Do you own a cross lease property and wonder what the costs would be to convert it to a free hold title? In this blog we discuss the steps involved in the subdivision and provide an estimation of costs for each step of the process. Please do keep in mind the costs vary for each development, and these should be used as a guide only.
What is a cross lease title?
Cross lease is a form of property ownership where multiple individuals own an undivided share of land, which they build on, with the land being leased from the other owners (often for a term of 999 years). This could involve a single site with two or more dwellings, you may own the rear dwelling, have exclusive use areas at the rear of the site and share common areas such as site access. Cross leased sites also often contain flats or townhouses.
There are many cross-leased properties throughout Auckland, however this form of property ownership is now not commonly created. Often this is because a fee simple ownership structure is more straight forward in the long term- you don’t need approval of other owners and you usually don’t need to update the title plans.
What are the benefits of converting a cross lease to freehold?
With a cross lease property any additions or alterations you propose to the dwelling, or new development usually need agreement from all cross-lease owners. Depending on what you propose and your relationship with other cross-lease neighbours you may have difficulty obtaining this approval.
Any additions or alterations, or new development on a cross lease property will also require an update to the Flats Plan and an application to council for the related resource consent. This will add additional time and costs to any development you propose on a cross lease site (for more information on this click here). If you don’t go through the process of obtaining resource consent and updating the Flats Plan, the Record of Title may become defective and affect future sales of your property. A future buyer may not be able to obtain finance if the title is not up to date.
A fee simple site where you have ownership of the full site gives you more flexibility and freedom to undertaken additions or alterations to your dwelling or new development. The Auckland Unitary Plan now allows for greater development potential in certain zones. If your fee simple site is located within a zone, such as Residential – Terraced Housing and Apartment Building Zone, Residential – Mixed Housing Urban or Residential – Mixed Housing Suburban your site may have options to construct two or more houses in place of one dwelling. However, this development potential maybe reduced or lost if you are on a cross lease site, where your dwelling is linked to other dwellings, infrastructure is shared and you need agreement from another party.
A fee simple site can be more desirable to potential buyers due to the greater degree of freedom available for the use and development of the site. A fee simple site can be more sought after in the market and can attract higher prices than cross lease sites.
What are the costs and who pays?
You can find out more about the cross lease to free hold process in our blog here. Converting your cross leased site to a fee simple site requires a subdivision resource consent application. You can find out more about the Council aspects of the subdivision process here.
In this blog, we focus more on the costs of this subdivision type.
How will you split the costs? Consultation with you cross lease neighbours
All of the owners of your site are affected by this resource consent (subdivision) application. Because of this, your first step should be to talk with the other owners. During this discussion you can discuss the benefits of the subdivision and determine whether they would be interested in undertaking the conversion with you. During this time, you should also be clear on what involvement each party would have in the process and how the costs of the subdivision would be shared. Ultimately all parties are likely to benefit from the conversion of the title to freehold, and it may be appropriate to equally share costs.
Planner
It is important to discuss your proposal with a Planner upfront as Planners manage the resource consent process for you and can help you identify potential issues and risks. You can then make an informed decision to proceed or not. You can also discuss potential lot layouts- for example, how will access, parking, outdoor living and service areas be catered for, where are easements required and who will these be in favour of?
Apart from reflecting how the land is used, you also need to consider what the Auckland Unitary Plan expects and ensure the outcome minimises potential adverse effects. Your Planner will also assess city wide and zone provisions and standards to determine whether there are any other reasons for resource consent beyond the subdivision component. Planners will write an Assessment of Environmental Effects (AEE) report, usually prepare the overall resource consent application for lodgement with the Council and liaise with the Council on your behalf. Planner’s fees to manage the resource consent process will likely be in the order of $4,500 to $5,000 + GST, depending on your specific site, its constraints and any other infringements present.
Civil Engineer
Assessment from a civil engineer may also be required, in particular to investigate the existing infrastructure on the site (in particular wastewater, stormwater and water supply). Stormwater and wastewater drainage may need to be videoed to ascertain the condition and position of the pipelines. Sometimes services are shared between cross leased units and separation of services may be required. This can add cost to the development, and once more is understood about the services on site your Civil Engineer will be able to provide an indication of any costs required to separate or upgrade services.
In some cases, vehicle crossing may also need to be upgraded.
The cost for a civil engineer to prepare an infrastructure report for a proposed cross lease to fee simple (of two cross lease sites) is approximately $3,500 + GST. This does vary depending on the complexity of the proposal and the number of dwellings involved.
Surveyor
A Surveyor will provide a subdivision plan that shows the proposed boundaries, site areas and any easements which may be required to convert a cross lease site to free hold titles. This document supports the resource consent application. The surveyor costs to prepare a subdivision scheme plan is approximately $4000 + GST.
Once the resource consent is approved your surveyor then completes land survey work which includes placement of new boundary pegs, preparation of e-survey plans, and preparing documentation for Land and Information New Zealand (LINZ) to create the new the records of title. Your surveyor will usually manage final Council approvals to “sign off” the subdivision consent, liaise with you solicitor and obtained LINZ approval. The cost for surveyors to manage this process is approximately $9000 + GST.
Council Fees
The council will require a resource consent application deposition to process the resource consent application. The application deposit fee for a cross lease subdivision (on its own) is approximately $4,000 + GST (in Auckland, correct at time of writing). The actual fee is likely to be more than this; the Council charges for actual time and costs.
Land Information New Zealand (LINZ)
As noted above your surveyor will prepare documentation to submit to LINZ to allow the new records of title to be issued. The LINZ lodgement fee is approximately $1,500 + GST.
Solicitor
Input from your solicitor will also be required including liaison with your surveyor, property owners and to finalise the necessary legal documentation. Legal fees will vary between firms.
Need more advice on your property?
If you own a cross lease property and are interested in investigating the conversion to fee simple titles, don’t hesitate to get in touch with us at Planning Plus. We can assist with the process along with the preparation of the resource consent application. You can contact us on hello@planningplus.co.nz or (09) 427 9966.
This blog forms part of a series on subdivision, and you may find other blogs on our website in your subdivision journey. You can find these on our website, www.planningplus.co.nz.
Helen is a Senior Planner at Planning Plus™ and has over 14 years’ experience in planning and environmental consulting. Helen's experience includes the preparation of resource consents, compliance monitoring, environmental auditing, community consultation and environmental fund coordination. Her background has provided her with a wide range and thorough understanding of technical and environmental inputs.
Helen holds a Bachelor of Applied Science (Environmental Science) and Bachelor of Business (Management) Conjoint Degree and is an Associate Member of the New Zealand Planning Institute.
Disclaimer
All prices exclude GST. As with all our blogs this information is preliminary in nature only and correct at the time of writing. It is not intended to substitute for your own investigations or obtaining specific advice on your proposal from professionals or specific quotes. Planning Plus LtdTM is not liable in any way for any errors or omissions.
© Planning Plus Ltd 2023