Buying a condo on leased land in False Creek just became a whole lot more expensive. The city of Vancouver jacked up lease rates overnight with an average increase of SEVEN HUNDRED PERCENT! This story from 24hrs.
“Richard Cooper woke yesterday to find his payments had jumped from $102 monthly to $785.
“I got up this morning and there was a bulletin,” Cooper told 24 hours.
Condo owner George Stratis was among the hardest hit. He wasn’t aware of the increase until he was contacted by 24 hours yesterday. “You’ve got to be kidding me! That’s absurd,” Stratis said, when told his payments had jumped by $1,400 a month. “That’s larger than a mortgage.”
Stratis could now owe the city about $20,000 a year. That’s on top of his regular property taxes.”
One owner has seen their payments raise from $121.50 to $2,000 – An incredible SIXTEEN HUNDRED PERCENT increase! The city claims that these lease rates have been stuck at a low value for thirty years and that todays increase reflects the current value of the land. Leasehold value has been a contentious issue between residents of False Creek and the city of Vancouver for years. Some residents claim this former industrial land is contaminated and overvalued by as much as 40-50 per cent.
“They’re simply boldly making the statement saying this land is worth top dollar and we should be getting as much rent for it as if it were clean,” said Renger, a senior city planner in another jurisdiction. “That’s not what market land value is about.”
I have a feeling that even at the peak of a boom you’re going to see listings for leased land property in False Creek plummet in value as owners, particularly retirees try to get out of their lease-hold condos.
Update: there’s more info in the Georgia Straight – apparently these increases are on 118 units that decided not to prepay their lease in 2001. The only False Creek resident that was there during the October 3rd council vote in favour of increasing the lease rates was Merv Therriault:
â€œThis has all been predictable,â€ Therriault told the Straight. â€œIn 1998, we got a document through an FOI [request] that said a large increase in rent will present a political burden to council in 2006.â€
Though the increase was forseen, apparently the size of the increase was not:
“COPE Coun. David Cadman told the Straight that no one could have predicted land values would rise so much, but itâ€™s councilâ€™s job to uphold the lease agreements. Both Cadman and Therriault predict that when the leases expire in 2040, South False Creek will likely be sold and turned into a Yaletown-like development.”
I’m unclear on the legal status of units built of leased land. If the city decides to sell the land in 2040 when the leases expire do they need to buy the buildings from their current owners, or can they just tear them down with no compensation since the lease for the land is up?