Ground rent rise forces family out

David Glen says surging land rents have become common. Photo / Chris Gormon

A family of seven had to leave their Greenlane house after ground leasehold payments rocketed from an annual $2045 to $35,000.

David Glen says his family had to shift to Onehunga and rent out their big bungalow at 94 Wheturangi Rd which backs on to Cornwall Park.

Getting in rent from tenants helps cover his annual bills which at one stage built up to $200,000, which he borrowed from a bank to pay back-rent.

That was because although the new 21-year renewal was sought as far back as 2006, agreement between Glen and landowner, the Cornwall Park Trust Board, was not reached until 2011, when backdated rent kicked in. "We loved living there, that was the happiest time of our lives as a family," says Glen of the house he bought cheaply in 2002 for $375,000 when it had a rating value of $725,000. In July 2011, his house was assessed as being worth $1.3 million, mainly thanks to its $920,000 land value.

Glen claims the board is demanding an annual $90,000 leasehold payment for a house on Maungakiekie Ave. He also claims eight houses went to mortgagee sale after big ground revisions forced owners out and nine properties cannot be sold or leased in what he sees as the board's unreasonable stance.

"Increasingly we are seeing forfeitures of property to the trust board. This is where the lessee cannot pay the new rent and, after an auction, the land and improvements (house) revert to the board without compensation to the lessee, a disastrous result.

"Until 2011, this had never occurred in the history of Cornwall Park. Unfortunately it is now all too common," Glen said.

The board said its charges were not unreasonable, pre-set according to its rules and based on 5 per cent of the land value of its 110 properties around the park.

Land values are set by two independent valuers representing both sides and if they cannot agree, an umpire makes a decision, the board said. It refused to comment on specific numbers and said it did not set the ground lease rent, which was decided independently, and it emphasised it was a not-for-profit body.

"Its income is used solely for the upkeep and operation of Cornwall Park for the benefit of all New Zealanders," the board said.

The board was now nearing the end of a round of lease renewals for some of the properties which had been largely successful. "We are pleased to say that the great majority of these leases have been renewed, reflecting perhaps the fact that rises in Auckland property values have been well known," it said.

Glen is not alone in his ground rent struggle. Suzie Trewheela's Campbell Rd ground rent shot from $3995 to $29,000, leaving her struggling to afford the bills, taking in a boarder, working long hours often late into the night, and describing her situation as "crippling, absolutely crippling".

Yong Xin Chen forfeited her $2.1 million bungalow at 21 Maungakiekie Ave after baulking at annual leasehold fees rocketing from $8300 to $73,7500 and her case featured in the Weekend Herald. The board wants $348,284 from her for backdated ground rent, renovations, auctioning and legal fees.

Glen said new ground rents on the 110 properties were pricing them out of home-owners' hands and he is angry that $300,000 he poured into his house resulted in no ground rent reduction, even though the lease says capital improvements would be taken into account.

He is also frustrated about lack of public understanding about the 110 property owners' situations. "People say 'you should have known better than buying leasehold property' but the lease document says if I spend money on the house, the board will take account of it and reduce the fee. I thought $20,000 to $25,000 a year was about right," Glen said of the $30,000 annual ground rent.

The board said it recognised the impact rent reviews had had on some lessees, particularly after 21 years of no change.