If you own a cross lease property there are a few more things you need to be aware of, as compared to the owner of a freehold site. This includes when you need approval of the other lease owners and a requirement to keep the Flats Plan accurate.
What is a cross lease?
Cross lease is a form of property ownership where multiple individuals own an undivided share of land, which they can build on, with the land being leased from the other owners (often for a term of 999 years). There are many, typically older, cross-leased properties throughout Auckland. However it’s relatively uncommon to create cross leases now. Often this is because a fee simple ownership structure is more straight forward in the long term- you don’t need approval of other owners and you usually don’t need to update the title plans.
What’s a Flats Plan?
The Flats Plan is a plan which is read in conjunction with the Record of Title for a property and illustrates the outline of buildings on a site, allocates the building a flat number, and identifies exclusive use areas related to each flat and common areas such as access. Proposed additions and alterations which extend the building footprint, or new buildings (such as a garage or sleepout) need to be shown on the cross-lease Flats Plan[1]. This means that the Flats Plan needs to be updated to reflect changes you make. If the Flats Plan is not updated, the Title will be defective. This often causes issues when you’re looking to sell the property. Often a bank/ lender will not provide funding, usually a mortgage, on a site with a defective Title.
What’s involved in the Flats Plan update process?
We have a blog here with useful information for those who need to update their cross lease flats plan and want to know more details about the process. In summary, the steps are as follows:
1. The site needs to be re-surveyed to confirm the location and area of buildings, in particular additions.
2. A new plan will then be required that shows the Flat areas, exclusive use areas, common areas and easements.
3. In Auckland, a resource consent is required to update a Flats Plan/ cross lease. Your resource consent application would detail the additions and alterations, accessory buildings etc, show how these met the applicable zone or region- wide rules in the Auckland Unitary Plan (in an Assessment of Environmental Effects report) and provide the updated plan. Your planner can assist you with this resource consent application.
4. Once a resource consent application is approved, a full land transfer survey and final plan is submitted to council for approval and any resource consent conditions must be met.
5. The approved plan is then submitted to Land Information New Zealand (LINZ), along with approval from the other cross lease owners, and the Flats Plan is formally updated.
This all takes time, and we highly recommend making the updates to the Flats Plan soon after you do the physical work (and you could make a resource consent application relating to both the land use and the subdivision at the same time).
Steps for updating a cross lease flats plan
How much does it cost to update the Flats Plan?
In Auckland, updating your cross-lease flats plan requires a subdivision resource consent application under the Auckland Unitary Plan. You can find out more about the Council aspects of the subdivision process here.
All of the owners of your site are technically affected by this resource consent application. Because of this, your first step should be to talk with the other owners and seek their approval.
Planner
It is important to discuss your proposal with a Planner upfront as they will manage the resource consent process for you.
Apart from reflecting how the land is currently used, including any detail the additions and alterations, accessory buildings etc, you also need to consider what the Auckland Unitary Plan expects and ensure the outcome minimises potential adverse effects. Your Planner will also assess region wide and zone provisions and standards of the Auckland Unitary Plan to ensure there are no other reasons for resource consent beyond the subdivision component. This makes sure there are no surprises when the resource consent application is lodged, and that your application process will run smoothly.
Your Planner will write an Assessment of Environmental Effects (AEE) report, usually prepare the overall resource consent application for lodgement with the Council and liaise with the Council on your behalf. Planner’s fees to manage the resource consent process will likely be in the order of $3,500- $4000 + GST, depending on your specific site, its constraints and any other infringements present.
Surveyor
A Surveyor will re-survey the site and prepare an updated plan that shows the current location and area of buildings. This document supports the resource consent application. The surveyor costs to prepare a scheme plan are approximately $3,500 + GST.
Once the resource consent is approved your surveyor then completes land survey work which includes preparation of e-survey plans and preparing documentation for Land and Information New Zealand (LINZ). Your surveyor will usually manage final Council approvals to “sign off” the subdivision resource consent, liaise with you solicitor and obtain LINZ approval. The cost for surveyors to manage this process is approximately $2,500 + GST.
Council Fees
The council will require a resource consent application deposit to process the resource consent application. In Auckland, the application deposit fee for amendments to a cross lease title is approximately $2,000 (correct at time of writing). The actual fee is likely to be more than this; the Council charges for actual time and costs. The more thorough your application is, the less time the Council should need to process it and the lower your Council fees should be. Using an experienced Planner will help keep your Council fees low.
Land Information New Zealand (LINZ)
As noted above your surveyor will prepare documentation to submit to LINZ to allow the new records of title to be issued. The LINZ lodgement fee is approximately $560 + GST.
Solicitor
Input from your solicitor will also be required including liaison with your surveyor, other property owners and to finalise the necessary legal documentation. Legal fees will vary between firms.
Please keep in mind the above is an estimation of costs for each step of the process- the costs vary for each development and the specific specialists used, and these should be used as a guide only.
Converting a cross lease to fee simple title
You may be considering converting your cross-lease title to freehold (often called a “cross lease conversion” or “freeholding” the site). This can be beneficial as updating a Flats Plan has a similar process and often similar costs as cross lease conversion. In addition, this can increase the value of your property, removes the need for future Flats Plan updates, and removes the need to get approval from other cross lease owners for works/ building on your site in the future.
We have more detailed blogs about the conversion of a cross lease to a fee simple title process and its costs here and here.
Need more advice on your property?
If you own a cross lease property and are interested in updating the Flats Plan or in investigating the conversion to fee simple titles, get in touch with us at Planning Plus. We will assist with the process along with the preparation of the resource consent application. You can contact us on hello@planningplus.co.nz or (09) 427 9966. We also have a lot of other blogs on our website that can help you with your resource consent journey.
Clara Casaes is an Intermediate Planner at Planning Plus™ and has 14 years of international experience working on land development and transport infrastructure projects. This includes land development and subdivision on all scales, and large-scale infrastructure projects such as busways, subways and airports. During these years, Clara’s work primarily related to consenting, including writing Assessments of Environmental Effects, attendance at Hearings, consulting with stakeholders and managing multi-disciplinary project teams. Clara’s background has provided her with a big picture view from initial concept design through to the construction phase of a project.
Disclaimer
All prices exclude GST. As with all our blogs this information is preliminary in nature only and correct at the time of writing. It is not intended to substitute for your own investigations or obtaining specific advice on your proposal from professionals or specific quotes. Planning Plus Ltd TM is not liable in any way for any errors or omissions. © Planning Plus Ltd 2023
[1] Not all changes require the Flats Plan to be updated. We recommend you discuss this with your surveyor or planner.
