05 Dec Pros and Cons of Purchasing a Leasehold Property | Conveyancing in Auckland Lawyers
What is leasehold land? Leasehold is a form of property ownership whereby you own the buildings and any other improvements on the site, but you lease or rent the land from a land owner. Each leasehold property needs to be assessed on its own merits as not all leases are the same. To discuss the pros and cons of purchasing a leasehold property with an approachable conveyancing lawyer in Auckland please contact Ian Mellett of Auckland law firm Quay Law.
See article below for recent press news.
Source NZ Herald October 2012
Angry Auckland apartment owners are rallying against a 470 per cent leasehold land bill rise.
Scene Three owners, previously paying $1400/unit annually for one-bedroom places, are now faced with $8000/unit bills payable to landowner Ngati Whatua o Orakei Maori Trust Board which this year won a valuation arbitration on its Quay Park land, allowing it to charge much higher fees.
Kelvin Horspool, an investor with a one-bedroom Scene Three apartment in the 164-unit block, has started a support group.
About 40 to 50 owners want to force changes so their bills are cut but they are also upset about the legal management structure, fearing the once-desirable 16-level Beach Rd block near the Countdown will deteriorate.
Apartment owner Richard Lamb had dire predictions, after Scene Three’s penthouse unit 1601, with a $625,000 CV, sold for $330,000.
Lamb bought his apartment two years ago for 60 per cent of CV, a reflection he said of leasehold bill uncertainty. “There was also some comment about Maori land,” Lamb said.
“I took heart in the land being Maori owned. “I anticipated a long-term view on the asset.
“I believed that a generally mutually rewarding situation over time would yield the greatest long-term return for the intended beneficiaries.”
But Ngati Whatua’s valuation win amounted to it taking “absolute top short-term dollar”, he said.
“The asset will be devalued over time, so the lease return will fall as the area becomes neglected and abandoned by lease holders, especially retailers and businesses.”
Tiwana Tibble, the former board chief executive, vowed two years ago to receive what it was due and encouraged early negotiations to avoid conflict.
“If you want to arbitrate, you want to think about that quite seriously. It’s a very costly exercise. If we can reach agreements, we’re better off. The last resort is to go to the lawyers.”
Scene Three residents complained this month that many owners lived in Australia and said it was hard to contact each other. About 88 per cent of owners are non-residents and rent their units out.
Neal McCarthy said his unit was cheap due to outstanding rentals.
“We have agreed to pick up the outstanding back [leasehold ground] rentals. This effectively will add who knows? It could be $20,000-plus dollars,” he said.
A valuer warned against buying residential leasehold property.
“I don’t allow my clients to buy leasehold land,” said Munroe Graham of Epsom’s Auckland Valuations.
“I tell them not to,” he said.
Graham said he had worked in the industry since the 1960s and knew of many cases where leaseholders had walked away from their buildings when land rents increased.
•Scene Three owners can email Kelvin Horspool at horspool@xtra.co.nz
To Contact an apporachable conveyancer at Auckland law firm Quay Law