Titles and Ownership

Title and Ownership

Titles determine the legal definition of the land, and are incredibly important. The easiest and most common approach is freehold, but there are others. For accurate and detailed information, read the government resources available here: https://www.settled.govt.nz/buying-a-home/finding-a-property/understanding-types-of-ownership/

Freehold

Freehold (or Fee Simple) is the most common and preferred style of ownership. If you can, always go for this sort of property. Freehold means you own the land, the house, and everything within that land is yours to use the way you want (subject to council and codes). This means in the future you can build your dream home on the site, subdivide, or something else.

Strata / Unit Title

Usually called “Strata” or “Unit Title”, these are common for apartment buildings since you won’t own the land itself. A “Strata” title means you own a specific, defined area of a dwelling, and these are generally freehold, but it pays to double check (especially in the Viaduct area). Body corporates and levies usually apply, so make sure you pay extra attention to the supplementary documents that are provided with this.

Cross-Lease

Crosslease means you own a defined or undefined share of land, and the exclusive rights to use part of the land. Read the memorandum of lease carefully as this will tell you what you can and can’t do. Typically for these titles, you can make interior changes, but cannot make any exterior building changes, including extending decks or garden sheds (fixed).

Crossleases are considerably cheaper than freehold titles and can be a good choice for first home buyers under the right circumstances, but when buying, do your due diligence and make sure the flat plans are what you see in front of you – or your future neighbours could ask you to remove your beautiful deck.

Some listings will say Crosslease (Freehold), all this means is the crosslease property is held within a freehold title – so still a crosslease, though you can give the agent some credit that they’re not selling a crosslease property on a leasehold site!

Cross-lease can be advantageous in your favour - if the lease is correct, it means your neighbour who's sharing the cross-lease can't really build multiple houses on their lot, and protects the current setback you have with them. The cheaper prices also mean you get more house for the price.

Some things to watch out for is shared driveways and utilities - if there's a long stormwater pipe for example, you may have to equally contribute to it's maintenance even if it's going to the neighbour behind you.

Investment tip: Buy the other cross-lease later on, or talk to them before buying and see if they're keen to split the cost of title conversion to free-hold. Doing so means both of you can increase the land value of your properties as free-hold, and command a premium at re-sale.

Lease-hold

Leasehold means you own the building, but have a lease on the land (which you don’t own). At some point in the future, that land will be passed back to its owner. Most leaseholds also feature a heavy ground rent. You should avoid leaseholds where possible. Don’t go there as a first home buyer, for the sake of your bank, lawyer and your sanity.

Body Corporates

If you are looking at an apartment, most of them will have body corporates. If it is an older apartment, it will generally have a higher body corporate due to the maintenance needs. If it is a new apartment, it will have lower body corporates today – but a massive one coming your way as the building gets older. You have been warned.