land, a mortgage of a head lease isn't valid until the lessee, the lender, Indigenous Services Canada and the Band Council sign a mortgage acknowledgement agreement.
• Ask early. Check with your lender or mortgage professional whether it finances the kind of lease you're considering, and on what terms, before you write an offer.

Time left on the lease, and what it means for value

The lease counts down from the date it began, not from when you buy, so a resale home has fewer years left. The Province notes that a lease's relative value tends to decline as it approaches its end date.

• An example. A 99-year lease that began in an example year of 2010 ends in 2109, so in 2026 it has 83 years left.
• False Creek South. Most of the original leases there have 10 to 20 years left in 2026. In 2023, the City offered strata leaseholders a 20-year extension on a prepaid basis, and at the end of a strata lease, the City makes a payment meant to compensate for the fair market value of the improvements.
• Elsewhere. What you receive at the end depends on the lease, and it may be nothing, so read that clause before you compare prices.

Property taxes, transfer tax and services

• At UBC. Leaseholders pay UBC's services levy plus rural property tax to the Province, which together equal what a similar property in the City of Vancouver would pay.
• On reserve land. Non-member leaseholders pay property taxes to the First Nation if it charges its own, as Musqueam, Squamish and Tsleil-Waututh do. The provincial home owner grant doesn't apply then, though a Nation may offer its own; Tsleil-Waututh's follows the provincial rules.
• The home owner grant. Under the Home Owner Grant Act, a lessee can qualify under a lease registered at the land title office for at least 99 years that makes the lessee pay the property taxes, if the other rules are met.
• Property transfer tax. BC's tax is paid when an interest is registered at the land title office, which includes the grant or assignment of a long-term lease, valued under the Province's rules. Some Nations have their own: Tsleil-Waututh's property transfer tax is similar to the provincial one, and Musqueam is working on a registry law so its leaseholders register only in the First Nations Land Registry, not also in BC's land title system, and pay only one transfer tax.
• Services. On reserve land, water, sewer and fire protection may come from a neighbouring municipality under a service agreement, so ask who provides them and how they're billed.

What to check in the lease

• The end date. The exact expiry date and the years left, counted from the start of the lease.
• Rent. Whether the rent is prepaid for the whole term, and if not, how and when it's reviewed, and whether any rent is owing.
• The end of the term. Any right to renew or extend, what happens to the building, and whether any compensation is payable.
• Consents and fees. Who must sign when you buy, sell or mortgage, and what it costs. Tsawwassen First Nation, for example, charges a fee to execute each document and asks for five clear business days.
• Rules for the home. Whether the lease limits renting, use or alterations, plus the strata or homeowners' corporation's bylaws, budget and minutes.
• Legal advice. The Province recommends reviewing the lease carefully, and a lawyer who knows strata leaseholds can help.

Questions buyers often ask me

What is a prepaid lease?

A lease where the ground rent for the whole term has been paid up front, often by the developer. You buy the years left on the lease and don't pay ground rent, though you still pay property taxes and any strata fees.

What happens when a leasehold lease ends?

The land and building go back to the landowner. Any compensation is set in the lease and may be nothing, though landowners and leaseholders sometimes negotiate an extension.

Can I get a mortgage on a leasehold home?

It depends on the lender and the time left. Lenders may ask for a larger down payment, and some require the lease to run at least five years past the end of the amortization.

Do I pay property transfer tax on a leasehold home?

If the lease is registered at the land title office, generally yes, because the grant or assignment of a long-term lease is taxable. On reserve land, ask whether the First Nation has its own transfer tax, as Tsleil-Waututh does.

Can I claim the home owner grant on a leasehold home?

Sometimes. The Act covers, among others, a lessee under a lease registered at the land title office for at least 99 years that makes the lessee pay the property taxes. If you pay your taxes to a First Nation, ask whether it offers its own grant.

Comparing types of ownership? Read what you actually own when you buy in BC and Closing Costs in BC, or browse homes for sale in Vancouver and North Vancouver.

This article is general information, not legal or tax advice. Every lease is different, so have a lawyer or notary review the lease and how it's registered before you buy; the details come from provincial, federal, First Nations, UBC and City of Vancouver sources and were current at the time of writing. For the Province's guide, see strata leaseholds.