What happens to council valuation (and rates) after cross lease conversion to f/hold?

[krypton_john]

What's more likely is your CL neighbour with the fee simple title will not immediately realise a rise in value but going forward it would and fee simple gives the homeowner more freedom etc.

You could get a valuer in - so your neighbour hears it from someone in the industry.

cheers,

Donna

Hi Donna,

I asked a valuer about this option. He said that route would require two registered valuations - a valuation as is, and a valuation based on fee simple title! So a $2k exercise with no known outcome.

I should have been a valuer.

[krypton_john]

have you talked to council in how they will treat this?

Well I have tried. Phone in, wait on interminable hold, eventually explain what the call is about, get told the appropriate department will call me back within two weeks. Two weeks later they call me back and tell me I need to talk to a different department (Ratings). Call the council again, interminable hold, ask to talk to Ratings, put back on hold, eventually given a different phone number to call. Call that number... all it does is ring and ring and then a message says "Call back later".

But... the original problem may have been resolved without this information. In an unexpected development our neighbour has come around and agreed to proceed!

[krypton_john]

What's more likely is your CL neighbour with the fee simple title will not immediately realise a rise in value but going forward it would and fee simple gives the homeowner more freedom etc.

You could get a valuer in - so your neighbour hears it from someone in the industry.

cheers,

Donna

Thanks Donna, yeah that's definitely a possibility.

[donna]

What's more likely is your CL neighbour with the fee simple title will not immediately realise a rise in value but going forward it would and fee simple gives the homeowner more freedom etc.

You could get a valuer in - so your neighbour hears it from someone in the industry.

cheers,

Donna

[krypton_john]

Why couldn't he get it across the line?

cheers,

Donna

The cross-lease neighbour changed his mind and wouldn't sign off on the freehold. that's still the issue I have now. He thinks that the CV on his property would drop because I'm not about to give him the 50m2 of land that is the difference between his exclusive use area and his title % share.

[donna]

I should have explained better - the freeholding work was all done by the previous owner of our property. He just couldn't get it over the line so sold as a cross lease. Poor guy, he had a conditional offer $200k over ours but the condition was the freeholding completed.

We bought the property as a cross lease but are trying to convince the neighbour to proceed with freeholding it. I think someone's been giving him some bad advice.

Why couldn't he get it across the line?

cheers,

Donna

[krypton_john]

have you talked to council in how they will treat this?

Talking to council ... involves going through a phone process with annoying menus and interminable waits before ending up with the wrong person so you go back to the interminable wait. Was hoping someone already had done this and had the answer.

[John the builder]

have you talked to council in how they will treat this?

[krypton_john]

A side question, does anyone have information on how much values rise when the CL title is changed to freehold? Even rules of thumb or specific examples. E.g. X% increase or $Y increase. We own a cross leased place and the neighbours are thinking of selling, so maybe I can get them to share the costs of freeholding to increase their sale price.

We've talked a lot about this with the surveyor. He estimates 10-15% increase in value.

[krypton_john]

also you have to compare his current value which presumably only comes with 25% land use share so uless distorted by improvement valuesmeans you already have the more valuable share.As sanya says his value can only go up.

I agree with Sanya but be careful that you dont invite negotiation. Did you have an afgreement to do this? if so enforce it he shpould have thought this through already.

I should have explained better - the freeholding work was all done by the previous owner of our property. He just couldn't get it over the line so sold as a cross lease. Poor guy, he had a conditional offer $200k over ours but the condition was the freeholding completed.

We bought the property as a cross lease but are trying to convince the neighbour to proceed with freeholding it. I think someone's been giving him some bad advice.

[krypton_john]

^^ Plus if they only have 25% share they should only be paying 25% of the rates for the shared land.

A lot of cross leases have one property with a lions share of land yet the rates on the land are split 50/50. Going fee simple will ensure they're only paying rates on their land

cheers,

Donna

In this case his rates are $4k and mine are $5.2k. So I'm 25% more but my CV is 33% more than his.

[heugumper]

A side question, does anyone have information on how much values rise when the CL title is changed to freehold? Even rules of thumb or specific examples. E.g. X% increase or $Y increase. We own a cross leased place and the neighbours are thinking of selling, so maybe I can get them to share the costs of freeholding to increase their sale price.

[donna]

^^ Plus if they only have 25% share they should only be paying 25% of the rates for the shared land.

A lot of cross leases have one property with a lions share of land yet the rates on the land are split 50/50. Going fee simple will ensure they're only paying rates on their land

cheers,

Donna

[John the builder]

also you have to compare his current value which presumably only comes with 25% land use share so uless distorted by improvement valuesmeans you already have the more valuable share.As sanya says his value can only go up.

I agree with Sanya but be careful that you dont invite negotiation. Did you have an afgreement to do this? if so enforce it he shpould have thought this through already.

[Sanya]

I Agree with John the builder. Get a valuation done. Usually when cross-leases are converted to fee simple the valuation increases. Freehold titles look far more attractive to buyers and therefore reach higher market prices.

Since you say everything has been approved by council which means you've completed a lot of work (presumably jointly?) already including surveying and possibly engineering reports, the reason for your neighbours change of mind needs to be understood. It may have nothing to do with valuations. It may be the neighbour is hoping for some compensation for his "perceived" loss of share.