Disclaimer: Because each life lease community is set up differently, and the residential tenancies act in Ontario can change from time to time, make sure you consult with the appropriate professionals before you commit to a purchase
What are the monthly fees in a Land Lease community?
If you are looking at downsizing or moving into a land lease community, you are likely drawn to the fantastic lifestyle and tight-knit neighborhood environment these communities offer. Historically some of these communities were (and still are) created as not-for profit.
- Some were created for cultural groups: Masaryktown in Scarborough was built for the Czech and Slovak community,
- some started as faith-based like Lynde Creek Village in Whitby which was originally conceived by the Baptist Convention of Ontario and Quebec and developed on land generously donated by the Cullen family
- Adult Active Lifestyle communities like Wilmot Creek in Newcastle or Sunday Place in Napanee
- Mobile home communities (which this article is not going to address)
But because land lease arrangements are unique—where you own the home itself but rent the land it sits on—it often leads to questions about the monthly fees. Disclaimer: each development may be different; make sure you do your own due diligence. In places like Wilmot Creek leases have changed over time.
Monthly fees can include: a lease for the land the home or condo resides on, some or all utilities, property taxes & fees to upkeep the recreational facilites and common elements (places shared by all residents) and services like lawn care & shoveling.
You should review a copy of the lease agreement before you finalize your purchase to understand the breakdown of the monthly charges. Portions of the monthly fees may increase separately - for example, property taxes. It may be wise to have a lawyer familiar with life lease communities review the agreement before firming up.
What's important to know about a land lease agreement in Ontario:
Let's clear up a common misconception right away: because you rent the land, you might wonder if you have the same protections as a typical tenant. The answer is yes. In Ontario, rented sites in land lease communities are fully covered by the Residential Tenancies Act (RTA). This means you have standard tenant rights, plus a few specific rules designed just for your situation.
The landlord has responsibilities in a Land Lease community:
Your landlord is responsible for maintaining the common areas, roads, and crucial infrastructure like water supply, sewage disposal, drainage, and electrical systems. They are also responsible for regular snow removal from the roads and organizing regular garbage disposal.
The lease portion of your land lease property is subject to the rules of the Residential Tenancy Act in Ontario
Most of the rules about rent increases that apply to other tenants and landlords also apply to land lease communities. Information about these rent rules can be found in the Board’s brochure, A Guide to the Residential Tenancies Act. This brochure is available from the Landlord Tenant Board; which is linked below.
Rent Increases for land lease properties fall under RTA Guidelines
The most a landlord can increase the rent by, without asking the Board for approval, is the rent increase guideline (the guideline). The guideline is set each year by the Ontario Government. A landlord can apply to the Board for a rent increase above the guideline if:
• the landlord’s costs for municipal taxes and charges, and/or utilities, have increased significantly or
• the landlord has done major repairs or improvements to the rental property, or
• the landlord has paid operating costs for security services for the property which are being provided by persons who are not employees of the landlord.
If the Board approves a rent increase above the guideline because of major repairs or improvements, the maximum increase the Board can allow for that ground is 3% above the guideline each year for a maximum of 3 years. However, if the cost is for infrastructure work that is required by the Government of Canada, or one of their agencies, the Board can approve rent increases that are higher. In this case, the Board can decide over how many years the increase can be taken (it is not limited to 3 years) and the increase the Board allows could be more than 3% above the guideline each year. “Infrastructure” work means work related to roads, fuel, water supply, fire hydrants and related systems, telephone poles, walkways, garbage storage and disposal areas, fencing, retaining walls, flood control systems, sewage disposal, drainage and electrical systems.
Land leases may be transferrable in land lease communities
It may be helpful to ask the representative of the community if the current lease is transferrable to the new resident. Never hurts to ask!
Land lease purchases are done on different real estate forms in Ontario
Working with a Realtor for a land lease property purchase? As realtors we have different sales agreements for different property types. For example freehold purchase and sales are done on form 100, condo purchase and sales are done on form 101 . For land lease properties, we use form 110, which is an Agreement of Purchase and Sale - Mobile Home that includes a Schedule A which is for a mobile/modular/manufactured home on leased premises.
How are Land Lease properties different than Life Lease properties?
In life lease housing, the buyer purchases an interest in that property—which gives the buyer the right to occupy a unit for a long period of time, often for their lifetime. Like condo owners, the buyer pays a lump-sum purchase price, and then continues to pay:
- property taxes
- monthly fees for maintenance
- Life leases are usually priced lower than similarly sized condominiums in the area. This could be due to the lack of availability of conventional mortgages and the exemption from land transfer taxes.
Life lease housing is usually developed and operated by nonprofit or charitable organizations called “sponsors.” Life lease buyers are often seniors looking to move into smaller homes. Often a portion of the sale is turned back to the community to keep costs low.
Helpful Links:
Ontario Government guide to Land Lease Communities & Mobile home parks
Residential Tenancies Act of Ontario
Landlord Tenant Board Guide to the RTA
