Leaseholders of residential properties around Auckland's Cornwall Park plan to petition Parliament again to rein in their landlord the Cornwall Park Trust, if they make no progress in talks over proposed massive rent hikes.
Cornwall Park Leaseholders Association spokesman John McConnell said the voluntary liquidation of the ASB Showgrounds board,another Cornwall Park leaseholder hit by a huge proposed rent rise, is a sad outcome that resonates with residential leaseholders still trying to persuade the park trust to offer fair market rents and compensation for improvements.
Residents of 110 multi-million dollar properties in some of Auckland's most desirable suburbs went to Parliament in 2017 to try to overturn the park trust's use of Glasgow leases, which began in Scotland a century ago and have since been banned by the UK government. The leases allow large lease hikes, which McConnell said had resulted in evictions, trauma and financial tragedy for tenants from Scotland to New Zealand.
McConnell said unlike rental tenants, lease tenants have no legal rights protecting them from landlords enforcing massive rent hikes.
"While the average market rent in the area is around $850 a week, the [park trust] board plans to increase average rent to $2000 to $3000 a week.
"Under the 100 year old lease agreement, tenants must either commit to a new 21 year lease, or abandon their home - often with a large mortgage still owing.
"The Cornwall Park agreement is unusual in that it allows the board to not only take back the land, but to also seize the home and improvements from its owners without any compensation.
"Faced with the collapse of their leasehold income, recently the [park] board has offered to pay a small group of leaseholders a paltry $185,000 to acquire homes worth $2m to $4m."
Cornwall Park Leaseholders Association spokesman John McConnell. Photo / Supplied
Cornwall Park Trust chair Adrienne Young-Cooper declined to discuss with the Herald the association's claims or the amount of the proposed rent rises while the parties were in negotiation.
McConnell said 80 per cent of Cornwall Park's income was from residential leases.
"But this is declining as the board enforces unaffordable rent hikes - 20 per cent of leases have reverted to rentals which the board earns about 30 per cent less net income from.
"All the leases will revert to rentals unless the board negotiates fair market rentals with tenants. The result will be the same as what has happened at the showgrounds. The board will not gain income, it will lose it."
McConnell said the association's analysis showed the Cornwall Park Trust board would be making losses as early as 2025 "unless they use a more commonsense approach to lessees, who are its main source of income".
The association's figures had been verified by independent valuers, he said.
"The board say their responsibility is to the enhancement of Cornwall Park. Under benefactor John Logan Campbell's deed gifting the park, and under New Zealand law, trustees must act in the best interests of beneficiaries - the people of New Zealand."
The association did not believe forcing unaffordable rent increases on tenants was consistent with this duty, he said.
McConnell said in 2012 the Scottish government banned Glasgow residential leases and recently the UK government had outlawed all new residential leases.
In New Zealand, the Lusk inquiry in 1993 recommended the government legislate to protect leasehold tenants with fair rent and compensation for improvements unless the landlords changed the lease agreements.
"Several landlords made these changes, but Cornwall Park chose not to."
McConnell said the Lusk recommendations are still valid. Trustees must change the lease to offer fair rent and market compensation for improvements or the government must intervene as they had in the UK and Scotland.
McConnell said the park trust board was legally bound to act in the best interests of the beneficiaries of the trust - the people of New Zealand - not just in the interests of the park as it had claimed.
