Homeowners Hate Land Rents Just Like Land Taxes
|November 5, 2013||Posted by Staff under Rent recovery or avoidance|
This 2013 excerpt of the New Zealand Herald, July 27 is by Anne Gibson.
The Cornwall Park Trust Board is a registered charity which owns the park, along with 23.4ha of surrounding land gifted to it by Auckland’s founding father, Sir John Logan Campbell.
The residential land was subdivided from 1910 to 1923 into 110 sections to provide leasehold income to pay for the upkeep of the park.
As the latest round of 21-year leases expire and are reset based on current market values, rentals have gone through the roof and feelings among the lessees are running high.
The board argued successfully that the value of the land should be based on the highest and best use of a property, unconstrained by any development.
Since then disillusioned leaseholders have been voting with their feet. Properties worth at least $6 million are up for sale and at least one has simply walked away.
An auction in September 2011 failed to draw a single buyer.
Freehold: Includes the house and the land. Leasehold: Includes the house but not the land, so the house owner pays “ground rent” to the land owner.
Purchasing a leasehold property can be a way of acquiring a property in a prime real estate area at low cost, compared to the cost of purchasing the freehold in such a property. However, purchasers of leasehold properties need to understand the obligations they are taking on and the economics of the purchase.
Few property professionals love leasehold.