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  1. #1

    Default Property on unit title

    Hi all,

    I am now considering a unit which is for sale and is on the unit title with BC and collective ownership of land. I understand that this type is less attractive comparing to free hold and cross-lease. Is there a standard discount that accounts for this factor?

    Let say a similar property on cross lease is 600, then what would be an approximate price for the same unit on the unit title?

    If anyone could help?

    Or should I stay away from unit title properties? May it be a potential headache?

    Thanks

  2. #2
    Join Date
    Nov 2016
    Location
    Hamilton
    Posts
    21

    Default

    I have personally observed more problems with cross lease properties than BC properties. With cross lease, no owner can do anything to the property without the explicit agreement of the other owner(s). If the other owner says that you can't paint the fence, then you can't paint the fence. In my opinion BC properties don't tend to increase in value as fast as freehold properties, because of their nature of usually being apartments. If a BC has a good BC manager and good committee/chairperson then it can be a good experience. Make sure you do due diligence on the BC first.
    Jeremy Barker
    Hamilton Property Management
    www.hamiltonpm.co.nz

  3. #3
    Join Date
    Sep 2007
    Location
    Auckland
    Posts
    8,305

    Default

    A unit title is better than a cross lease for sure.
    Squadly dinky do!

  4. #4
    Join Date
    May 2004
    Posts
    2,774

    Default

    Personally I stay away from unit titled properties. Several reasons -

    - a single unit owner has pretty much no control over what happens to common property or levies
    - larger complexes have plenty of renters, some with absentee owners who might not be very interested in issues, or owners who can't or won't pay levies, especially special levies for major maintenance
    - there are new rules going through the legislative process mainly relating to more regs around medium and large complexes. Who knows what will be progressed by this government though.
    - speaking of this government, it is not on the landlord's side, if thinking of renting.

    On the other side, many issues around unit titles are set down in legislation, along with default BC rules, so at least there is some consistency. However, many BCs have their own rules which should be inspected carefully. As should accounts, minutes, maintenance plans and records and the other docs that must be provided at different points in the purchase process.

    Been there, done that, bought the company (ie all units so I now run the BC).

  5. #5
    Join Date
    Oct 2013
    Posts
    1,613

    Default

    Quote Originally Posted by artemis View Post
    Been there, done that, bought the company (ie all units so I now run the BC).
    The great thing about unit titled properties for larger scale investors is that you don't actually have to buy them all - just more 50% - to get almost full control of the Body Corp, and do largely what you want with the property. Much the same way shareholdings work in public companies.
    AAT Accounting Services - Property Specialist Accounting - AATAccounting.co.nz
    Lower fees for investors, traders & real estate agents!
    [email protected] for more information.

  6. #6

    Default

    All right, the price will not increase as much as compared to a freehold house. But what about against the value of a cross-lease unit?

    Would a price movement be any different?

    thanks

  7. #7

    Default

    Quote Originally Posted by Davo36 View Post
    A unit title is better than a cross lease for sure.
    why is that Davo?

  8. #8
    Join Date
    Sep 2007
    Location
    Auckland
    Posts
    8,305

    Default

    Quote Originally Posted by Alexy View Post
    why is that Davo?
    You know what? Now that you ask, I'm not sure!

    Unit title is freehold, crosslease is 999 years, but that's a long time!

    Perhaps others could comment?
    Squadly dinky do!

  9. #9
    Join Date
    Oct 2014
    Location
    Auckland
    Posts
    96

    Default

    I live in a unit title townhouse in a group of five. I would not consider buying a cross lease property mainly because the potential insurance issues that can crop up, not to mention the lack of protocol for dealing with common property maintenance and general issues. Here I know that the entire complex is insured to full value. A well run BC is much more desirable the the wild west of cross lease.

  10. #10
    Join Date
    Oct 2014
    Location
    Auckland
    Posts
    96

    Default

    It's important to do your homework on the BC of any property you are looking at. For example, if any major work is imminent, the current owners will hopefully have been paying into a fund so that the new owner is not hit with a massive bill. Generally, BC fees will incorporate building insurance and exterior maintenance - things that any responsible home owner would account for anyway.


 

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