What is UNIT TITLING anyway?

[Kre8eve]

I've read (on this forum and books) and heard a lot about UNIT TITLING....that some investor buys multi unit properties and then converts them into separate unit titles, thereby increasing the equity in BIG numbers.

Have any of you done it before? Can I request details on the process, timeframe, costs and pitfalls if any?

Thx in advance!

[Green Fish]

There's another thread somewhere with some good practical information on things like installation of separate electricity meters and new firewalls.

The basic concept is reasonably straightforward and it's all contained in one easy-to-follow statute:

http://www.legislation.govt.nz/act/p...DLM405591.html


Before the Unit Titles Act, the only way to give each occupier a form of ownership was to use cross-leases (very messy for multiple unit properties) or to have the whole block owned by a company in which each occupier held shares (which made it hard to get finance). Although a unit title is not as good as a "fee simple" title, it's about as close as you can get when dealing with multiple unit properties.

[grange]

Unit Title

Hi Kre8eve,

The process of converting a block of flats on one title into separate titles whether by Unit Title or fee simple is a way to increase the value (and disposability) of the separate units.

THe benefit is to release the equity in the separate parcels of land (units/lots) and you can generally make 20%-30% on a revaluation.

The problems are that you need resource consent, this is to check all the 'effects' of the conversion. The original buildings are usually substandard with their access, drainage, fire protection, etc and therefore require upgrading.

We are working on one in Porirua where the RC and BC is approved with only some fire rating required on the internal partition walls. our client will get 4 units on separate titles and about 30% increase in value for a minimal amount.

The key issues to look for if finding a property like this is to find one with good solid concrete block walls between the units, this will comply already with the fire issues. then check the drains, connections, and other services to see if they comply with current standard.

its complex but can work well if you find the right one - probably talk to a valuer first to see if there is enough to gain (recent unit sales in the area will be a guideline for your new values).

hope that helps.

contact me if you want any further info.



Adrian

[Dean@Massiveaction]

I've done one lot in Rotorua.
Cost 12 grand to convert 12 units form 3 titles to 12 titles. RV went from 1.1 to 1.7.

[Xav]

Kre8eve,

Your best option would be to go for fee simple sections with party wall easements for any connecting walls.

If for some reason you can't do this, I would recommend doing them as cross leases.

Unit Titles are necessary where you want to have an individual title for a space not at ground level (ie. an apartment).

Apart from that, I would avoid creating them as although they aren't too bad to set up, they can be fraught with difficulties for owners and there aren't really many advantages over a cross lease.

In terms of the process, talk to a surveyor. It is really just like any other subdivision.

You will need to either comply with your local council's requirements so that the subdivision is a controlled activity or get a resource consent on a discretionary or non-complying basis. The later can take a long time and you may ultimately either fail or you get a consent subject to conditions which greatly reduce the value of the new titles. That is probably your main risk (other than not being able to sell them of course).

Legal and surveying costs will vary depending on how many easements etc you require. Of those surveying costs will probably be the bulk of it.

If you need to start altering buildings to comply with council requirements obviously there will be extra costs there, which it is not possible to estimate without knowing what is required.

I would think pooomba's one must have been relatively straight forward for those fees, if not you should ask him who he used .