Avoid cross-lease?

[nickpnz]

Hi all,

We're first time buyer in Auckland (ppor not investment) with an okay budget but one that probably won't get us freehold.

Should cross-lease be avoided at all costs?

An option we're considering has only one other leaseholder, buildings are joined and a decent sized parcel of land.

I can't see much appreciation, but could hold long term as an investment and cashflow later down the line.

Thanks for your views.

[TheLibrary]

At all costs - No

What you need to do is understand all the dynamics that comes with owning a crosslease. Structural changes requires other owners permission, shared drives can become contentious.......visitors parking in the drive and blocking you and in a joined property, you would have to agree repairs and maintenance in some instances

They are only as good as the reasonableness of the other owners

Read the lease and assume the other owners expect you to adhere. Make sure you understand it - get a lawyer to go over it with you.

[HouseWorks]

Was thinking you meant leasehold. In which case no because you just get screwed over by the landowner.
I have a few reservations about cross-lease. Modern cls that provide exclusive use areas (not all cls allow exclusive area), are already fully constructed with decks, fences, sealed drive and adequate size home for the land size will have no problems imo.

[donna]

There's lots of X leases and as TheLibrary says how it works will come down to the other owner. You share the entire land. Even building a fence can be contentious so you'll need to pick your battles so to speak. We have a couple of rentals on X leases and fingers crossed we've been fine to date (and we've had one for over 10 years).

There's been a couple of conflicts - one when the owner of the other property (both properties are standalone) wanted to extend their property to the end of their useable land - which would have affected our property's sun etc i.e. causing that side of the house to be even damper in winter than it is currently so we just said no. The other conflict was when speculators bought the property (road side and joined to ours) and wanted to put up a fence along a very tight access lane to our property (at rear).

They tried it on and probably would have gotten what they wanted had the owner not been me or an investor . So as I say it's unlikely that you'll never experience a challenge or two so be prepared for it. What I wouldn't do is buy a X lease that needed lots of work and that would include needing permission. I did nearly purchase a X lease that had 4 other properties - thankfully I had a lucky escape as I'm sure it would have been up a headache.

cheers,

Donna

[Viking]

You cab buy and wait until you can buy the other proerty and then freehold.
you can freehold now.
The govt. is working on changing the rules and making cross leases obsolete. I think that work is currently with the Law commission.
Everything hinges around the lease so study that fully and get advice on the clauses.

I have two and one is Ok but the other, well she will get snaffued under all the new nice warm homes bit. That won't paint or repair the outside but I will wait. The sections are big so will be able to split when the time comes.

[Timmurray]

I have a cross lease with one other property, a fence dividing us, with separate driveways. There have been no problems in 12 years so it can be fine. I did want to build a deck at some stage and that would require the approval of the neighbour - so I guess that would be the first test. If I use up 30m2 of permeable stormwater soak-away area that's 30m2 less for the neighbour to potentially use in the future, and they may object to that.

[learningInProgress]

The thing about cross lease is you are less flexible in term of improving your property. Changes outside your house will require consent from the other side.

Having said that, I would only want a cross lease if I own half of the cross lease and better if you can build good relationship with the other lessor(?)

[flyernzl]

I have several.
No problems.

[HouseWorks]

I have several.
No problems.

Hi flyernzl
Flats or standalone?

[flyernzl]

Standalone. Two and three brm houses.

[HouseWorks]

We have one in Ellerslie, small standalone early 90s weatherboard house. Needs work on section including fence and deck. We've been good to the Asian neighbours and no issues with our relationship. They still won't agree us making what is minor but value adding improvements. Very strange.

[donna]

What's their issue with it? Maybe you could do a deal where they also get to choose some improvement to their property and you approve it. The opportunity is there for the both properties that may not be if either sell - i.e. less accommodating owners.

cheers,

Donna