In the realm of property ownership in New Zealand, the distinction between cross lease and freehold properties holds significant implications for homeowners. While both types of ownership have perks, the change from cross lease to freehold represents a pivotal transformation that empowers homeowners with increased control, reduced risks and enhanced property value.
However, before you start figuring out how to convert your property, it’s vital that you fully understand the difference between cross leases and freehold properties, as well as what benefits you can experience.
Understanding Cross Lease And Freehold Properties In New Zealand
Here's a quick explanation of both of these kinds of property ownership:
Cross Lease Properties: In a cross lease arrangement, multiple property owners share ownership of the land on which their buildings stand. Each owner holds a leasehold interest in the entire property, typically for a long term, and leases a specific area known as a "flats plan." While they have exclusive use of their individual dwelling, they collectively own and manage the land.
While this type of ownership can have plenty of benefits, it can also have its drawbacks. For example, because multiple people own the same property, disagreements can arise as to how you can use your part of the property. While you may want to do something, your neighbours may disagree, harbouring negative feelings and conflict.
Freehold Properties: On the other hand, freehold ownership grants individuals complete control and ownership rights over both the land and the buildings on it. This type of ownership is perpetual and unrestricted, allowing homeowners the freedom to make decisions regarding their property without the need for shared consent or lease agreements. This is the most common, and the simplest, type of property ownership in Aotearoa.
Freehold property owners have much more control over what they can do with their properties, making changing cross lease properties to freehold titles an appealing choice for cross lease property owners.
The Many Benefits Of Converting Cross Lease To Freehold
How exactly can you benefit from converting your cross lease property? Here are just a handful of the many benefits you can expect:
Increased Control. Perhaps the most intriguing benefit for many cross lease property owners is the fact that you’ll have much more control over your property, and you won’t have to ask your neighbours for permission before you do anything.
Unlike cross lease arrangements, where alterations or additions require consent from other leaseholders, freehold owners can change their property whenever they like as long as their alterations don’t break any of NZ’s building code regulations. This freedom extends to landscaping, renovations and structural changes without the need for external approvals.
Avoiding Defective Titles. One of the inherent risks of cross lease properties is the potential for defective titles. These arise when owners change their property without updating the cross-lease "flats plan" to reflect these alterations accurately. Defective titles can deter potential buyers and pose challenges during lending and insurance processes. By converting to freehold, homeowners eliminate the risk of defective titles, ensuring smooth transactions and safeguarding their investment.
Reduced Risks. Cross lease ownership entails shared responsibilities and mutual agreements between neighbouring owners, which can lead to conflicts over maintenance, insurance and common area usage. By changing your cross lease to freehold, homeowners mitigate these risks and avoid disputes with fellow leaseholders. Freehold ownership streamlines property management, offering clarity and autonomy in decision-making.
Even if you get along with all of your neighbours, getting everyone’s permission to make decisions and arrange property management tasks can be a hassle.
Increased Value. Freehold properties are generally regarded as more desirable and valuable than their cross lease counterparts due to the certainty and exclusivity they provide. The absence of shared ownership complexities and title defects makes freehold properties more attractive to buyers, resulting in higher market demand and increased property values. By converting to freehold, homeowners unlock the full potential of their property, enhancing its marketability and investment potential.
If you ever plan on selling your property in the future, converting your cross lease now can help you improve your selling chances down the track.
Unlocking The Full Potential Of Your Property With Civix
The decision to change a cross lease property to freehold is a strategic move that offers homeowners a myriad of benefits, ranging from enhanced control and reduced risks to increased property value. By embracing freehold ownership, you can enhance your control of your space, protect their investment and elevate the market appeal of their property.
So, where can you start? At Civix, we aim to streamline the process by helping you with our expert services. With years of experience and a commitment to excellent results and customer service, we’re your go-to partners when handling cross lease properties in New Zealand.
Are you ready to get the process started? Call us on 09 303 1113 or reach out to us through our contact page.
Experience the joys of freehold property ownership; consider us at Civix!