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  • #1

    Cross-lease bonuses

    Hi All,

    It has been some time since I've asked a question or contributed on here and with how busy you sometimes get I truly appreciate the time and effort the consistent posters put into this forum.

    My question today is around the positive and negative sides to cross-leases, there are a few other threads here but none I can find specific to Papakura 1/2 shares of 1000 square meters - why would the two owners not split it into freehold...? No longer need their permission to build a deck...

    I have 2 properties to date and am looking at buying my live in (not investment) home with my partner, where I plan to stay for quite some time. Papakura is one of the few <$600k areas left and I've noticed quite a few cross leases. With 1/2 shares of decent sizes, why would you remain in a cross lease? does the legal costs put too many people off?
    Finance Broker - www.creditone.co.nz
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  • #2
    Either legal costs or people don't even think about it. Typically it is 10 to 15K to do it but most owner occupiers never even think about it. Providing you are willing to fund it many owners will let you. It is not uncommon for one side of a cross lease to have a lot more usable space than the other side. As a cross lease it is common area so neither party has exclusive benefit but when you subdivide it can sometimes create perception issues for the poorer cousin.

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    • #3
      Originally posted by Bobsyouruncle View Post
      Either legal costs or people don't even think about it. Typically it is 10 to 15K to do it but most owner occupiers never even think about it. Providing you are willing to fund it many owners will let you. It is not uncommon for one side of a cross lease to have a lot more usable space than the other side. As a cross lease it is common area so neither party has exclusive benefit but when you subdivide it can sometimes create perception issues for the poorer cousin.
      It's not legal costs that are the majority, but survey and Council costs. Legal will be about 20% of the total, with LINZ registration fees comprising quite a bit of that.

      I've just done one and am getting underway on another.

      I would rate costs at $15-20k. Much easier, obviously, if you own both of them, and if you aren't changing the interior boundaries.

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      • #4
        $15k-$20k really isn't that much when you consider the hassle it can save. I would just hate for any development opportunities to be limited by the approval of my neighbor.
        Finance Broker - www.creditone.co.nz

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        • #5
          It's not the hassle it saves it's the value it adds. The last one I did was 12K all in and added 10 times that to the valuation.

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          • #6
            I'm just surprised you don't see more of it with 1/2 shares of 1200 square metres and "okay" houses... when the freehold houses on 600 square metres are selling for $100k+ ea more than their cross lease counterparts...
            Finance Broker - www.creditone.co.nz

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            • #7
              I think most people have no idea how simple it is or that it can be done. We are like sheep in the main.

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