Commercial

Property problems: Pros and cons of leasehold property deals

Q. I am thinking of purchasing a leasehold apartment in Wellington. Is there a premium for non-leasehold-type properties? Do you think I will have any trouble reselling the property at all and is there anything I should be looking out for?

A. Unfortunately, there is no straightforward or simple answer to your question as each leasehold property will be held under differe

Sunday, June 06th 2004

nt lease terms. However, there are some general comments that may be of some assistance to you.

Registered leasehold properties can be split into two broad categories. The first is where they are for a finite term such as 50 or even 100 years. Examples of such leases would include the apartments on Princes Wharf in Downtown Auckland.

The second category is leases which, although they have a finite term including rights of renewal that, if exercised, enable the lease to continue in perpetuity.

Obviously, a leasehold estate that has a finite term and is not capable of renewal- without renegotiation with the landlord - has a reducing value, all other things being equal. The closer to the termination date the less valuable that leasehold estate will be as there is less time left for the tenant to use the property which, at the end of the lease, reverts back to the landlord. A perpetually renewable lease does not suffer from this problem.

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It is not the best out there for many businesses and property sector people. Sales are down across the board, our clients’ confidence is falling, and there is a lot of uncertainty.

SBS FirstHome Combo	6.74
Heartland Bank - Online	6.89
Wairarapa Building Society	6.95
Unity	6.99
Co-operative Bank - First Home Special	7.04
ICBC	7.05
China Construction Bank	7.09
BNZ - Classic	7.24
ASB Bank	7.24
ANZ Special	7.24
TSB Special	7.24

Unity First Home Buyer special	6.45
Heartland Bank - Online	6.55
SBS Bank Special	6.69
TSB Special	6.75
Westpac Special	6.75
China Construction Bank	6.75
ICBC	6.75
AIA - Go Home Loans	6.75
ASB Bank	6.75
Unity	6.79
Co-operative Bank - Owner Occ	6.79

SBS Bank Special	6.19
ASB Bank	6.39
Westpac Special	6.39
AIA - Go Home Loans	6.39
China Construction Bank	6.40
ICBC	6.49
Kiwibank Special	6.55
BNZ - Classic	6.55
Co-operative Bank - Owner Occ	6.55
TSB Special	6.59
SBS Bank	6.79

SBS FirstHome Combo	6.19
AIA - Back My Build	6.19
ANZ Blueprint to Build	7.39
Credit Union Auckland	7.70
ICBC	7.85
Heartland Bank - Online	7.99
Pepper Money Essential	8.29
Co-operative Bank - Owner Occ	8.40
Co-operative Bank - Standard	8.40
First Credit Union Standard	8.50
Kiwibank	8.50