Vancouver raises False Creek lease rates 700%
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:
“This has all been predictable,†Therriault told the Straight. “In 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 it’s council’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?
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October 5th, 2006 at 9:22 am
I can’t imagine dealing with an expensive increase like this. I hope that people there haven’t bet their nest-egg on a leasehold condo.
October 5th, 2006 at 9:28 am
October 5th, 2006 at 9:32 am
October 5th, 2006 at 9:53 am
disgusting.
October 5th, 2006 at 10:17 am
October 5th, 2006 at 10:33 am
October 5th, 2006 at 10:36 am
October 5th, 2006 at 11:30 am
It also seems to me that part of owning is being prepared for extra costs. Even if your property is not on leased land you can still run into repair costs or tax increases.
I feel sorry for the people that are affected by this rate increase, but I’m sure that a lot of them probably knew it was just a matter of time before it happened.
October 5th, 2006 at 11:50 am
This rate of increase is unfair, I can’t imagine it will stand. The city must be hoping to force those who can’t afford it out. What will the ramifications be? Why is 24 reporting on this but not the Sun? Is this a hoax?
This kind of property tax is regressive, it has no bearing on the owners ability to pay, targeting the most vulnerable. Those on fixed incomes and those who bought years ago and could never afford to buy in this climate. They will be taxed out of their homes. The people affected may actually be people who bought a home to live in rather than soley as an INVESTMENT in which case they might have thought a city lease would be stable and trustworthy thing to depend on. Especially in a city that has long been held in esteem for progressive housing and planning ideals.
October 5th, 2006 at 11:59 am
http://www.straight.com/content.cfm?id=21026
118 lease holders are affected
In 2001, residents who had not prepaid their leases were given the opportunity to do so, to avoid renegotiating every 10 years. These 118 chose not to do so.
I wonder if they were unable to afford it, or simply gamblers.
October 5th, 2006 at 12:31 pm
October 5th, 2006 at 1:29 pm
even starting to trade housing futures on the commodity market.
October 5th, 2006 at 3:25 pm
…………………..
I’d like to know how it works here in Vancouver too.
Public housing (known as HDB for short) in Singapore are on 99-year leasehold land. It’s generally believed that extension will be given once the lease expires if the structure is still stable, or the building will be demolished, the land title to revert to the State and the condo-occupants to walk away with no compensation.
However, these 99-year leasehold condos are priced at around C$120k (1 bedroom) to C$200 (3 bedrooms). Luxury condos built on private freehold land are around C$400 - x,xxx,xxx.00
October 5th, 2006 at 5:25 pm
The city should offer to spread the increase over two years. This would give the owners a fair chance to pack their bags. There are wealthy buyers and the property is desirable; they’ll happily pay the new rate.
It’ll be win-win: the owners get incentive to sell in a hot market; the buyers go into the deal with their eyes open; the city gets realistic lease rate payments.
October 7th, 2006 at 11:25 am
October 7th, 2006 at 5:02 pm
Is anyone out there willing to pay $660,000 for a 2-bed, 1-bath, 1100 sq ft 30-year old condo in need of a new roof?
That is ridiculous.
October 7th, 2006 at 6:26 pm
October 9th, 2006 at 10:43 am
October 11th, 2006 at 4:32 pm
In any case, I guess this means that all the property values in False Creek will go for a dive. No Lease or Lease, everyone looses.
Now we know how the Olympics are being paid for!
October 11th, 2006 at 9:21 pm
October 23rd, 2006 at 1:21 pm
1. These leases halfway through their 60 year period.
2. The lease agreement provides for a renegotiation of the rent after the first 30 years. Note that it is a negotiation - the City does not have the power to unilaterally impose new fees.
3. The lease agreement allows for arbitration if the City and the leaseholders cannot reach agreement on new fees.
4. No-one has been ofically contacted by the City with respect to the proposed new fees yet. The numbers circulating are taken from City Hall Minutes published on the internet.
This thing has some way to play out yet, but most of your correspondents have decided it’s already a done deal! How many have actually read the lease agreement with the City?
December 3rd, 2006 at 12:00 pm