Do you own a cross lease title, and wonder what is involved in converting it to a freehold title? In this week’s blog we discuss the general steps in involved and the benefits of going through the process.
What is the difference between a cross lease site and a fee simple/freehold site?
Cross lease is a form of property ownership where you own a share of land and hold a long-term lease of your dwelling. This could involve a single site with two dwellings, you may own one dwelling, have exclusive use areas and share common areas such as site access. There are many cross-lease properties throughout Auckland, however this form of property ownership is now not commonly proposed in new subdivisions.
Freehold titles are also known as fee simple titles. This is where you own the whole property.
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.
How do you convert your title to fee simple?
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.
Discuss your proposal with a Planner: they will usually manage the resource consent process for you. This can identify any fundamental issues with the proposal so you can make an informed decision to proceed or not. You can also discuss potential lot layouts- how will access, parking, outdoor living and service areas be catered for, for each unit? Apart from reflecting how the land is used, you also need to consider what the Unitary Plan expects and ensure the outcome minimises potential adverse effects.
Early in the process, you also need to speak to the other cross lease parties- you will need their approval to convert the title, so you need them on board from the start. During these discussions, outline the benefits of a fee simple title and determine whether they would be interested. During these initial discussions clarify what involvement each party would have in the process and how the costs of the subdivision process would be shared: ultimately all parties are likely to benefits from the conversion and it may be appropriate to equally share costs.
Assessment from a civil engineer may also be required, in particular to investigate the existing infrastructure on the site (wastewater, stormwater and water supply). Sometimes services are shared between cross leased units and separation of services is required. This can add cost to the development, and you need to take this into account when decided to proceed or not. A Surveyor will provide a scheme plan that shows proposed boundaries, site areas and any easements which may be required.
Resource consent application
Once the above investigations are completed, your Planner will write an Assessment of Environmental Effects (AEE) report and usually prepare the overall resource consent application for lodgement with the Council. As part of this 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.
Once Council issues the resource consent it may contain conditions, however as there is existing development on the site there are usually only a small number of conditions, and the subdivision can be completed quickly.
Need more advice on your property?
If you own a cross lease property and are interested in investigating the conversion to a 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 firstname.lastname@example.org 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.
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. Planning Plus LtdTM is not liable in any way for any errors or omissions.