Ground rent debate subdues prices
Thursday 23 August 2012
New ground rent charges for leasehold buildings on Auckland’s waterfront are coming as a rude shock to many property owners, says the city’s property investors association.
By Susan Edmunds
Many of the leaseholders have not had to pay anything for the past 15 years under a deal with Ngati Whatua o Orakei.
The rent-free period expired in 2012 and one German firm will now pay $848,000 a year for its office blocks.
Last week, an arbitrator ruled at the iwi land under the Parnell Terraces was worth $12.3 million. Owners of the apartments will pay 6% of that value each year.
The property’s owners had argued the land was worth only $6 million or $7 million.
Auckland Property Investors Association president David Whitburn said the leasehold issue was putting downward pressure on apartment prices around the waterfront.
“A lot of people haven’t budgeted for it. They forget they don’t own the land. They’ve had long periods of time without having to pay a lease and it comes as a nasty shock.”
He said at apartment complex The Docks, some owners had been hit with a double-whammy.
“Some people bought them for $500,000, they are now worth $200,000. Now they’re in negative equity and on top of that losing $18,000 a year [for the lease].”
Comments from our readers
Sign In / Register to add your comment
As New Zealand begins to settle into the “new normal” of the Covid-19 lockdown, commentators have started releasing their (tentative) outlooks for the housing market. Here’s a summary of some of them...
Some large commercial tenants are refusing to pay rent and this could devastate the commercial property sector, the Property Council New Zealand is warning.
Major lenders have launched mortgage holidays for borrowers affected by the Covid-19 outbreak, using online application forms to process customer requests.