As the landscape of housing and real estate evolves, many are seeking alternative living arrangements that provide stability, affordability, and a sense of community. This includes the increasing popularity of the life lease. This alternative housing arrangement offers a unique way for individuals. This is especially those 55+, to secure their living situation for years to come.

This blog will help you understand the life lease lifestyle, along with pros and cons of this arrangement. In Guelph, there are limited life lease communities. However, as the population ages they are becoming more and more popular in the area.

What is a Life Lease?

A life lease is a housing arrangement that allows individuals to purchase the right to occupy a residence for the duration of their lifetime. Typically, it is in a community designed for older people or individuals looking for a more communal living experience.

Unlike traditional home ownership that many may be used to (the owner holds title to the property), a life lease grants tenants the right to live in the property. However, they do not own it outright. The owner is the “sponsor”, or the company that manages the property.

In a life lease arrangement, residents generally pay monthly fees for maintenance and amenities. In some cases this also includes property tax and internet) to the sponsor. Upon the tenant’s departure, due to moving out, death, or other reasons, the property is typically returned to the ownership of the organization (sponsor) that manages the life lease community. The initial fee is often refunded, minus any agreed-upon deductions that were part of the initial life lease agreement.

Advantages

  1. Affordability: Life leases often come at a lower initial cost compared to purchasing a home. This makes it an attractive option for older people on a fixed income or individuals looking for a cost-effective housing solution.
  2. Maintenance-Free Living: If you live in a life lease community, you don’t need to worry about property maintenance, landscaping, or repairs, as these responsibilities are usually covered by the management. This can offer a significant peace of mind for individuals who may struggle with the upkeep of an entire home.
  3. Community Environment: Life lease communities often foster a strong sense of belonging and camaraderie among residents. With shared amenities and organized activities, tenants can enjoy social interactions and build lasting friendships.
  4. Flexible Lifestyle: Life leases can provide a more secure living arrangement compared to renting, as tenants have more stability and predictability in their housing situation. They can enjoy their golden years in a community that caters to their needs without the fear of erratic rental increases.
  5. Potential for Appreciation: Depending on the market and the specific life lease community, the value of life lease properties may appreciate over time, providing a reasonable ROI (return on investment) when residents decide to sell their rights to occupy.
  6. Predictability: Most life lease communities are not managed by a Condo Corporation, but are rented from the owner/ sponsor. Therefore, they are governed by rent regulation and the fees can only increase at the allowed rental amounts. The allowed increase for 2025 is 2.5%.

Disadvantages

  1. Lack of Ownership: Since tenants do not own the property, they may feel less invested than homeowners. The inability to modify the unit significantly or make major renovations can limit personal expression and customization.
  2. Exit Fees: When moving out of a life lease, residents may face exit fees or deductions from their initial buy-in refund. This can range, but is typically between 5-10% of the sale price. Additionally, finding a new tenant or waiting for the turnover of the property can be time-consuming.
  3. Limited Control Over Operations: Residents have little say in how owner manages the property. The management organization typically makes the decisions, which may not always align with the desires of the tenants.
  4. Market Vulnerability: Life leases are subject to the real estate market. In an economic downturn, values may decrease, affecting the potential return when a resident eventually moves out or passes away.
  5. Smaller pool of buyers: Because of the strict policy around ownership, the buyer pool for a this type has a limit. As an example, most communities are for 55+ buyers who are spouses or common law only. As well, typically renting of the units is not an option. This means that life lease properties can take longer to sell and may be volatile in sale price.

Difference between a life lease and land lease

In a life lease, the owner has the right to occupy the property but does not hold title (ownership). For a land lease, the owner owns the structure (the house) but not the land it is on.

What if I want more info on a land lease property?

In Guelph, the Village by the Arboretum (VBA) is a great example of a land lease community. Beth and Ryan do a significant sales volume in the VBA and could answer questions you may have.

Why would someone want a life lease?

Life leases provide a unique housing alternative that is growing in popularity. These developments offer affordability, maintenance-free living, and a vibrant community atmosphere. This makes them an excellent option for many individuals, particularly older people who prioritize stability and connection.

However, like all housing arrangements, there are caveats to consider. Those contemplating entering must weigh the pros and cons. They must also assess their personal circumstances, and ensure they fully understand the terms of the arrangement. It’s always advisable to seek professional legal and financial advice before entering into such agreements.

What happens to the property when the owner dies?

When someone who has a life lease passes away, their inheritor comes into play. Thi is someone who they either name in their will or the original agreement- inherits the interest in the property.

As an example: Beth who is 90 years old has passed away. Her daughter, Ruth who is 50 inherits her life lease interest. Ruth applies to live in the unit, but does not satisfy the age eligibility (55+ years old). Additionally, even if Ruth was 55+ it is up to the sponsor (owner) to determine if Ruth would be approved to live there based on other criteria.

As a result, Ruth decides to sell the property interest to a new owner for current market value.

Questions?

Have more questions on life leases? Get in touch with Beth and Ryan Waller, Guelph Realtors