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Crosslease Rental Properties

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  • Crosslease Rental Properties

    Does anyone have any views/opinions etc about whether or not a cross-leased rental property has any advantages/disadvantages versus a non-cross leased rental property? Thinking about looking into a cross-leased 'do-upper' and wondered if anyone had any "info-gems" they could offer me....

  • #2
    I own a cross lease IP as I'm sure many others on this forum do. havent had any troubles, I think it could be tricky if there is no fence or definate boundry between the two. also need approval from other party if you want to change the floor plan or add a garage etc... I'm sure theres more to it.. anyone ?

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    • #3
      Cross lease

      Not my area of expertise but a bit of knowledge.
      Cross lease was effectively a cheaper means of subdividing a section until cost of this reduced some 5 years ago. Term was for 999yrs with renewal.
      A cross lease can have exclusive and non exclusive areas. Most have exclusive areas which covers bondarys to section and shows common use such as driveway. Therefore you know where to put a fence.
      You need permission from other crosslease parties to do alterations to house (change to exterior footprint) or add building such as carport or garage.
      The main problem that occurs is when you do add a garage/carport even though you have neighbour consent and a permit, is that the crosslease plan which shows the building etc is not updated with new building. Some solicitors get hot on this but as everything is legal then it is OK but the crosslease plan is incorrect. The only way to fix the cross lease plan is to get a surveyor to resurvey and show additional building or alteration to house footprint and then deposit the change with the Land Transfer office. Including surveyor, soliciotr and land transfer costs $5-$6,000.
      If no alterations or no extra building then no problems.

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      • #4
        Crosslease Rental Properties

        Thanks for info and keep posting to this site. For my money (so to speak , this is one of the best IP sites there is!!!

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        • #5
          Is "crossed lease" the same as "leased" land?

          I have seen properties for sale on leased land and was wondering what that would mean to someone who was purchasing it as an investment property.

          How is leased land percieved by the market in New Zealand?
          Is leased land ever converted to freehold land?
          Would an interest only loan make even more sense when buying a property on leased land?
          Does anyone here have investment property on leased land who could tell of their experience please

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          • #6
            Leased Land

            Leased land is quite different to a cross lease. Under leased land the land is leased for a period of time which is usually 25 yrs or less. In most cases it is less. However there are some leases which are mainly in the commercial area that are perpetual which means for ever.
            With a lease there is also aground rent payable which is effectively a yearly rent. This is usualyy quite small. Most lenders will not lend on leasehold land however there are a number who will. Generally the mortgage needs to be repaid by the time the lease expires or is up for renewal. This can result in high repayments as the lease may only have 10yrs to run so you must repay the loan over that 10 yrs.There is also no guarantee the lease will be renewed on expiry.
            A property with a lease will be a lot cheaper than a freehold or cross lease property.
            Really it is just not something you want to be looking at as a new investor.

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            • #7
              Thanks NZMtgBroker ! Great Information there. And no I wouldn't be looking at something that I didn't really "own" without knowing all the pros and cons (hence asking for opinions ). We have the leased land here in Aus, Canberra springs to mind as one place.

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              • #8
                Fantastic to see many more new forum users posting in our Forums. Thanks for sharing your experiences and knowledge....it's a win, win for everyone.

                We have a cross leased rental property in Kapiti (oodles of them in Kapiti) - and I had (sold now) a 2 bed place in London that was on leased land (hard to find freehold in London...too much history). Never property has caused any concern.

                The cross leased rental is established without needing any major works so I'd be inclined to avoid properties that did require additions if they are cross-leased.

                Cheers,

                Donna :P
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