Cross-Lease Properties: Should You Convert to Freehold?

Cross-lease titles are an older form of ownership, commonly created in the 1960s and 1970s as a lower-cost alternative to full subdivision. While still in use today, they can be more complex to deal with than modern freehold ownership.

Under a cross-lease, owners share ownership of the land, while each has the exclusive right to occupy their own dwelling. However, any alterations affecting the exterior of a property—such as additions, extensions, or structural changes—generally require the consent of all co-owners and an update to the flats plan.

Over time, this can lead to complications. It is common for flats plans to become outdated or no longer reflect the current buildings on site. These issues are often identified during a sale and can result in delays, renegotiation of price, or lending difficulties.

Converting to freehold

Converting to freehold involves subdividing the land so each property has its own separate title. The process typically requires a surveyor to prepare a subdivision plan, obtaining resource consent, and registration with Land Information New Zealand. In most cases, unanimous agreement from all co-owners is also required.

Key benefits of conversion

Improved marketability and value
Freehold properties are generally more attractive to purchasers and may achieve stronger market value due to their simplicity and reduced risk.

Greater control
Owners can carry out alterations and improvements without requiring co-owner consent (subject to council rules).

Reduced potential for disputes
Freehold ownership removes many of the consent and boundary-related issues that can arise under cross-lease arrangements.

Simplified transactions
Freehold titles are typically easier to finance, value, and transfer, particularly where cross-lease documentation is outdated or inconsistent.

Conclusion

While conversion involves upfront cost and coordination, it can offer meaningful long-term benefits in clarity, flexibility, and marketability.

If you would like expert advice on whether converting your cross-lease property is the right option for you, please contact Freebairn & Hehir.