Apartment ground rent questions [Feb 2009]

We live in a leasehold apartment in Auckland city and are about to have our first ground rent review. From what we can gather, our share of the ground rent is going to almost triple. At what point do we need to bring in legal help and is there any way we can appeal a ground rent rise which is just too unreasonable or excessive particularly in the current environment where values have plunged? How does one prove that?"

Answer:

This is a very difficult issue and not particularly a legal question.  There are various leasehold properties that are going through a similar process at the present time.  Much depends upon the terms of the actual lease document which will determine the mechanism for the ground rent review and any right of appeal or any rights to question the way the new ground rent is set.

The best recommendation is to get legal help immediately from a lawyer who has been involved in this process previously or is currently involved for other clients.  Also valuation advice should be sought.  Most lawyers who deal with work in this particular area will have a valuer who is expert or experienced in these types of rental valuations.  They are specialised and require specialist expertise and experience.  There may well be steps that you can take to challenge the ground rent, challenge the rights under the lease or at the very worst come to an agreement with the lessor as to a relief for the rent over the next rental period. 

It is no comfort but the huge increase in the value of land in the Auckland area (caused by a variety of different economic and regulatory reasons) has caused ground rents which are determined on the land value to rise astronomically between one rent review period to another.  This is exactly the problem this question addresses.

In a nutshell get good, experienced legal advice on this issue and good sound valuation advice.

For more information contact Tim Jones at .(JavaScript must be enabled to view this email address)

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