Whether you are in the process of buying or have already purchased property in New Zealand, you may have come across terms such as cross lease and freehold. Understanding the differences between these ownership types is essential because they affect your rights, responsibilities, and the ways you can use or develop your land in the future.
If you are looking to convert an existing cross lease title to freehold ownership or want to understand the difference between cross lease vs freehold, our guide provides you with clear information so you can make an informed decision.
We explain what each term means, the key differences, and why they matter for property owners in New Zealand.
What Is a Freehold Ownership?
Freehold ownership, also referred to as fee simple, is the highest form of property ownership in New Zealand. When you own a freehold property, you have the most control over your property, subject to local council regulations and planning rules.
Freehold ownership allows you to sell, lease, or subdivide your land (subject to council approval) without needing permission from other owners or a body corporate. It offers greater flexibility and fewer restrictions, which is why many property owners prefer this type of title.
What Is a Cross Lease Ownership?
A cross lease is a more complex form of ownership, often found in residential properties created between the 1960s and 1990s. Under this arrangement, multiple owners share ownership of the land, and each owner leases their individual dwelling and section of the property from the group.
In practice, this means all owners must agree on changes affecting the property, including fences, driveways, or extensions or changes that alter the outline of the building. If changes are made to the property, the cross lease plan (known as a flats plan) should be updated, or the affected property can be deemed to have a ‘defective title’.
Cross Lease vs Freehold: Key Differences
1. Ownership & Control
With freehold, you have exclusive ownership and full control over your property. With a cross lease, you share ownership of the property with your cross lease neighbours and lease the use of the building (and sometimes outdoor areas).
2. Decision Making
Freehold owners act independently when making decisions about their property, subject to council rules. Cross lease owners must consult with other parties for changes affecting the property, which can slow down or complicate any improvements or changes.
3. Maintenance & Costs
Shared ownership in a cross lease property means shared responsibilities for maintenance and costs related to common areas, whereas freehold owners are solely responsible for their individual properties.
Why Does This Matter for Property Owners?
Understanding whether a property is a cross lease or freehold is vital because it influences what you can do with your land, your legal responsibilities, and your investment’s value.
Cross lease properties may come with additional restrictions and potential disputes, which can impact their resale value and borrowing options. Many owners, therefore, opt to convert cross-lease titles to freehold to gain greater control and flexibility.
Cross Lease to Freehold Conversion
Converting from a cross lease to freehold ownership offers several practical and financial benefits. With a freehold title, owners gain full control over their land and dwelling, eliminating the need for agreement from co-owners for renovations, extensions, or other changes.
This often makes the property more attractive to buyers, may increase its market value, and can simplify future development or subdivision plans. For these reasons, many owners see freeholding as a long-term investment in both flexibility and peace of mind.
Need Help Understanding Cross Lease vs Freehold?
Give Us a Call Today
Whether you are buying a cross lease property or considering converting your existing property from cross lease to freehold, expert guidance is crucial. Our surveyors and planners can explain your options, help navigate Council complexities, and ensure your ownership aligns with your goals.
At Thomas Consultants, we provide expert advice on cross lease vs freehold and can assist you in understanding the best path for your property ownership. Contact our team today to discuss your situation and learn how we can help you make informed decisions about your property.
