People often think about housing in terms of either homeownership or rental.
There’s another type, a cross between—or a hybrid of—the two general categories. It’s called a life lease.
Kate Mancer is a leading expert in Canada about this housing model, which ticks so many boxes that one might say it’s magical.
And as the Vancouver-based advocate explains, this is precisely the reason why she titled her 2019 book The Magic of Life Lease: A Seniors Housing Solution for the 21st Century.
“It really is a magical solution in so many ways,” Mancer told the Straight in a phone interview.
Mancer is talking not only about seniors housing but also life lease’s ability to enable new and affordable housing for a wider population.
The model works well with seniors because, typically, they own homes. When they sell, they can use the equity to acquire a life lease.
To explain, a life lease is an agreement wherein a person purchases the right to live in a home for as long as the individual wants. The buyer pays a lump sum upfront. A monthly fee covers maintenance charges.
When the person leaves or dies, the purchaser or their estate gets the money back. And depending on the terms, they may also get a portion of the property’s appreciation.
From beginning to end, the ownership of the home stays with the developer, which is called a “sponsor”.
Now, why would someone want to live in a life lease?
For one, Mancer said that this housing form provides a high quality of life for residents.
“They create a very strong sense of community and a very satisfying environment for people living in them,” Mancer said.
Affordability is another reason.
“Appraisers will often say that if you don’t have title, that means the value of your unit is lowered by about 10 percent compared to a similar unit that you had a strata title to it,” Mancer explained.
Sponsors of life-lease projects are often nonprofits, so the prices of the units generally reflect the cost of development.
“They are being built on a nonprofit basis, so the typical developer profit of 15 or 20 percent is not a part of the life-lease equation,” Mancer noted.
Another reason why life leases are desirable is that they lead to a better use of the housing stock.
Mancer explained that by encouraging “overhoused” seniors to downsize, homes more suited to growing families become available.
She cited as example the Cedar Valley Manor, a 42-unit life-lease development in Mission.
“The households who moved in that building were all living in single-detached houses, so they freed up 42 housing units for larger households, for families with kids,” Mancer said.
Another reason why Mancer believes that life leases should be encouraged is that they can enable the development of housing projects that otherwise would not be possible.
To illustrate, Mancer cited the case of the Performing Arts Lodge (PAL) in Vancouver.
The housing development dedicated to performing artists is comprised of 99 social-housing units, 12 life-lease units, and a theatre with space for rehearsals. PAL Vancouver opened in May 2006 at 581 Cardero Street in the city’s Coal Harbour neighbourhood.
The nonprofit PAL Vancouver raised commitments of $3,144,000 for the life-lease units, thereby convincing the City of Vancouver, which owns the land, of its ability to become a sponsor. The city provided a $1-million grant.
Mancer is the principal of Lumina Services, a consulting company that focuses on seniors housing and health developments, and she is currently working with the Baptist Housing Society, a nonprofit that bought the Inglewood Care Centre in West Vancouver in 2020.
Inglewood provides 230 long-term-care beds, and these will be replaced as part of the facility’s phased redevelopment. When completed, the project will provide homes for 600 seniors and staff.
The project will also include 125 life-lease suites. The Baptist Housing Society says online that it plans to “leverage proceeds of initial life lease sales to cover the cost of construction”.
This will “also enhance the affordability of other portions of the project where a private owner might otherwise harvest profits”.
“By generating revenue for the society, it will help them finance the development of the other components on the site,” Mancer said about how landowning nonprofits, in general, benefit from life leases.
Another plus for life leases is that the nonprofit gets to accumulate funds when someone moves out. This happens when the value of the property’s appreciation is shared between the sponsor and the outgoing resident.
“When they have enough, they buy back one of the life-lease units, which they then rent out to lower-income households,” Mancer said.
Life leases started in Manitoba and Saskatchewan during the 1980s. Mancer said that there are more than 300 life leases in Canada; of these, 20 are in B.C.
In 2017, Aspen Green opened at 3365 East 4th Avenue in Vancouver’s Hastings-Sunrise. Based on Mancer’s listing, it’s the second and only life-lease development to follow PAL Vancouver in the city.