We are expat kiwis being out of the country now for over 10 years. So a few observations following a recent trip for you to consider in regards to leasehold land in New Zealand.

1. Much of the leasehold land belongs to maori tribal or iwi groups. As a result major changes such as sub dividing etc would need further consultation with the maori which may take a while.
2. Most leaseholds are renewable indefinitely.
3. Rates and taxes have an additional cost for the leases. You could expect the additional lease costs to be 30 to 40% higher than free hold land.
Having said this, this is an area where you can get some wonderful bargins which give positive cash flow.

House prices on lease hold land in many places are 20-30% lower – less mortgage but rents remain the same – so good cash flow.
There is a drive at the moment to settle outstanding land issues in New Zealand. This means that in the near future a capital outlay in may be required to make some properties freehold. For a 2-3% capital outlay property value will rise to freehold values. In the town that I am basing these comments on many of the local businesses have bought as many freehold properties as they can manage in order to reap the benefits of the capital growth. But whatever you do in regards to leasehold land – do your homework first. Coastal properties have gone up in price over the last few years with many areas seeing rapid price rises.

Secondly the issue of finance is it is not a problem as an Australian buying into New Zealand. Most of the major Banks can accomodate. Conditions do apply. As most of the New Zealand Banks are owned by Australian groups I imagine the raising of finances will be simplified [purhaps].

There are some excellent deals going in New Zealand. The discussions in the papers were that New Zealand follows behind the Australian market by 6 to 12 months. This information can be used for your advantage. Auckland can be problematic to the uniformed. Some of the Real Estate guys have suggested expecting a 2% rise in interest rates with a 10% decrease in rental as arough guide as to where the market may be heading.

I hope this is of help.

Kegwylo.

KG Billinghurst
6308095871183