Parkbridge Lifestyle Communities has announced a new community partnership with Mattamy Homes that takes Parkbridge’s land lease homes model into the housing mainstream, marketed as “attainable” low-cost residences.
The developer and owner of more than 50 residential land lease communities and 30 recreational resort communities across the country, Parkbridge has until now targeted mainly the seniors market but with its latest move it will now sell land lease housing suitable for purchase as starter homes in mixed-use residential communities.
The new Lakehaven community, with more than 2,000 homes slated to be built in Innisfil, Ont. near Lake Simcoe, represents the debut of Parkbridge’s new focus.
“We really want to be in the attainable housing business,” said Eric Malcolmson, senior vice-president of development at Parkbridge. “What we’re doing is, we’re evolving the thinking around what is land lease, what can it be and how can it be applied to help solve the housing crisis.”
Ontario-based Mattamy Homes is the largest privately owned homebuilder in North America. Among the firm’s roles with Lakehaven will be marketing and construction of the homes, said Malcolmson.
Parkbridge is owned by the pension fund BCI (British Columbia Investment Management Corporation).
In a land lease tenure, the buyer purchases the residential structure and leases the land from the developer. Malcolmson calculates the price for a land lease home can be as much as 25 to 30 per cent lower than freehold.
Phase one of Lakehaven, launched in May, offers 204 land lease townhomes and 317 freehold detached singles.
“Everyone talks about the missing middle. This is part of what a solution to the missing middle looks like, 1,500- to 1800-square-foot homes with a price of under $500,000 for a base unit,” said Malcolmson.
Malcolmson said the joint venture with Mattamy has been in the works for several years but the expansion of its land lease program became more viable after the Ontario legislature passed Bill 23 last November that extended the lease term the firm was able to offer buyers from 21 years less a day to 49 years. Buyers are now able to secure the same type of insured mortgage financing available for all types of homes, he said.
The shorter term worked well enough for seniors buying land lease resort homes from Parkbridge often on an all-cash basis.
But with 21 years less a day, the schedule A banks would only lend up to the maximum term less five years, thus a maximum amortization of 16 years, said Malcolmson.
He explained Lakehaven is the first of what will be many more mixed-use communities with “attainable” homes.
“We are increasingly focused on first-time homebuyers and being a private developer in what we call attainable, we say attainable because affordable often means government subsidized,” Malcolmson explained. “We’re not looking for government loans to build our project. We’re using conventional construction financing.”
Brad Carr, CEO of Mattamy Homes Canada, said in a statement buyers “will have that exciting opportunity of choice in a community with different options for ownership.”
Malcolmson suggested Lakehaven, with its low-priced, smaller land lease homes and larger freehold homes, could fill the spectrum of a homebuyer’s lifetime buying cycle — getting into the market in a land lease home of around 1,500 square feet, moving up to the freehold of 2,000 to 3,400 square feet as a family grows, and then in retirement moving back to a smaller land lease.
Parkbridge often sells modular homes built off site for its adult lifestyle communities but its Lakehaven homes will be built onsite.
Malcolmson said the first point explained to potential land lease buyers is that they will enjoy the equity of owning the house, and benefit from increases in prices, but they will not share in increased land values.
He said upfront payments are lower in a land lease given the low cost; there’s no land transfer tax; the downpayment is lower and the CMHC fee is lower; and carrying costs for mortgage, tax and insurance are lower. But there is a monthly land lease fee paid to the developer and in some places a maintenance fee payment as with condo fees.
Homeowners are able to sell anytime, Malcolmson said. The lease is flexible and Parkbridge will write up a new lease with the new homeowner.
Another feature that will ensure affordability is smaller homes, said Malcolmson. Parkbridge will continue to build modest-size homes reminiscent of the post-war era, he said.
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