Aleya Bhaloo : Archived blog posts for : February 2019

Leasehold, Co-ops, Stratas... What's the Difference?!

Posted on February 22, 2019 by Aleya Bhaloo

When it comes to real estate, there's A LOT of jargon in the industry. It can be quite overwhelming during your real-estate journey when you encounter all these unfamiliar words, which is why we're here to tell you the differences between all these types of property ownership. In Canada, there are 4 common types of property ownership which include:

Freehold
Leasehold
Strata
Co-Op

Freeholds

Freeholds are the most common type of property ownership, and also the most popular. It's the regular: You buy the house, so you own the building and the land it's sitting on. Most people prefer to buy freehold properties because there's less restrictions on what you can do (except for city bylaws, permit limitations...). You are the owner, so you are allowed to do any sort of renovations, changes to your property as you please, without having to receive approval from an authority. Detached single-standing homes are commonly sold as freeholds.

Leaseholds

Leaseholds are quite different from Freeholds in that you own the building, but not the land that it's sitting on. The land is leased by someone from a developer/builder. The lease is for a specific period of time, and will expire after that period. The lease term is usually around 99 years. After the lease is up, there are several different ways that it could go:

They could renogotiate terms to extend the lease for another period of time
The land could be reclaimed for redevelopment (The developer would pay out all the owners of the Leasehold)

There are quite a few Leaseholds in Vancouver, such as:

UBC Endowment Lands
SFU
False Creek
Certain parts of Vancouver's West End
Indigenous Land

While Leaseholds may scare some people off, there are actually still quite a lot of benefits to owning a Leasehold. Since you don't actually own the land, Leaseholds generally are cheaper than freeholds or other types of property ownership. This means if you're looking to buy, but have a lower budget, Leaseholds may be the way to go. However, having said that, they usually do require a larger down payment of ~20% rather than the minimum of 5%.

Strata

Strata properties are also extremely common in Vancouver. Most attached homes (i.e. condos, townhouses) are strata properties. When you own a Strata property, you own your individual strata lot, and together with other owners own the common property/assets as a strata corporation (i.e. parking, ameneties, roof...).
You are in charge of the maintenance of your individual unit, but charged a monthly strata fee for the upkeep of the common properties. The strata fees are proportionate to the size of your strata lot, so the bigger your unit, the more fees you have to pay.

Stratas also have rules and bylaws that owners have to abide by. These rules/bylaws are set in place by the Strata council, which consists of owners that are elected by all the owners in the strata. They host strata council meetings to discuss renovations, finances, complaints, and more. These strata council meetings have minutes that are accessible by all owners in the strata, even if they're not part of the council.

Co-Ops

When you buy a co-op, you become a shareholder in the corporation that owns that property, and have exclusive use of a unit in that property. Other than that aspect, co-ops are quite similar to Stratas in how they're run. Living in a co-op means you have to abide by certain rules/bylaws, share costs of the upkeep of the property... and more.

Co-ops can be more restrictive in their selection process. While other property ownerships cannot reject someone based on their gender, age..., co-ops can. There are often age restrictions, or women/men-only co-ops out there. There may also be an interview process to get permitted to the co-op, which some people actual prefer so they know the people that are their neighbours

When you purchase a co-op, you don't take out a traditional mortgage. You require a different type of financing called a share loan. It's similar to a mortgage, but the only difference is that you share in the co-op is the loan's collateral, not the actual property. Contact a Mortgage Specialist for more detail.

Hope you found all this information about the different types of property ownerships helpful, and cleared up some questions you may have had. This is just a brief overview of all the different types of property ownerships out there. If you want to know more, please visit the websites below for more information, or get in contact with us.

If you're still confused, feel free to CONTACT US to ask more questions!

If you're ready to START YOUR REAL-ESTATE JOURNEY, CONTACT USto find out how we can help!

Resources:

https://economictimes.indiatimes.com/definition/freehold-property

https://www.rew.ca/news/thinking-of-buying-a-leasehold-property-read-this-first-1.22111234

https://www2.gov.bc.ca/gov/content/housing-tenancy/strata-housing

https://www.chf.bc.ca/find-co-op/

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BC's Speculation and Vacancy Tax

Posted on February 12, 2019 by Aleya Bhaloo

The BC government's Speculation and Vacancy Tax is finally here. This tax is part of the BC government's plan to ensure that housing is affordable for all citizens of British Columbia.

Goals of the Tax

Their main goal with this new tax is to:

Turn empty houses into affordable housing for BC residents
Raise revenue that will go towards creating more affordable housing
Foreign/domestic investors who own residences in BC, but don't live in them

Exemptions

The government estimates that 99% or more British Columbians will be exempt from the tax; however, you must register in order to be qualified for exemption.

In mid-late February, keep an eye out for a letter from the provincial government with instructions on how to claim your exemption. The application (can be done online or through telephone) must be completed by March 31, 2019 in order to qualify for exemption. An application must be done by each owner of the house.

What Happens if You're Not Exempt?

If your home is left vacant for 6-months or longer since December 31, 2018, you will NOT be exempt from the Speculation and Vacancy Tax in 2019. You must pay the tax by July 2, 2019.

Tax Rates:

For properties owned on December 31, 2018, the tax rate is the same for everyone:

0.5% of the assessed value of your residential property on July 1, 2018 (BC owners are eligible for a tax credit of up to $2000 on secondary properties)

For 2019 and onwards, the tax rate will vary:

2% for foreign owners and satellite families (People who declare 50% or less of their income on Canadian income tax return)
0.5% for British Columbians and other Canadian citizens or permanent residents who are not members of a satellite family

So, don't forget to declare your exemption from the Speculation and Vacancy Tax!

Resources:

https://www2.gov.bc.ca/gov/content/taxes/property-taxes/speculation-and-vacancy-tax

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Leasehold, Co-ops, Stratas... What's the Difference?!

Freeholds

Leaseholds

Strata

Co-Ops

BC's Speculation and Vacancy Tax

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