Property problems: Pros and cons of leasehold property deals
Q. I am thinking of purchasing a leasehold apartment in Wellington. Is there a premium for non-leasehold-type properties? Do you think I will have any trouble reselling the property at all and is there anything I should be looking out for? A. Unfortunately, there is no straightforward or simple answer to your question as each leasehold property will be held under differe
Sunday, June 6th 2004, 7:56AM
by The Landlord
nt lease terms. However, there are some general comments that may be of some assistance to you.Registered leasehold properties can be split into two broad categories. The first is where they are for a finite term such as 50 or even 100 years. Examples of such leases would include the apartments on Princes Wharf in Downtown Auckland.
The second category is leases which, although they have a finite term including rights of renewal that, if exercised, enable the lease to continue in perpetuity.
Obviously, a leasehold estate that has a finite term and is not capable of renewal- without renegotiation with the landlord - has a reducing value, all other things being equal. The closer to the termination date the less valuable that leasehold estate will be as there is less time left for the tenant to use the property which, at the end of the lease, reverts back to the landlord. A perpetually renewable lease does not suffer from this problem.
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