Quality apartments in Auck?

[Anthonyacat]

Had no idea it was St Johns College that owned that land. At least it's going towards education and not some multi-billionaire's yacht fund.

[Bobsyouruncle]

There's 2 main land owners, I forget the other one. Both generally don't ever let you freehold. Many people just walk away. They took someone to court not long ago over unpaid leases but the publicity caused them to back down if I recall correctly.

[Davo36]

You're thinking of Cornwall Trust who own Cornwall Park and the land under the houses around it. The leases fund the maintenance of the park, so no, they never sell them. Because then they'd run out of income sources.

Yes a Chinese lady didn't pay. So they took her to court and were half successful. She played the "It's too big a rise" card along with the "We are unsophisticated people who don't speak good english" card.

[Bobsyouruncle]

Yep that's right Cornwall. One place I looked at in Greenlane I could buy practically for nothing but the weekly lease was around $800 and it was going to go much higher in 2022. At some point they will have to reset them surely?

[Anthonyacat]

Isn't that exactly contrary to our argument in the other thread? The leases are based on land values, which you've argued can continue doubling forever. If land values can, why can't ground rents?

Of course, my argument is exactly as you've stated here. At some point they'll have to reset them, simply because no one will be willing to buy the houses. They will take existing owners to court over unpaid dues, repossess the leasehold, and would have to pay someone to 'buy' it from them. A nonsense scenario.

[Bob Kane]

Isn't that exactly contrary to our argument in the other thread? The leases are based on land values, which you've argued can continue doubling forever. If land values can, why can't ground rents?

Of course, my argument is exactly as you've stated here. At some point they'll have to reset them, simply because no one will be willing to buy the houses. They will take existing owners to court over unpaid dues, repossess the leasehold, and would have to pay someone to 'buy' it from them. A nonsense scenario.

The leases are based on the value of freehold land - which is so wrong that I'm surprised it still happens.
Surely some valuer would realise the difference in value between freehold and leasehold land?
At some stage Cornwall Trust will need to use the leasehold value of the land (which will be 1/10th the value of the freehold equivalent) and come up with a realistic lease amount.

[Beano]

Isn't that exactly contrary to our argument in the other thread? The leases are based on land values, which you've argued can continue doubling forever. If land values can, why can't ground rents?

Of course, my argument is exactly as you've stated here. At some point they'll have to reset them, simply because no one will be willing to buy the houses. They will take existing owners to court over unpaid dues, repossess the leasehold, and would have to pay someone to 'buy' it from them. A nonsense scenario.

So the land value = the property value (if freehold)
Then the building would have Nil value
This would apply not just to Auckland but everywhere in the country

[Beano]

The leases are based on the value of freehold land - which is so wrong that I'm surprised it still happens.
Surely some valuer would realise the difference in value between freehold and leasehold land?
At some stage Cornwall Trust will need to use the leasehold value of the land (which will be 1/10th the value of the freehold equivalent) and come up with a realistic lease amount.

What rental do think is realistic ?

[Bob Kane]

What rental do think is realistic ?

$100-$200 per week.

[Beano]

I don't have any numbers in Auckland but elsewhere (Wgton and Napier) for many units the ground rental ranges from $50pw to $80pw
I wouldn't mind seeing Auckland numbers but what they will be in another decade will be anyone's guess

[eri]

afaik

what used to be "peppercorn" ground rent by churches etc.of land that had been gifted to them in 1880? ie $20 a year for 20 years, set in the old non-inflationary times for land seen as low value?

have slowly been switched over commercial leases of 7% of land value per year, fixed for 5 or so years, then recalculated/ratcheted up

recently saw some 400m2 bare sections in a bush setting in epsom for $1.45m........if they were to be leased at commercial rates of 7% that would be $100,000 per year......who would want to build an $800,000? house on that?

a peppercorn rent is often used as a form of nominal ground rent where a (potentially substantial) premium has also been paid on commencement of a long lease of, say, 99 or 125 years (a "virtual freehold").^[10] The notional collection of the annual peppercorn rent helps to maintain a formal landlord–tenant relationship between the two parties, precluding the risk of a claim for adverse possession from the tenant arising, were no consideration to be paid for an extended period.^[11]
It is not uncommon, even in the modern day, for a peppercorn rent to be denominated in (sometimes whimsical) physical goods rather than currency. For example, many of the buildings in London's Covent Garden are leased at a peppercorn rent of "one red apple and a posy of flowers",

[Wayne]

$100-$200 per week.

Why would that be reasonable?
It is interesting how this has turned.
It seems to be reasonable that houses in Auckland can go up in value doubling every 7-10 years due to the shortage (I am told).
Shortage of what? Land maybe (council rules et al).
So you would think that the land value should also double every 7-10 years - forever.
It is not unreasonable that the owners of the land expect a return on their capital so the lease should also double every 7-10 years.
I really struggle to see the difference.

[Anthonyacat]

I really struggle to see the difference.

Exactly my point about 10 posts ago.

But I suppose if residential landlords are expected to continue compressing their yields, perhaps everyone else is too?

And really, 7% of gross land value is a heck of a good return in the current environment. Pretty terrible when interest rates are running at 12%.

[Wayne]

Exactly my point about 10 posts ago.

But I suppose if residential landlords are expected to continue compressing their yields, perhaps everyone else is too?

And really, 7% of gross land value is a heck of a good return in the current environment. Pretty terrible when interest rates are running at 12%.

I know but everyone tried to ignore it so I thought I would try again.

[Davo36]

I know but everyone tried to ignore it so I thought I would try again.

Good.

Bob Kane's posts on this have been nonsensical.