Comments on: Vancouver raises False Creek lease rates 700%

By: Anonymous

Anonymous — Sun, 03 Dec 2006 20:00:00 +0000

If you bought a condo for $100,000 and rented it for $1000 per month you would earn 12% (as long as there are no other expenses). As long as you get $1000/month you always get 12% return, regardless of the value of the property. This is the same as the city. They are still getting the same rate of return on this land based on the original price they paid for it. They not not improved it at all or had any expenses incurred with it, so why are they putting up the rent? Just to force people out?

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By: Chillout

Chillout — Mon, 23 Oct 2006 21:21:00 +0000

Here are a few facts most of your correpondents seem to be unaware of....
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?

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By: raconteur49

raconteur49 — Thu, 12 Oct 2006 05:21:00 +0000

Hang in there .. et bon courage

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By: Anonymous

Anonymous — Thu, 12 Oct 2006 00:32:00 +0000

The scary thing is that a real estate agent told us that the lease will not go up by much and then when we called City Hall, they say that they did not know anything and that it would be up to an independent evaluator to decide. I think it's a shame for any new folks who bought in from a previous owner who choose not to pre-pay the lease.

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!

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By: Anonymous

Anonymous — Mon, 09 Oct 2006 18:43:00 +0000

Let this be a lesson. Don't buy leasehold properties sitting on land owned by Salish, UBC, SFU, City or otherwise.

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By: Win Lose or Draw

Win Lose or Draw — Sun, 08 Oct 2006 02:26:00 +0000

I have little capacity for empathy for people who cannot heed loud, long warnings. Believing one has an entitlement to below-market cost is nothing more than freeloading.

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By: Lets Organize

Lets Organize — Sun, 08 Oct 2006 01:02:00 +0000

We paid ~$410,000 for our 2-bed condo, on leased land. The City claims the market value for the land our unit sits upon is $250,000. That means that (hypothetically) if we owned the land (held this condo as fee simple), we should be able to sell it for $660,000.

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.

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By: Anonymous

Anonymous — Sat, 07 Oct 2006 19:25:00 +0000

My land rent in False Creek just increased by $10,332 a year. At a 30% tax bracket I now must earn about $15,000 more a year to keep my home in False Creek. At 58 years old I can't earn that much more money per year. My $861 per month increase would pay for a mortgage of about $133,000. My home is now effectively worth that much less!!

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By: Anonymous

Anonymous — Fri, 06 Oct 2006 01:25:00 +0000

These people have had a decade in which to deal with this upcoming issue. They can *not* expect the rates to remain flat forever.

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.

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By: Anonymous

Anonymous — Thu, 05 Oct 2006 23:25:00 +0000

"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?"
.......................
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

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By: Anonymous

Anonymous — Thu, 05 Oct 2006 21:29:00 +0000

well because oil is a commodity and housing is ...hmmm well I guess now housing is a commodity.

even starting to trade housing futures on the commodity market.

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By: Anonymous

Anonymous — Thu, 05 Oct 2006 20:31:00 +0000

When you sign a lease, or buy a lease hold property, you sign a contract with the city. In the contract, the city guarantees the lease for X number of years. After that, it's all up in the air. Will you go to Saudi Arabia and demand oil for $20 a barrel today?

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By: Anonymous

Anonymous — Thu, 05 Oct 2006 19:59:00 +0000

oops I did find it in the Sun, and the Straight, where they have a bit better explanation

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.

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By: Anonymous

Anonymous — Thu, 05 Oct 2006 19:50:00 +0000

actually lots of thing don't get more expensive overtime- once adjusted for inflation. Real estate over the long term is one of those things.

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.

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By: d_oush

d_oush — Thu, 05 Oct 2006 19:30:00 +0000

I'm not unsympathetic. I don't think its right to raise the rates that high that fast, but to expect costs to stay the same after 30 years is not realistic. You cant find anything that cost the same as it did 30 years ago. Even if it's true that its contaminated its still prime central land in a booming city.

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.

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By: bc_cele

bc_cele — Thu, 05 Oct 2006 18:36:00 +0000

Nice to see the sympathy there d_oush. Are you still in school? How about we just adjust your fees to what they would be in a free-market, without a government subsidy? That will be another 12K please.

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By: bc_cele

bc_cele — Thu, 05 Oct 2006 18:33:00 +0000

Seems like there may be a court challenge in the near future. If you can't jack up rents more than a fixed amount - and this is just another form of rent - then why should you be allowed to do it for leaseholds?

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By: d_oush

d_oush — Thu, 05 Oct 2006 18:17:00 +0000

OH come on. These lease payments have been around for 30 years! of course they are going to go up. I cant buy or rent a house for the same price that I could 30 years ago, so why should lease payments be any different?

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By: tinybubbles

tinybubbles — Thu, 05 Oct 2006 17:53:00 +0000

This is a shameful move by the City of Vancouver, but I guess this is what happens when money comes before everything else.

disgusting.

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By: Anonymous

Anonymous — Thu, 05 Oct 2006 17:32:00 +0000

I wonder how many people have been driven by boom pricing to consider lease-hold property an investment though? Wh wants to bet that you'll see falsecreek leasehold condos show up on MLS in the next couple of weeks in the sub $200k range?

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By: xeus

xeus — Thu, 05 Oct 2006 17:28:00 +0000

This is exactly why leasehold property is NOT a good investment. I feel sorry for these people, but this is what can happen when you rent the land you live on.

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By: bellcurve

bellcurve — Thu, 05 Oct 2006 17:22:00 +0000

How can they arbitrarily jack up the cost of a lease this much? Why would they not at least endeavor to set a schedule of increases so that these costs are more manageable for the people that live there?

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.

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