Does anybody own a cross lease residential property?

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TeaLeaf

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#261867 19-Dec-2019 02:33

Any reflective comments from cross lease owners please.

Ive been looking for a long time for the ideal principal place of residence. I dont invest in property anymore, outside existin Aus stuff.

I found a gorgeous home in a nice suburb. 10yrs old architect driven non leaky monolithic home with all the bells and whistles. $200k below the CV,, not that I follow CV, but its market value isnt much difference based on 6 months of watching sales prices.

However Auck seems to have taken a jump in the last 4 months, so I feel any major crash that bloomberg etc are predicting, I should be covered.

My main issue is its cross lease. Due to how its only common area being the drive being used by other homes not on the cross lease and a LIM that spells it all out very well. But I just dont like the concept of not being freehold. However I dont think the owner lives in the older main house. It doesnt seem it will have compliance issues due to recent sales would have shown up the same compliance issues if it was. so thats not an issue, it seems the issue could be the person may just flat out say NO, you cant pay for converting the titles.

How do other people who own and live in cross lease properties feel? Would you like to convert your title but cant?

Its cetainly a great buy if it were freehold, but cross lease even though its not possible for neighbout issues to occur (which can occur on any title anyway), it just feels odd. Was a bizarre way for people to get around zoning issues in the day. IMO the council is partly responsible and should allow people to convert individual titles, find a way to make that legality work etc. :-)

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#2378130 19-Dec-2019 03:04

Cross leases are fine but you need to understand the limitations and issues.

The exact footprint of all properties need to be shown on the flats plan. Any changes to this need to be on the flats plan and if you want to do it retroactively it will generally need to be brought up to the current building code. An addition can be consented and have a COC but not be on the flats plan which means it is a defective title.

This can be also be a major issue if you want to convert to fee simple as cross leases were often used to get around height to boundary issues.

Basically get a really good property lawyer involved if you are serious and you'll be fine. It'll cost some cash but they will advise you of all the issues.

Batman

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#2378138 19-Dec-2019 06:57

it'll be fine. use it to your adv and offer less.

SATTV

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#2378140 19-Dec-2019 07:35

I have lived on a crosslease for 15 years and it is not really a problem, our house is attached in the middle to next door with a firewall in the middle.

It largely has not been a problem however with all the news and extra compliance enforcement it means you cant just build a deck, you have to get next doors permission and get it put on the plans.

We have had four owners of next door and they have all had their positives and negatives, the current owner is not willing to spend a cent on maintenance unless she has to, we share a roof, gutter & power lines.

On the whole it has not been a problem, we could not afford a single house in Auckland and 15 years ago it was boom time.

I would love to convert to a freehold title but as he are joined in the middle I dont think it will be practical.

John

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marej

186 posts

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#2378149 19-Dec-2019 08:27

A cross lease is a as good as how the other leaseholders behave towards the crosslease. There should be the exclusive area of your flat indicated on the title. As long as everything is in order with the title and the flats exclusive area, it should be fine. If the neighbours breach the rules that can be an issue, but get your lawyer to advise you.

Handsomedan

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#2378150 19-Dec-2019 08:30

I've owned (in a very uneven share with the bank) a crosslease property (fully separate from neighbour) for over 20 years.

We have had fences put up, interior work done, house painted etc all with no issues.

The only time we will ever need to think about our place being a crosslease is if we want to change the footprint as explained in posts above.

Our houses are completely separate, fully fenced and have exclusive use zones. Our water and phone lines run beneath the next door neighbour's place, so that is the only odd thing (our termination point when having fibre installed was in another street (our neighbour is on a corner) and our water meter and valve is next to the neighbour's one in the other street...but we have used the valve twice and had fibre installed once, so it's been no hassle.

We did think about having an extension built to accommodate an ensuite, but the cost would have been prohibitive as the plan needs to change, opening up a bunch of legal loopholes for the neighbour to potentially hold you to ransom (or so I was told).

So have I noticed the crosslease? No

Do I care that it's crosslease? No

Will it matter when I sell one day? Possibly

Have I made enough capital gain in 20 years to not give a "rat's rear end" about the possible lower resale value due to scaremongering? Yes

Get a good lawyer, don;t be afraid and do your due diligence.

Just like a "normal" house

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tdgeek

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#2378198 19-Dec-2019 09:07

Our last rental was crosslease. When we sold, the agent, who we know, said it will affect the sell price, and generally thats because of emotion as its not fee simple, i.e. all mine. As above there is little effect in reality, but people see it as inferior as they dont own the property 100% (even though they do)

TeaLeaf

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#2378222 19-Dec-2019 09:33

Thanks all. Im in no rush.

Its much like many above, completely seperated by the maps and legel paper work and is within normal house regulation rules from the neighbours. the only reason i would want to free hold is so I could pop a loft master in as it would have unobstructed ocean views vs glimpses between the neighbours in front house who both share the drive way and they are both cross leaee to.

im just wary of paying too much regardless that the other houses near are valued prior to the down turn at $1m, some just sold for $750k with unobstructed sea views freehold, yes the one Im looking at is a nicer home but asking $100k more than $750k sea views home, is not free hold and is only 1 decade newer 09 vs 00. The one in front blocking its view is an 00 build too and it gets uninterupred sea views, but IS on a cross lease too but sold for $750k as well.

I found 4 homes with sea views within 500m that are free hold that sold $795k or less, It seems cross leease is cheaper but its not a hard and fast rule.

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qwertee

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#2378287 19-Dec-2019 10:05

When we looking to buy in CHCH we always shied away from cross leased houses.

