Freehold, cross lease or unit title- what does it all mean?

When looking at purchasing or developing a property it’s very important for you to understand the type of landholding it is and how this affects development of the site. In New Zealand, there are three main types of legal land holding, including freehold, cross lease and unit title. Each legal land holding means different rights, restrictions, and obligations for the owner. This blog gives you a high-level understanding of the differences of the three types of land holdings.


What is a freehold property?

Freehold property, also referred to fee simple property, is the most common type of land holding in New Zealand. Freehold is also the simplest type of land holding. With a freehold property, you own all of the land and any building(s) on the property.


Tips to consider before carrying works on a freehold property:

When you have a freehold property, you don’t need permission from another landowner/ lessee to make changes on the property. However, make sure you check if there are interests (such as covenants, consent notices and easements) registered on the Record of Title (“title”). These can place limitations on the use of the property. You may also need to apply for resource consent or building consent if the work does not comply with relevant council rules, standards and the Building Code. This advice is relevant to all land holding types.


What is a cross lease property?

Owning a cross lease property means you and the other cross lease owner(s) jointly own the same piece of land and you have separate leases for a particular area (for example courtyards etc) and building/s that you occupy (often for a period of 999 years). A cross lease title includes a “flats plan” showing the footprint of the building that you are entitled to. The lease covenants registered under a cross lease title restricts what you can do with your property.





Tips to consider before carrying works on a cross lease property:

If you are planning to carry out works around your house that alters the building footprint (e.g. adding structures like a carport or a deck) or on the common areas, you need to talk to the other cross lease owners and get their approval. You will also need to make sure the flat plan is updated to reflect the new building footprint. Often people forget to do this, and it makes the title “defective”. This commonly becomes an issue at sale stage so its best to update the flat plan at the time you do the work. We’ll discuss this more in a blog next week.


Unit title

With the increase in high-density developments in New Zealand, unit title holdings are becoming more and more common, which can be seen in residential and commercial properties. Residential unit title properties typically include apartments and townhouse. Commercial unit title properties often relate to office buildings and retail complex. Unit title owners own a certain part/unit of a building and any accessory units (i.e. private courtyard, garage, storage area) and an undivided share of the common areas (i.e. lobby area, lift, communal garden and swimming pool).

Body Corporate

As a unit title owner, you automatically become a member of the body corporate. The body corporate of the complex is formed by all the owners in a unit title property, who is responsible for making day to day decisions for the common areas or the complex as a whole. You should ask for a copy of body corporate rules to check how it is managed.


Works within common areas:

If you own a unit title property you will need to pay levies (also called fees or contributions) which will contribute to the regular costs relating to common areas, including insurance, ongoing repair and maintenance, and management. Any works within the common areas will need to be agreed upon by a majority of the body corporate members.


What suits your development?

What land holding type is best suited for your development depends on the type of development, its form, how you envisage the areas being used and what you’re trying to achieve. Give us a call to discuss the best option for you.


Need more advice on your property?

If you are uncertain about what you are buying into or whether there are any restrictions that will affect the use of your property, then don’t hesitate to get in touch with us at Planning Plus. We can help you to better understand your property and discuss any development potential. You can contact us on hello@planningplus.co.nz or (09) 427 9966.


We also have a lot of other blogs on our website that can help you with your resource consent journey.


Disclaimer

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.


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