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A three-bedroom house in an affluent central Auckland suburb complete with pool, spa and outdoor bar is being marketed as lifestyle opportunity for young first home buyers at $495,000, but there’s a substantial catch.
The ground rent on the leasehold property on the edge of Cornwall Park will rise from $28,000 to an estimated $100,000 a year in six years’ time.
“Don’t be frightened,” listing agent Tanya Kwasza said to potential buyers in a sales video.
“It’s just pocket money. It’s so affordable, because where else can you live the dream?”
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The asking price is a fraction of the house’s $3 million rateable value.
Kwasza said the owners were also open to offers.
She told Stuff she was pitching the home as an opportunity to first home buyers as a way of fixing their costs for six years while they saved for a larger deposit to take their next step up the property ladder.
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This property at 122 Campbell Rd offers young buyers the opportunity for a “luxury” lifestyle, according to the listing.
“It’s a luxury home that you wouldn’t normally be able to rent.
“Look at it as a fixed term rental for a long period of time, but with no landlord or inspections to deal with.”
She believed that rents in Auckland would continue to rise and split between three friends, the property could be more affordable than renting.
Once the lease increased, they could either rent the house out to cover the cost or sell it.
Kwasza said if it came to it, she would commit to being the agent that would have to sell at the new rate.
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The lounge boasts two chandeliers and a fireplace.
The house is one of about 100 properties where the land is leased by the Cornwall Park Trust.
Cornwall Park Leaseholders Association chairperson David Glen has been attempting for years to negotiate with the trust to get it to agree to lower future lease costs.
He recommended first home buyers “steer well clear” of lease holding at Cornwall Park.
“In six years’ time a young buyer could walk away with nothing.”
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The property has gate access to Cornwall Park. “You can watch the cows and sheep wander past your fence,” the listing says.
At present, the deal on the table for new leases is 3% of the property value for the first seven years, 4% for seven years after that, and 5% for the final seven years of the lease.
Glen signed up at $2500 and now pays $35,000.
He said that he had done a survey of his members and 98% of respondents said they were planning to get out as a result of the expected upcoming increase.
A Cornwall Park Trust spokesperson said 5% was a better deal than leaseholders typically got in Auckland.
“As landowner, we value the relationships we have with our leaseholders and are willing to work with them to address issues that affect them and us.
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The bar is already stocked at the home on Campbell Rd.
“However, our legal duty and our over-riding focus is to manage our assets in such a way that we can continue to provide the opportunity to experience nature [at the park] in the heart of our city, for free.”
Meanwhile, mortgage broker Andrew Malcolm said it would be difficult for a first home buyer to find a bank that would lend on a leasehold property.
“If you can find one, the deposit would likely need to be 50% or more.
“Leaseholds are a big headache for a lender if a borrower defaults because they are hard to sell.”
He said any potential buyer would need to have a firm grasp of their spreadsheets and be able to tolerate risk.
“Leaseholds are typically marketed to gullible first home buyers and investors for the rental income, but it rarely ends how the buyer intends.”
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