Residents feel chill as leases end

Sandra Davies says an increase in ground rent is forcing her to sell. Picture / Paul Estcourt

Royal Oak residents on long-term leases are reeling at the prospect of a weekly rent rise of almost $190.

The residents at 722 Manukau Rd face a grim future when their leases come up for renewal next year because ground rents under their four units have been frozen since 1985.

Now, a 21-year review is imminent. They will either have to come up with one lump sum - which they expect to be about $800,000 - to buy the four sections outright, or their ground rent could rise an expected 1382 per cent from $13.50 a week to $200 a week.

Sandra Davies, 60, said the rent rise was forcing her out of the home she bought eight years ago.

After having the place painted and decorated ready to sell, she has abandoned it for a rental property. She fears it will fetch only $170,000 and is worried buyers will be disinterested. She is also concerned for the welfare of a neighbour in her 80s who she says will find it impossible to pay the new ground rent.

Newmarket commercial landlord and land banker Tramco owns her section, and it too wants to find a solution to the dilemma.

Craig Chalmers, a Tramco property manager, said no value had been placed on the Manukau Rd site but residents had been offered the chance to freehold the 1000sq m property.

"Our preference is to deal with commercial or business leases because we're not residential players," he said of the business, which owns large tracts of Newmarket. "We want to get a win-win situation in Manukau Rd, and I'm confident there will be a resolution."

Options included residents renewing ground leases and paying the new rent, freeholding the site as a group or selling all four properties to one new owner who could then freehold the titles.

The Manukau Rd residents' plight is similar to that of residents around Cornwall Park, where some lessees are struggling to cope with a 750 per cent rent rise.

Grant Murray of Maungakiekie Ave said ground rent on his property rose 1817 per cent from $1800 annually to $34,500 in 2003 in one hit.

"And we think we will be one of the cheaper lease valuations."

Mr Murray said the Cornwall Park Trust Board was sitting on a gold mine, after rents were renewed.

But he expects lessees to abandon their homes and cites one case where a large home has deteriorated to the point where it could soon be condemned.

"This is unfortunate since the original intent of these leases was to set a ground rental that was affordable, thereby ensuring that the leasehold property was an attractive option for a homeowner and to guarantee a steady and reliable income for the trust. They are shooting themselves in the foot - they just don't know it yet," he said.

Board chairman Dr Lindo Ferguson has defended the increases, saying trustees must generate maximum income for the park's upkeep.

The story so far

* Residents on leasehold land in Epsom, Greenlane, One Tree Hill and Royal Oak are being hit with big rent increases because their 21-year leases are expiring.

* Most of the increases - first reported in the Herald two weeks ago - affect properties owned by the Cornwall Park Trust Board.

* However other nearby residents on long-term leases are also affected, including a group in Manukau Rd.