Leasehold Property
Insight
Leasehold homes are common in some areas of New Zealand, particularly where the land is owned by iwi, local authorities, large estates or private landowners. Buyers pay ground rent and must comply with the terms of a registered lease, which may include restrictions on improvements, insurance obligations and permission requirements for changes.
Because lease terms vary widely, buyers and sellers must understand how rent is calculated, how often it is reviewed, and what happens when the lease expires or renews. Some leases contain terms that dramatically increase rent over time, affecting affordability and resale value.
People typically look for a leasehold lawyer when buying, selling or renegotiating terms, when rent reviews cause disputes, or when exploring options to convert to freehold. This guide outlines key considerations with leasehold properties.
How Leasehold Differs From Freehold
Tip:
Always calculate long-term affordability, not just current ground rent. Rent reviews can significantly increase costs.
In a freehold transaction, you buy both the land and the buildings. In a leasehold transaction, you buy the buildings or improvements but lease the land under a long-term contract. Ground rent, rent reviews and lease obligations must be understood thoroughly before committing.
Leasehold owners must also comply with lease conditions relating to insurance, maintenance, improvements and assignment of the lease. Failure to comply can lead to disputes or refusal of consent to sell or improve the property.
Common Issues With Leasehold
Common pitfall:
Underestimating the financial impact of rent reviews tied to market land values, especially in high-value areas.
Common issues include steep rent increases at review dates, uncertainty about renewal terms, difficulty obtaining consent for improvements, and disputes over obligations such as insurance or maintenance. Some leases contain formulas tied to land value assessments, which can cause large jumps in rent.
Another frequent issue is resale difficulty if buyers are unfamiliar with leasehold terms or if lease conditions are particularly strict.
Key Checks for Leasehold Properties
When reviewing a leasehold property, your lawyer examines the lease term left, rent review formula, outgoing obligations, improvement restrictions, assignment rules and expiry or renewal provisions. Understanding these terms is essential for budgeting, resale planning and avoiding disputes.
Step 1
Remaining Lease Term
Longer remaining terms offer more security. Short or uncertain terms may affect lending or resale.
Step 2
Rent Review Structure
Check whether rent increases are fixed, percentage-based or linked to land valuations.
Step 3
Assignment & Consent Rules
Some leases require the landowner’s consent before you can sell or improve the property.
Step 4
Insurance & Outgoings
Review who must insure the property and pay for rates or other outgoings.
Step 5
Expiry or Renewal Terms
Understand what happens at the end of the lease—renewal, renegotiation or return of improvements.
Costs for Leasehold Legal Advice
Leasehold advice usually costs more than standard conveyancing due to the complexity of the lease documents. Costs may increase where there are unusual rent review formulas, disputes, consent requirements or negotiations with the landowner.
For general property pricing context, see the property lawyer costs guide.
How to Choose a Lawyer for Leasehold Matters
Choose a lawyer experienced with leasehold arrangements and who can clearly explain rent review structures and long‐term financial impacts. Ask whether they regularly handle transactions involving iwi land, council land or large estates, as each may have distinct requirements.
If you are selling, choose someone who can help manage disclosure and prepare for any questions prospective buyers may have.
Find a Lawyer for a Leasehold Property
Explaining the remaining lease term, rent review schedule and any restrictions on improvements helps match you with lawyers who regularly handle leasehold transactions. This avoids repeating your story and leads to more focused early advice.
By outlining whether you are buying, selling or renegotiating terms, you give potential lawyers the information they need to assess your situation quickly.
Need help with a leasehold property?
Tell us about the property and the lease terms to get matched with lawyers experienced in leasehold matters.
Frequently Asked Questions
What is a leasehold property?
A leasehold property is one where you own the building or improvements but lease the underlying land from a separate landowner. You pay ground rent under a long-term lease, which usually includes rent reviews and conditions about use and maintenance.
Why are leasehold properties cheaper?
Leasehold properties are often cheaper because you are not buying the land. However, ongoing ground rent, rent reviews and lease conditions can significantly affect long-term costs and resale value.
What should I check before buying leasehold?
You should review the lease term remaining, rent review dates, how rent is calculated, restrictions on improvements, assignment rules and any obligations relating to insurance or outgoings. A lawyer can explain these terms clearly and identify risk areas.
Can leasehold land be converted to freehold?
Sometimes. This depends on whether the landowner is willing to sell the freehold interest and on council or trust requirements. Converting to freehold can be expensive and not always available.
Do banks lend on leasehold homes?
Many banks lend on leasehold properties, but lending criteria can be stricter. Banks often require longer remaining lease terms and predictable rent review structures.
You don’t need all the answers
Property issues can feel overwhelming — especially when you’re facing deadlines. Sharing a few details about your situation is enough for a lawyer to understand the context and guide you through the next steps.
Get Help From a Lawyer for Leasehold Properties
Leasehold land can be complex because you purchase the building but not the land beneath it. Providing a short description of the property, ground rent, lease terms and any concerns helps match you with lawyers who regularly assist with leasehold transactions.
By outlining the remaining lease term, rent review structure and any proposed changes, you can connect with professionals familiar with leasehold arrangements and the risks involved.