Government to sell off New Zealand's little bit of London

New Zealand House in London. Photo / NZPA

The Government could soon surrender its lease and sell most of New Zealand House near Trafalgar Square in London to try to avoid a costly upgrade.

It is understood officials are working on a deal under which Treasury would surrender its lease on the land to the owners, the Crown Estate, much earlier than the 2048 date when the tenancy ends. In return for a cash settlement, it would also hand over ownership of most of the 18-floor heritage-listed building, other than the four floors holding the commission's offices and penthouse reception area. The deal would mean New Zealand only had to foot the bill for the upgrade and maintenance of its own office space.

In another money-saving measure, the High Commissioner's residence in Kensington, valued at about £5.5 million ($10.6 million), was put on the market this year and the Ministry of Foreign Affairs has confirmed a conditional buyer has been found for it.

Foreign Minister Murray McCully said the sale price was confidential "but you'd expect us to sell it at some sort of gain".

Rather than buy a new property, there are plans to put an apartment in NZ House for the High Commissioner to live in.

The Kensington residence was bought under the former Labour Government in 2003 but High Commissioner Lockwood Smith was put into a rented home - costing about $7500 a week - when he took up the role about six months ago.

Labour's foreign affairs spokesman Phil Goff has criticised the decision to abandon the residence after just 10 years. However, it is understood the Ministry of Foreign Affairs has advised that the residence was considered unsuitable because of ongoing demolition and redevelopment on neighbouring sites.

The residence was used to host functions as well as house the High Commissioner.

New Zealand House

* It was built between 1959 and 1963 on land where the Carlton Hotel stood before it was destroyed in the Blitz.

* The NZ Government has a 99-year lease on the land from the Crown Estate which ends in about 2048. The New Zealand Treasury owns the building.

* It was Grade II listed in 1995 as an example of postwar modernist architecture.

* Designed by Scottish architects Robert Matthew, Johnson Marshall & Partners.

* The Treasury estimated it needed a $150 million upgrade in 2009, but that was put on hold.