Ground rent debate subdues prices

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].”