Leasehold
A form of property ownership where you own the buildings but lease the land from a separate landowner for a set period.
What is a Leasehold?
Leasehold means you own the buildings on the property but not the land underneath. Instead, you lease the land from the freeholder (often a council, iwi, church, or private trust) for a set period — typically 21-99 years, with periodic rent reviews.
Leasehold properties are significantly cheaper to purchase because you're not buying the land. However, you must pay ground rent to the landowner, which is reviewed periodically and can increase substantially.
Leasehold is relatively uncommon in New Zealand but exists in certain areas, particularly in Wellington (Wellington Tenths Trust) and some Auckland suburbs.
Why It Matters for Due Diligence
Leasehold requires careful financial analysis. Key questions: How long is the remaining lease term? When is the next rent review? What has the ground rent history been? Can the lease be renewed?
Banks may be reluctant to lend on leasehold properties, especially if the remaining term is short. Resale can also be more difficult. Always get specialist legal advice on the lease terms.
How to Check
The title will clearly show leasehold status. Your lawyer should obtain and review the full lease document, paying particular attention to rent review mechanisms, renewal rights, and termination provisions.
Frequently Asked Questions
Can I get a mortgage on a leasehold property?
It depends on the remaining lease term and your bank. Many banks require at least 50 years remaining on the lease. Some banks won't lend on leasehold at all. You may need to shop around or accept less favourable terms.
What happens when the lease expires?
It depends on the lease terms. Some leases include a right of renewal. Without renewal, the land (and potentially the buildings) revert to the landowner. This is why remaining lease term is so critical.
Related Terms
Freehold
GlossaryThe most complete form of property ownership in New Zealand, giving the owner full rights to both the land and any buildings on it.
Cross-Lease
GlossaryA form of property ownership where multiple owners share the freehold of a single piece of land and lease their individual dwellings from each other.
Unit Title
GlossaryA form of property ownership for apartments, townhouses, and other multi-unit developments where each owner holds title to their individual unit and shares ownership of common property.
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