Cross lease history
Cross leases are easily one of the more complicated forms of property ownership in New Zealand and it can be confusing for people to understand what it entails, and any implications involved. Learn more below about cross lease and what you may need to be aware of.
Historically, people created a cross lease as a low-cost way of having more than one house built on a piece of land that was not able to be subdivided. Instead of subdividing the land, all house owners jointly own the underlying land and then typically allocating themselves exclusive use rights for the areas where their respective houses were built. This usually is shown on Flats Plan associated with the cross lease titles.
What’s different about a cross lease?
What’s different about a cross lease is that the entire land parcel of the cross-lease title is conjointly owned by all house owners, while each house owner leases the area on which their house is built for an extended duration (usually 999 years). That is why when you read the title, the houses are called Flats (sometimes Areas) and the title will refer to leases and flats plan etc.
A cross lease is essentially a historical form of development that was extremely popular in the 1970s and 80s, as it avoided the subdivision rules and restrictions of the day.
Are there any issues with cross leases?
All house owners own the underlying land jointly, however when making changes to their individual houses then matters can get complicated.
For instance, if one house wants to make any alterations like additions of a bedroom or add a deck etc, then technically they must seek permission from all other involved owners and accordingly update all their flats plans. For doing this they will need to involve a surveyor and lawyer on top of other professionals. Therefore, it is critical to initiate and build a positive relationship with the other involved owners on your cross lease. A cross lease is also generally created with shared driveways and shared services, and accordingly you will have to jointly maintain all infrastructure involved irrespective of where your house sits.
Cross lease properties generally tend to return lower value when compared with similar free hold properties due to restrictions associated with them.
Can you convert a cross lease to a freehold?
You can convert your cross lease property to a freehold title through a subdivision and by ensuring infrastructure is separated out for each future freehold lot. This can add potentially significant value to your property, as it lifts the restrictions and avoid the pitfalls of cross lease.
The conversion will require:
- A survey of the property to mark out the new property boundaries
- A survey of the location of all services and a plan of how these services will be separated
- A subdivision consent application to be prepared and lodged
- Physical works to separate the services and potentially upgrade the driveway
- An application to Land Information New Zealand for new property titles