By Mark Parker, Registered Professional Surveyor and land development expert, Cato Bolam Consultants.
Many homeowners across the country hold cross-lease titles, though not all cross-leases are created equal. They often vary in complexity and quality, having been developed to meet the needs of their time, without fully considering future requirements. Cross-lease titles account for 18% of all titles in Auckland, the second most popular title type after fee-simple.
Fee-simple, often called freehold, offers the highest form of property ownership, granting complete and permanent ownership rights to the property holder. However, the term ‘freehold’ can also include unit titles, which involve shared ownership of common areas.
What is a cross-lease title?
A cross-lease title involves multiple individuals owning shares in the same piece of fee-simple land, with the buildings leased back to each owner (cross-leased). Then, common and exclusive use areas are typically, though not always, allocated to each leaseholder.
Disadvantages of cross-lease titles:
- Any alterations to the exterior of buildings require an amendment to the lease area.
- Changes to the title need the consent of co-owners.
- Disputes may arise over shared areas or lease terms.
- Cross lease titles are often viewed as less desirable in the property market compared to fee-simple, possibly affecting resale value.
- Defective titles can complicate mortgage lending.
Advantages of cross-lease titles:
- The requirement to consent to the co-owner’s alterations can be seen as an advantage.
- Cross leases can be less expensive than fee-simple titles due to the shared land ownership.
Why should I think about converting my cross-lease title to fee-simple?
Freedom to renovate and improve your property: With a fee-simple title, you have full control over your property and can make changes without needing your neighbour’s consent.
Increase property value: Fee-simple titles are more attractive to buyers and can boost your property’s market value.
Avoid disputes and frustrations with neighbours: Eliminate the need for co-owner approvals and potential conflicts over shared areas.
Greater control over your land: You gain sole ownership of the land, giving you full authority over its use and development.
Simplified property management: Fee-simple ownership removes the complexities of managing shared spaces and responsibilities.
Future proofing your investment: Converting to fee-simple can ensure your property retains its value and appeal in the long term.
How should I go about converting my title?
The first step is to talk to your neighbour about the conversion, how it will be funded and who will do what. We can then assist you to organise a topographical survey and CCTV of all the existing buildings, drainage and access. This is a key step to determine if drainage exists, is functioning and if there is suitable access. If the existing infrastructure is satisfactory, Council will accept it without requiring physical work. However, if drainage or access is missing or damaged, it may require repair or installation.
Once this is resolved, you’ll apply for subdivision consent from Council, which will include conditions ranging from completing a land transfer survey to addressing any regulatory or physical work required to repair or install the required drainage or access.
A straightforward conversion with no physical work, can generally be completed in 6-7 months, if physical work is required the process could extend to 12-18 months depending on the complexity of the project.
Once the conversion is finalised, you’ll enjoy the peace of mind that comes with owning a fee-simple title—free to alter and improve your property independently, without worrying about the approval of your neighbour.
We’re here to help!
Our subdivision experts are available to provide support and guidance, helping you make informed decisions about the future of your property.
Contact Mark Parker and the Cato Bolam team.
