Leasehold land sales could 'hurt vulnerable'

Napier leaseholders will find it easier to buy their land with increased discounts and help with legal fees under a new Hawke's Bay Regional Council proposal.
However, some councillors fear the most vulnerable will be at risk if the income stream is sold.
The residents could receive 17.5 per cent off the price of their land, and $1000 towards legal costs through the new council plan.
Regional councillors agreed at a corporate and strategic committee meeting this week to grant leaseholders a larger discount than the previous 5 and 10 per cent offered. Council staff said that would encourage leaseholders to buy their land so more of the leasehold portfolio would become freehold property.
Leasehold land is owned by the council while "improvements" - houses, garages and sheds - are owned by lessees. Some annual leases had more than doubled when they were reassessed in the past few years.
Napier councillor Neil Kirton said with just 2.3 per cent return coming from the leasehold portfolio the council could put the money to much better use.
"For far too long the council has failed to grapple with the real issues," he said. "Councillors have chosen to ignore the reality that the leasehold land portfolio was hurting leaseholders and is a poorly performing investment."
The agreement would also allow investors to buy the cash flow from leasehold land, which some councillors feared would make leaseholders vulnerable to unscrupulous behaviour.
Napier councillor Christine Scott said the council had assistance in place for leaseholders, but an investor such as a pension fund would be focused on the bottom line.
"I'm concerned about our most vulnerable leaseholders, those on a very limited or fixed income. Freeholding is not an option for them."
The council would be able to put rules in place to protect leaseholders, and rents were set at a maximum of 5 per cent of the property value.
However, Mrs Scott said this would put off potential investors, who would pay less money for an income stream with lots of conditions.
Leaseholder Judy Siers said the paper discussed by the council had economic advantages for leaseholders and the council, which would be able to invest in higher yielding investments.
"It's a good carrot to encourage leaseholders to freehold. It gives everybody the chance to move forward and is better economically for everyone."
The proposal will be confirmed at a full council meeting on July 27.