Property guides

Types of property ownership – freehold, leasehold, unit title, cross lease

When you look at buying property you will come across various title types, such as Freehold, Leasehold, Unit Titles and Cross lease. A brief outline of each is below.

Freehold (or ‘fee simple’)

This is the most common and simplest ownership type which generally gives the owner the most rights. If you have a freehold property, you own the land and usually anything built on it. The land may be subject to other interests that would usually be registered on the title and that your lawyer would go through with you before purchasing.

Unit Title (or ‘strata title’ or ‘stratum estate’)

This is a unit under the Unit Titles Act 1972 and as the unit owner you would own your particular apartment or unit and any accessory units, such as garages or storage areas. You would also own and undivided share of the common property, such as lifts, shared courtyards, lobby areas, gardens etc. Unit Titles will have a body corporate and there will usually be body corporate fees to pay. There is also usually a set of rules that the unit owners in the building must follow, for example not to make excessive noise and not to leave rubbish in the common areas.

Leasehold Estates

With this type of ownership, someone else owns the land (usually a church, charitable organisation or trust), and you pay rent to them. By owning a leasehold estate, you own exclusive possession of the land and buildings on it for a specific period of time as outlined in the Lease. There are a number of ground lease properties around New Zealand, for example properties owned by the St John’s College Trust Board in parts of Auckland, most of the properties down at the Viaduct in Auckland, and the Maori Tenths Trust in parts of Wellington.

Cross lease

This is a composite title comprising a share in the fee simple land and a leasehold estate in the building or flat. The creation of cross lease properties was quite common a number of years ago, because when owners divided the land in this way it was not considered to be a subdivision and therefore didn’t have to meet the onerous government and council requirements of subdivisions. It was therefore advantageous for small developments. The creation of cross lease properties lost its advantage when the Resource Management Act 1991 was brough in and included ‘cross lease’ within its definition of a subdivision. If you are buying a cross lease property, we recommend you read more about that here.