While SATTV had very good experiences, me as a buyer was always mindful of the limitations that a cross lease brings.

People who owned a cross had a mixed bag of experiences when asked, and some were not too good.

marej

186 posts

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#2378293 19-Dec-2019 10:09

TeaLeaf:

Thanks all. Im in no rush.

Its much like many above, completely seperated by the maps and legel paper work and is within normal house regulation rules from the neighbours. the only reason i would want to free hold is so I could pop a loft master in as it would have unobstructed ocean views vs glimpses between the neighbours in front house who both share the drive way and they are both cross leaee to.

im just wary of paying too much regardless that the other houses near are valued prior to the down turn at $1m, some just sold for $750k with unobstructed sea views freehold, yes the one Im looking at is a nicer home but asking $100k more than $750k sea views home, is not free hold and is only 1 decade newer 09 vs 00. The one in front blocking its view is an 00 build too and it gets uninterupred sea views, but IS on a cross lease too but sold for $750k as well.

I found 4 homes with sea views within 500m that are free hold that sold $795k or less, It seems cross leease is cheaper but its not a hard and fast rule.

Doing alterations which change the footprint of your house generally will require permission from the other lease holders. Keep in mind the lease holders cannot unreasonably object in that they have to have a good reason, rather saying no for the sake of it. This is where you need to be clear about the lease agreement, and have good legal advice.

ShiroHagen

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#2378403 19-Dec-2019 11:45

My reflections on living Auckland crosslease with 2 separate houses.

Day to day life is completely identical to freehold. If you're planning to buy just to live in it then it's a non issue.

It only becomes a potential issue if
1. You are selling the property
2. Doing any building / alterations

We are looking at doing 2 now and as as part of that, did some investigations into converting crosslease into fee simple.
We found that separation would cost well over $100K for Council / survey / LINZ fees + cost of separating services and driveway upgrade.
While the estimated added value to our property 'might' range between 7-18%. So the conversion might be worthwhile if it was a high end property and we were to sell right away to recover the outlay, but we aren't, we are renovating to live in. So conversion to fee simple was quickly ruled out.

To proceed with 2 on existing crosslease therefore requires consent of the neighbour. And we've been lucky that we've got to know them and they are reasonable people.
So to date they have been happy to provide written consent for our plans.
Based on your description sounds like you're in a similar position - renovating to live not sell? So getting on with your crosslease co-owners is crucial.

TBH rather than a crosslease, I'd be more wary of the potential cladding, framing and roofing issues for a house of that era.

esawers

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#2378418 19-Dec-2019 12:09

We live in a cross lease, and also have rentals that are cross lease.

I wouldn't hesitate to buy one again provided they weren't attached (our owner occupied house is completely separate and fully fenced, the only thing we share are the drains that go down our driveway)

One of our rental properties was written off after the earthquake and as it was a unit in a block of 10 it was a bit of a nightmare trying to deal with the other crosslease owners.

We ended up in court with a forced sale of the whole building because the owners couldn't agree on an outcome.

TeaLeaf

6325 posts

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#2378475 19-Dec-2019 12:34

ShiroHagen:

TBH rather than a crosslease, I'd be more wary of the potential cladding, framing and roofing issues for a house of that era.

The scurge of NZ property, cookie cutter homes made with piss weak exterior construction = leak house syndrome.

No this place is solid as a rock, james hardie weatherboards and some other vertical material to help add aesthetic interest, both have aluminium eaves over the joinery and ally run ways in case some how moisture could get through, which it cant. But after reading the construction notes from thr architect, nothing was off, the last builders report was in the pack thanks to current owners and same thing, nothing but ultra minor things.Its just gone on 11years old now. double glazing helps after living in noise for so long.

The problem I have will be finding out who the owner is as I think the other cross lease is rented, i "think". the other homes actually visible are all owner occupied.

TeaLeaf

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#2378485 19-Dec-2019 12:48

esawers:One of our rental properties was written off after the earthquake and as it was a unit in a block of 10 it was a bit of a nightmare trying to deal with the other crosslease owners.

We ended up in court with a forced sale of the whole building because the owners couldn't agree on an outcome.

Sorry to hear that. sounds like my family when my grand mother died.

I know a lot of people got hurt financially in that. My sisters house split in half, write off.

gehenna

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#2378504 19-Dec-2019 13:07

I'm on a cross lease. It's been fine so far but I believe the previous owners had some issues with the neighbours. I guess it always comes down to personalities like most things in life

itxtme

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#2378539 19-Dec-2019 13:54

Issues with neighbours are mainly irrelevant to a crosslease. A crosslease is a share of the whole land parcel. It was commonly used in the 70's and 80's when the cost of subdivison meant this loophole method was preferrable. This was cleaned up in 1991 RMA changes.

Things to consider with a crosslease have been laid out above involving physical changes to the building. Many flat plans do not have rules around fences on your private area, so some of the warnings I think are bit over the top. Read the flat plan!

The other consideration is what the house value is worth. You may own 1/2 the share of the land, but actually only have access according to the flat plan of 1/3 of the land. That means that the land value share is not technically that relevant to the LV stated. Maybe that is why the sale price is sitting below the GV so markedly?

If you are buying this house to make big changes structurally or with the intention of subdividing (now or in the future*) then crossleases add difficulty to this. If not, then there is little difference between a cross lease and freehold as far as ownership and usage goes.

* What I am getting at here is that you may not intend to do this, but if you buy/pay a price with that being a possibility in the future then a crosslease house would not be the best option

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