Fee Simple vs Stratum Estate (Stratum in Freehold)

Fee simple is the standard form of freehold ownership in New Zealand and the most complete form of private land ownership. When you own fee simple, you own the land parcel and everything built on it. Your ownership extends from the ground surface upwards (with some practical limitations for airspace) and includes the right to use, develop, sell, or pass on the property.

Fee simple is the default title type for standalone houses, bare land, and traditional subdivisions. It is the simplest title to understand, the easiest for banks to lend against, and gives owners maximum flexibility for renovations and development (subject to council rules, easements, and covenants).

Stratum estate (stratum in freehold) is a form of freehold ownership where the title defines a three-dimensional space rather than a traditional land parcel. This is increasingly common in modern medium-density developments — townhouses, terrace houses, and duplexes — where individual dwellings are built close together or share party walls, and the development uses a stratum subdivision rather than traditional fee simple lots.

With stratum estate, you hold a freehold title to the defined space your dwelling occupies. The land beneath may be owned separately or as a shared parcel with easements and covenants governing access, services, and maintenance. While stratum estate is legally freehold and banks generally treat it the same as fee simple, buyers should check for any covenants, easements, or residents' society obligations that come with the title. These can affect what you can do with the property, particularly regarding exterior changes and shared infrastructure.

You will encounter one or the other depending on the property and development type. Fee simple is standard for older, standalone properties. Stratum estate is increasingly common in new-build townhouse and terrace developments. The practical difference for most owners is minimal — stratum estate is still freehold and banks treat it accordingly. The key is to check what obligations and restrictions come with a stratum title, particularly around shared driveways, party walls, and residents' society rules.

If you are considering a stratum estate property, have your lawyer review the registered interests carefully. Check for covenants that restrict exterior changes, easements for shared access and services, and any residents' society or body corporate obligations. Compare the total ongoing costs (including any society levies) with a standard fee simple property to understand the true cost of ownership.