Life lease communities are another housing option for today’s seniors

by Todd Lewys

It’s a housing concept that’s gaining momentum in Canada and, by extension, Manitoba.

That concept? None other than life lease communities, an option that  seniors around the ages of 55 to 75 are looking at, said REALTOR® D’Anne Hansen.

“It’s something we began to see here about 12 to 18 years ago,” said Hansen, who’s specialized in the assignment of life leases for the past eight or nine years. “Early on, we saw activity on that front in dribs and drabs. That activity has picked up quite a bit in the last several years.”

The reason for that increased activity is that seniors are looking for a housing option that not only simplifies their life, but that also offers security, provides a built-in social network and the peace of mind that comes with easy, carefree living in a community where lifestyles are shared, according to Hansen.

Hansen said, while the accommodations found in life lease communities are similar to condominiums, the financial framework surrounding the acquisition of a suite in a life lease community is quite different.

“Actually, a standard lease for a suite in a life lease community never hits the (real estate) market,” she explained. “You will pay a percentage of the suite’s assessed value — say $100,000 — to get the rights to that suite.

“Then, you will pay rent to live in the suite, which is usually quite affordable for a senior-aged couple.”

Realtor John Vander Kooy, who also has long been involved in the marketing of life lease projects, said there are three reasons why increasing numbers of senior couples aged 55 to 75 are choosing to go the life lease route.

“First off, in most cases, their house has just gotten too much for them, and they’re looking to trade it for something that’s newer, and exciting,” he said.

“Second, they don’t want to sink, say, $300,000 into another home.

“And third, they have a big desire for carefree living. They’re tired of all the responsibilities that come with owning a home, and want to simplify their life.”

He added that value is often the key reason why senior couples choose life lease communities.

“Couples choose a life lease community either because it’s going to be a wonderful place to live, or, from an analytical standpoint, it’s a good investment. They’re getting a comfortable place with nice amenities — a place that will provide them with worry-free living, and enable them to just take off somewhere whenever they want.”

Hansen agreed: “The idea behind life lease communities is that you’ll live in a higher-quality building than you could typically rent.

“Some buildings will actually maintain exteriors and kitchen appliances, while others may even provide allowances for kitchen upgrades. You also get amenities like gyms, party/common rooms, guest suites and indoor parking.”

At the same time, the entrance fee paid up front is either held in trust as long as a couple lives in the life lease community, or can be handed back to them if, for some reason (different accommodations, health) they decide to leave.

“Either you get your money back, or, if the market has risen and supply and demand is greater, you could market your suite and get what people are willing to pay for your lease. If market conditions were favourable, you could possibly get $150,000 when the lease is re-assigned.”

Vander Kooy said for many senior couples — many younger seniors are now looking at life leases — the concept makes sense.

“It’s a good option for a lot of people, but it’s important they talk to someone who really knows life leases to see if it’s an option that’s right for them,” he said.

Further to a life lease: “It is a rental arrangement, but it is unusual because the tenant makes a cash contribution (not an investment) in the rental unit of an agreed upon amount ...

“When the tenancy ends, for whatever reason, the tenant is entitled to its cash contribution returned. If the tenancy ends in the death of the tenant, the money is payable by the landlord to the tenant’s estate.

“That does not mean that there is no monthly rental, but the monthly rent will be less that renting an equivalent apartment suite, because the tenants, as a group, have paid a substantial part of the capital cost.” — Taylor McCaffrey LLP, Barristers & Solicitors.