Cross leasing a property

[tricha]

Has anyone out there had any experience is splitting up a property into cross lease.

The reason being is I have a property with 2 flats on a 600 Sq metre section.
Selling them separately I'm sure would give a much bigger return and from what I understand cross leasing is the only option I have, the block is to small to subdivide.

All replys appreciated!

[bear]

Has anyone out there had any experience is splitting up a property into cross lease.

The reason being is I have a property with 2 flats on a 600 Sq metre section.
Selling them separately I'm sure would give a much bigger return and from what I understand cross leasing is the only option I have, the block is to small to subdivide.

All replys appreciated!

Cross leasing is an outdated means of property development and one which should be avoided if at all possible. The properties are less valuable and any modifications to buildings on site will result in new survey plans and applications to Council for the "title update". Furthermore what one flat does will often affect the other property owner.

Most Councils have provision for the subdivision of existing development (the key being existing). There should be no additional effects of development even though rules may not allow it.

avoid avoid avoid

freehold is best closely followed by Unit Title development


Bear

[denpal]

Ring council and speak to a planner there. Don't do cross-lease this is an inferior form of title. Freehold is best for re-sale value, unit title a distant second.

[tricha]

Ring council and speak to a planner there. Don't do cross-lease this is an inferior form of title. Freehold is best for re-sale value, unit title a distant second.

U R dead right Bear and Denpal, freehold is #1

Lets revisit what I posted, I have been to council and they deem
the block is too small to subdivide, because of the minimum section size they impose.

These units are in prime land, probably out of sorts as where they belong regarding the existing neigborhood.
Put it another way they are in an elite area of housing.

If these units were able to be on separate titles they would sell for $230,000 each minimum.

As a whole, $320,000 due to the rent of $190 a week each.

Cross leased $200,000 each,

So the big question is how do I go about doing it ?????????

[Steve]

I am in a similar situation with a property that I own.

If I were to subdivide, taking into account access to the back flat would result in one section effectively being 275m2 which is below the minimum 300m2.

Having talked with the council, just because they have allowed the consent for 5 properties below the minimum in the neighbouring vicinity, does not mean that they would allow mine to proceed.

Of course, I have the option of fronting up with some cash to get a definitive answer...

[tricha]

I am in a similar situation with a property that I own.

If I were to subdivide, taking into account access to the back flat would result in one section effectively being 275m2 which is below the minimum 300m2.

Having talked with the council, just because they have allowed the consent for 5 properties below the minimum in the neighbouring vicinity, does not mean that they would allow mine to proceed.

Of course, I have the option of fronting up with some cash to get a definitive answer...

Hmm Steve.

Thats 100% the situation I have.

Good point, I guess I can approach the council and ask for dispensation.

I am sure the neighbors would rather have solid neighors, rather than who knows what they may get.
At the moment I have excellent tenants and the neighbors have excellent neighbors.

Just a question, are your flats joined ? And which council u have to deal with ?

Does anyone out there know how rates are divided when a property is on cross lease and how u go about setting up cross lease.

Lets face it, at the end of the day, if u want to modify your own home, u need consents from all your neighbors. A cross leased neighbor is still another neighbor.

[George]

Interesting topic. I have been told that by making our property
freehold will increase value by 30k. We have a 2 bed villa with view
and good location in Henderson on a cross lease with shared
driveway. Current value is 315k so all things being equal we
could expect up to 350k by changing. This seems a lot for a
2 bed and a drive where we have to reverse in front of their
garage (allowed for on plan but no line on ground to show this).
Question is, would the cost of changing make it worthwhile and
in Auckland do people really care if it's crosslease if it's a
bit cheaper?
George

[dartMonkey]

My understanding is that under section 218(1)(a) Resource Management Act cross leases are deemed to be subdivisions. Hence if you are attempting to avoid minimum lot size requirements imposed on subdivisions I doubt a cross lease will achieve that.
Note the Law wasn't always this way and cross leasing was historically a way to avoid some of the subdivision rules. I think the extended definition of subdivision was enacted in the 90's.
I don't know which Council you are dealing with but imagine that there will be room to make a discretionary application to subdivide. For example you may be able to subdivide to 350 sq m as of right but also down to 250 sq m provided certain conditions are met (ie discretionary application). I think you'll find the Council rules on-line. Usually, if you obtain the consent of neighbours then it's relatively straight forward.
I suggest talking to a local Surveyor or, dare I say it, a local Lawyer.

[Steve]

I have to deal with the Dunedin City Council. I have tried to look at the rules on-line, but they are a bit confusing to me...

At this point in time, I am not looking to sell so I can bide my time. It's just something that I have briefly looked in to.

[bear]

Just some observations and comments from the issues that have been raised.

- Yes, Cross lease is a form of subdivision but is inferior and should be avoided was created as a way of subdividing without the involvement of Councils - subsequent legislative changes brought it back into the responsibility of Council - historically good for tax purposes
- Rules for subdivision witin the district plans i am aware of do not usually differentiate between free hold and cross lease in terms of lot size but subdivision by a Unit Title plan is often treated differently.
- there are usually rules within the plan which apply different provisions for existing development and allow subdivision rights not normally afforded if vacant.
- If the buildings are attached or would be closer than 1m from the boundary (be it freehold or notional under a cross lease) then fire rating would be an issue which needs to be considered. This can be a costly requirement.
- The rules for subdivison are slightly different throughout the counbtry which is in my view a confsiong issues for those not within the industry. Some Councils are pro-development others are not so friendly.
-Whether an application is discretionary or non-complying there is a chance it could be refused even with neighbours consent. The only sure application type is a controlled application which must be aproved. So don't get hung up on lot size as the proposal is either acceptable or not and many other aspects are considered
- The only way forward for these situations is to discuss with a planner within the respective Councils or alternatively a planning consultant, and have preliminary discussions with a good surveyor. I wouldn't worry about a lawyer at this stage unless they can recommend someone decent in the surveying or planning front.
- one not so good observation from your post Tricia is your comment about your neighourhood - seems this proposal could be out of character what you are proposing? unfortunately type of occupiers you have are important to your neighbours but are lagely irrelevant to the decision that is made by Council

hope you find these comments helpful and am happy to help answer other questions you may have

regards

bear