Freehold vs Leasehold ???

Hi, my husband and I are looking to buy a (small/modest) home in Hawke's Bay later in the year.  We are currently in Canada. We've been doing some research online, and the terms "Freehold" and "Leasehold" keep popping up in the house searches.  We are not familar with what this means. 

After a bit more searching, we found out that "Freehold" means that you own the house and the land, but "Leasehold" means that you own the house, but not the land.  Not exactly sure what the implications to this are.  Can a leasehold property suddenly be in the position that someone wants the land? Do you then have the house moved and have to buy land somewhere?

Is anyone on here familiar with this? Are there problems with leasehold? 

Also, the real estate site that we are on doesn't seem to say what most of the properties are. Some say freehold or leasehold, but most don't say which it is. Maybe we are missing something (?)

Sorry if these are really stupid questions, but it's totally new to us.

Not stupid questions. Explained quite well here:

http://propertypanel.co.nz/buying-leasehold-land-i...

I have found the Napier City Council website invaluable for providing free information about properties in Napier:

http://www.napier.govt.nz/services/properties-and-...

Very useful! Many thanks!!

Leasehold in particular can be a bit tricky. Talk to a lawyer.

Here are two I know and recommend:

This ginger is my girlfriend, she's good at this shit: http://www.raineycollins.co.nz/our-firm/our-people...

This guy (Matt Hay) I used to work with, he is my family's lawyer and a top man. He is also a pretty handy country music singer: http://succeedlegal.co.nz/who-we-are

Good luck! 

Many thanks! I've bookmarked them. Definitely sounds like we'll aim for freehold. However, if there's an amazing deal on a leasehold, might be worth exploring.

Just to put another term in the mix, there are also a lot of "cross-lease" houses in NZ, which you shouldn't mix up with leasehold. Basically it's a cheap way of subdividing a property, which means that you technically own a share (e.g. 1/2, 1/4, 1/10) of the whole title with the other properties on the lease. If there are common areas (e.g. drives/access-ways) you have equal responsibility for them, and if the buildings are joined/close you may have some sort of body-corp agreement.

We bought one earlier this year, and because there aren't any shared areas, the only significant difference from freehold is that we have to ask permission from others on the lease (the house at the back) if we want to make alterations (e.g. add a garage) and can't amend the exterior of the house without changing the lease (which costs some $$).

Not sure if that helps...

We have a cross lease and I would say avoid it, it doesn't have the same protections as unit title and if your neighbour on the property is a b*tch and doesn't want to spend any effort on maintenance then you are either left with having to maintain the entire property yourself or to have your investment devalued by letting it fall into disrepair.

So to sumarise there are:

Fee Simple (freehold)

Leasehold (which is a fixed term lease, usually long term, i.e. 99 years or similar, but with increases in payments at set intervals, usually pegged to property values and inflation - you have certain protections in this property to make sure you are not priced out of the market, however in Auckland there was a case recently where the lease on properties went up ten fold) 

Cross Lease (everyone owns a share of the property and has a lease on their own structure)

Unit Title (similar to cross lease except there are more protections under law and a compulsory body corporate)

Fee Simple is the best bet however in some of the best locations leasehold is the only option as the land is owned by Iwi or community trusts).

If your looking at leasehold make sure you understand when the rent is up for renewal and what rules are around the ability to increase it. Read this: http://www.nzherald.co.nz/nz/news/article.cfm?c_i... if the review period is reasonably frequent or has just passed you will be okay, if its coming up and is long term you could get in trouble.

Thanks, yes, this helps a lot. I'd seen this term, and also "unit" listed on the real estate website, and was trying to figure them out.

Wow!! That's a massive increase for that property in the article!!

Many thanks for clarifying these terms. I saw a number of the "Unit Title" and a few "Cross Lease" listings, and was trying to figure out what it meant. Often times the listings don't say anything about what it is, or maybe I'm not looking in the right place. 

If you're interested in a property make sure you ask the real estate agent for:

A) A copy of the title, this will show any information on what sort of property it is (most are fee simple of unit title).

B) Any disclosures, by law a real estate agent is required to tell you any problems with the building that they know about.

Monolithic clad buildings from the 90's can have what is called leaky home syndrome which means basically that they leak and are rotting from the inside out. If a house has weather tightness issues then run. Older buildings can have asbestos and of course lead paint but this is only an issue if you want to renovate.

When you put on an offer common practice is to make it subject to a LIM report and building inspection. A LIM report is bought from the council and shows all information that they have on the property. Do not trust vendors building inspection make sure you get one of your own. 

Vendors are responsible for something like 20 years for any dodgy repairs on a property but you want to go in with knowledge of what is wrong.

Very helpful!! Many thanks!!

Be careful relying on that. 

Yeah should add C) Real Estate agents are always creative with the truth. 

You should always do a building inspection. The disclosures are just the first step.

All good advice but given you are new to nz and this should apply to all people buying, is seek out a good conveyancing lawyer before you do anything. Be prepared to pay for their advice. It can save a whole lot of hurt later on.

Many thanks for everyone's great advice and tips! Greatly appreciate it!

*Bump* for CandianFan. Think this was the info you were after?

Thanks!!

If you have the resources go free hold. Also be aware of subdivided sections. Councils love to double dip and charge high rates to all the properties involved.

Good to know!