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The type of title over the land may restrict your use and enjoyment of the property. Boring it might be, but it’s important especially when you’re buying property in a foreign country. Your expectations could come to nothing if you don’t plan right.
Fee simple title
Only the Crown has absolute ownership but fee simple title is the closest thing to absolute ownership in New Zealand. People 20 years of age and over, of sound mind, sober and not been bankrupted can deal with their land as they wish during their lifetime or through their will after death. (Use of land in NZ may be restricted by certain legislation to preserve the ecology and resources of the country as a whole). This means:
- You can use it for the duration of your lifetime
- Use the fruits of it, like garden produce and/or the rental income should you rent it out
- In a limited way you can even abuse it (e.g. by not cultivating the land)
- You can sell it
- You can give someone else a right to use part of it, for free or for payment (e.g. like a right of way) and
- When you can no longer live there your descendants can use and enjoy it if you give them permission or when they inherit the property.
This type of estate can be transferred to your heirs indefinitely. If one of your descendants dies without an heir the property will revert to the Crown.
This type of title is also called freehold. Freehold means it is yours and your descendants’ property for as long as you wish (subject to certain conditions).
Leasehold estate
A leasehold estate is when the duration of the interest in land is limited. It may be 999 years for a cross lease or 30 years for a crown lease.
If you buy into such a property then your purchase is for the buildings, while the land belongs to someone else. You can have a mortgage for the buildings, but you also pay a sum over and above this, to the landowner as you are renting the land from them. You can't alienate the land or give someone else any right over it. Your descendants could only inherit the buildings.
Crown leases
The Crown is the legal owner of the land, but sells the right to live on and farm the land, to a tenant who pays a yearly fee to the Crown. Banks will lend money to such leaseholders, because the lease will usually for at least 30 years, and there are likely to be renewals. Depending on the location it might be just as expensive as freehold land.
Stratum Estate
A unit title is created by the Unit Titles Act 1972. The unit title plan subdivides land and buildings three dimensionally, creating a cube of land and/or airspace in respect of which the title is issued. A Unit Title is quite common with multi-level buildings such as apartments and flats. It also deals with the ground, car parks and recreational areas like swimming pools, gyms etc. The common property is vested in a corporate body that also manages the building, the grounds and the rules of occupancy.
Cross Lease
Imagine a block of land (a section) with two homes on it, either separate or attached. The cross-lease allows the owners to own the land in undivided shares. Each owner gives a lease agreement to the other to arrange for the exclusive use of each of the houses, some garden space, and its garage. This lease agreement is for 999 years, which means ownership of the house is (almost) forever. The house will be long gone before this time lapses. How you use your house and private areas is determined by the lease agreement between the owners. Sometimes it’s possible to change the cross-lease to full (simple) title.
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