Archive for the ‘Life Lease’ Category

The Hidden Gems in Net Worth Analysis

Tuesday, May 10th, 2011

A few months ago CMHC released a report called Changes in Net Worth in Canada, 1990-2009. Although I am just as interested in net worth as the next person, the report does not exactly make for riveting reading. Notwithstanding, there are lots of interesting bits and pieces of data.

For example, the highest net worth individuals are those between 45 and 64. I suppose that isn’t really all that interesting because it is basically what you would expect. In 2005 the median net worth of those households was $310,000 followed very closely by the 65+ group with a net worth of $309,000.

Average net worth is much higher than median for both groups–$551,000 for the 45-64 group and $491,000 for the 65+ group. Average net worth increased faster than median net worth between 1999 and 2005 (29.5% versus 21.5%), suggesting that inequities in the distribution of net worth increased over this period.

Although not available on an age-specific basis, tenure comparisons indicate very clearly the disadvantaged position of renters. In 1999, a typical homeowner was 18 times wealthier than a typical renter. By 2005, the typical homeowner was 24 times wealthier! The gap between those two groups has been widening for at least 20 years.

Part of that disparity of course is due to patterns in the real estate market. Home equity grew more rapidly than other sources of wealth in the 2000s, exacerbating the disadvantaged position of renters.

For all of our readers interested in Saskatchewan, and I hope there are many, I will be spending almost a week in Saskatoon starting on Sunday and will report back via the blog. One fascinating thing I already know is that on a per person over the age of 65+ basis, there are 10 times as many life lease units in Saskatoon as there are in the entire Lower Mainland. Pretty amazing.

Another amazing thing is that some of the seniors’ housing projects in Saskatoon have such long waiting lists they have instituted waiting lists for their waiting lists. One place for example told me that they were going to open their waiting list for additional names in August! I assumed August 2011 but who knows? What is the reason for such amazing success?

Stay tuned!

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Life Lease Legislation

Tuesday, August 24th, 2010

I was working on something to do with life lease the other day and googled an article by an Ontario lawyer named John Clark. The article is called Life Lease Residential Housing: Is it Time for Legislation? So far Manitoba is the only province that has enacted legislation dealing with life leases, although other provinces have thought about it and two (BC and Ontario) have had a public consultation processes. Nothing happened in either province as a result of the consultation and it seems unlikely that anything will, at least for the foreseeable future.

The conclusion of the Clark article is that yes, legislation would be a good thing, notwithstanding the concern of many in the industry that legislation might be too restrictive—might harm the innovative and flexible approach to life leases that is now the operational context. And in fact I have talked to knowledgeable people in Manitoba who say that that is exactly what happened in that province—innovation and creativity were stifled as a result of the legislation.

Mr. Clark supports legislation for the consumer protection elements it would presumably provide, specifically in relation to the safety of purchaser deposits, financial and management disclosure, construction insurance, the freedom to register a life lease interest at land titles, and the freedom to sublet.

In BC, these consumer protection mechanisms already exist, not through specific life lease legislation but through the Real Estate Development Marketing Act.

Mr. Clark also muses that perhaps life lease development ought to be restricted to the not-for-profit sector and that governments might want to think about assisting the life lease development process in some way—via loan guarantees and incentives for developers and residents for example—because that would be a relatively inexpensive way for governments to contribute to the development of affordable housing.

In all provinces, except Alberta, life lease has evolved as a creature of the not-for-profit sector. There are very few for-profit life leases, mostly because for-profit developers prefer to get in and out as fast as possible. For-profit life leases operate primarily in the service-enriched market.

We will be posting more about life leases in the weeks to come. It is a particular passion of Lumina’s.

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