NZ home property without land?

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rayonline

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#279571 24-Oct-2020 00:36

Not sure where this belongs. Feel free to move it :)

The media has been saying a lot about home prices in NZ. In terms of meeting the basic needs, what about if homes were made available without land like a 99yr lease right of use that can be bough and sold? No land rental. I was looking at Singapore and they have HDB, which is even subsidised to families, up to a eligible $250k annual income. Then there is the open market for something nicer.

Views? Cheers.

BlinkyBill

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#2591098 24-Oct-2020 08:17

80% or thereabouts of Singaporean’s live in HBD homes; and the conditions and cultural differences between Singapore and NZ renders comparisons completely irrelevant.

You are describing leasehold land, and there are plenty of leasehold properties are available in NZ today. The reality is that all of the land in NZ is owned by someone, and not a single one of those owners will provide the land for free.

Eva888

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#2591101 24-Oct-2020 08:34

We already have this in New Zealand. It’s called Leasehold Land where you buy the house and pay a rental on the land it’s built on. The land lease is for a specific time. Prices are generally cheaper than freehold dependant on length of remaining lease. However land rental can be raised at rent reviews and this can sometimes be disastrously high. You still have to pay outgoings like council rates or body corp fees if applicable. It’s harder to get a mortgage and generally requires a larger deposit. It’s also more difficult to sell depending on how much land lease you have left although this can be negotiated to extend the lease but everything has a cost. We have all manner of leases here, Maori leasehold land, harbour leasehold, hospital leasehold etc.

rayonline

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#2591102 24-Oct-2020 08:58

Yes, I had a thought last evening. Govt leasehold, indexed to inflation?

NZ now is having more apartments and townhouses to be built than the past. If one is simply going to live in it, than to build up a property portfolio does one need the land? If one did want the land then there are obviously homes that are freehold.

BlinkyBill

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#2591105 24-Oct-2020 09:09

How much Government-owned land is suitable for residential lease? That is, take away Govt land that is tied up in conservation area, farming, national infrastructure, etc - how much is left?

the answer is - not much and way way too little to make such a scheme worthwhile.

zyo

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#2591167 24-Oct-2020 10:28

It's basically long term leasehold with a lumpsum payment upfront (or government subsidy)

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#2591219 24-Oct-2020 10:43

Yep tenants of leasehold land could be up for a shock increase in rent when the rent review comes up:

https://www.nzherald.co.nz/business/cornwall-park-leaseholder-liable-for-173000-back-rent-court/CY3JFXIYKAH35ZNV6YYR3DYUNI/

Annual rent increased from $8,300 to $73,750 (back in 2010)

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zyo

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#2591222 24-Oct-2020 10:52

logo:
Yep tenants of leasehold land could be up for a shock increase in rent when the rent review comes up:

https://www.nzherald.co.nz/business/cornwall-park-leaseholder-liable-for-173000-back-rent-court/CY3JFXIYKAH35ZNV6YYR3DYUNI/

Annual rent increased from $8,300 to $73,750 (back in 2010)

This is probably designed for apartment where the building itself probably won't be worth much at the end the of lease.

Otherwise I couldn't imagine who in their right mind would build an expensive family home (which can probably last generations) knowing the land belongs to someone else.

gzt

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#2591519 24-Oct-2020 21:18

zyo: Otherwise I couldn't imagine who in their right mind would build an expensive family home (which can probably last generations) knowing the land belongs to someone else.

When you think about it, it depends on the price of the lease. $1, not a problem.

The St John's area of Auckland has some very nice houses. The local church has owned a massive block of land since 1840 something. Leased plots to homeowners when there was nothing. Today those houses change hands for a lot of money even though many of the older leases are running out soon.

Seems like a good development model to me. The landowner gets a long term return when the 99 year lease runs out, and owns practically a whole suburb. The first leaseholder gets a low entry price.

zyo

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#2591533 24-Oct-2020 23:10

gzt:
zyo: Otherwise I couldn't imagine who in their right mind would build an expensive family home (which can probably last generations) knowing the land belongs to someone else.

When you think about it, it depends on the price of the lease. $1, not a problem.

The St John's area of Auckland has some very nice houses. The local church has owned a massive block of land since 1840 something. Leased plots to homeowners when there was nothing. Today those houses change hands for a lot of money even though many of the older leases are running out soon.

Seems like a good development model to me. The landowner gets a long term return when the 99 year lease runs out, and owns practically a whole suburb. The first leaseholder gets a low entry price.

When they were leased I'm pretty sure they went at market rates at the time. Just like landlords didn't let their houses for peanuts hoping tenants bring in population growth which enhances their capital gain.

mattwnz

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#2591537 24-Oct-2020 23:22

I certainly would avoid leasehold. Not sure if banks are that keen to lend either. The other option I can see is license to occupy, which is standard for houses in retirement complexes. This is where you buy a license to live in a house but the land and house is owned by someone else. A shared ownership model is also another way to try and lessen the cost for first homebuyers. But it isn’t solving the problem. NZ shouldn’t have a housing crisis, and imo, the main reason we do is because housing is seen as the main investment people have, so they want prices to rise. A lot of it comes down to greed. So there is no political motivation to fix this, because they don’t want to.

Geektastic

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#2591538 24-Oct-2020 23:31

I don’t know if there is long leasehold here in NZ. My father had an office in London which had 950 years to run on the lease when he bought it.

However, the rent is not paid annually: you pay a commuted capital sum up front and the rent is a peppercorn if demanded (by tradition. It’s never demanded) so really no different that buying the freehold for most intents and purposes.

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andrewNZ

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#2591574 25-Oct-2020 08:42

Not sure if the specifics, but there are properties on the otago peninsula that have 99yr leases.

I believe they sell for less $ the closer to lease end they are partly because of the unknown cost of lease renewal.