Property

Ground rent debate subdues prices

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.

Thursday, August 23rd 2012

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

On Thursday, August 23rd 2012 4:02 pm Fair NZer said:

It will come to a time when the Ngati Whatua o Orakei will be left with mostly vacant properties returning no income (ground rent), as the desperate (perhaps broke) leasehold owners started to really walk out of their properties.

Heartland Bank - Online 6.69
SBS FirstHome Combo 6.74
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 6.45
China Construction Bank 6.75
TSB Special 6.75
ICBC 6.75
ANZ Special 6.79
ASB Bank 6.79
AIA - Go Home Loans 6.79
Kiwibank Special 6.79
BNZ - Classic 6.79
Unity 6.79
Westpac Special 6.39
China Construction Bank 6.40
ICBC 6.49
SBS Bank Special 6.55
Kiwibank Special 6.55
BNZ - Classic 6.55
Co-operative Bank - Owner Occ 6.55
ASB Bank 6.55
AIA - Go Home Loans 6.55
TSB Special 6.59
Kainga Ora 6.99
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

More Stories

Support for regulation

Monday, March 18th 2024

Support for regulation

REINZ has emphasised the need for property management regulation to Parliament’s Social Services and Community Committee.

A better investment market

Thursday, March 14th 2024

A better investment market

“Reinstatement of interest deductibility starting from the new tax year on 1 April brings property investors back in line with every other business in the country, where interest costs are a legitimate deductible expense," Tim Horsbrugh, New Zealand Property Investors Federation (NZPIF) executive committee member says.

[OPINION] Recessionary times

Thursday, March 14th 2024

[OPINION] Recessionary times

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.

Interest rate expectations: It’s not over yet

Thursday, March 07th 2024

Interest rate expectations: It’s not over yet

Most Kiwis think interest rate increases have peaked.