Cornwall Park lease change plan

Campbell Rd lessee David Glen is frustrated by the conditions of the new leases. Photo / Chris Gorman

Trust board proposes cheaper rent rate and allowing tenants flexibility in land use.

The Cornwall Park Trust Board has proposed sweeping changes to the leases on 110 Auckland properties it owns, including axing five-yearly mandatory house repainting demands.

John Clark, the trust board chairman, wrote to the lessees saying the new modern lease represented a significant initiative from the board.

"It hopes that lessees will consider the opportunity to adopt it," he said.

Those who do so get either a $5000 land rent credit or $15,000 spent on external house maintenance.

One of the biggest changes is a new lower 3.9 per cent rent rate for the next seven years, compared with the current 5 per cent fixed 21-year rate.

Lessees have until May 7 to let the board know if they will take up the lease, which contains new, more flexible options for changing land use or subdivision.

"The trust board recognises that subdivision and intensification may assist lessees with spreading the ground rental over more dwellings," Clark said.

Lessees will be able to rent out their places as of right without the need for written board approval.

A clearer time frame has also been established to manage rent reviews, with a six-month lead time and the provision for an interim rent to be paid if the review is delayed.

Lease payments can now also be made monthly in advance compared with the old lease that sought rent six-monthly in advance.

Clark emphasised the board would never freehold any of the 110 properties. "The modern lease does not contain any option to freehold the property," he wrote.

Lessees can now also take up an offer for mediation of disputes other than rent review. One leaseholder expressed disappointment in the new deal, saying it added nothing to relieve the lessees' plight.

David Glen, a Campbell Rd lessee, said that after about a two-year process, the board had come up with nothing new or acceptable, which was frustrating.

"The new lease fails on so many levels as it does not address the fundamental problems. There is no freeholding clause, therefore there is no viable exit option for leaseholders. The seven-year lease only comes into effect once the current leasehold contract comes to an end," he said.

The new lease offered considerable benefits to the leaseholder but downsides to the lessee.

"It is interesting, in fact damning of the board, that it cannot sell vacant land even at a discounted lease," he said citing one Maungakiekie Ave property.

"The 10 to 12 properties they now own outright are rented out at considerably below the level of leasehold expected from the current leaseholders, around 2 per cent to 3 per cent of gross of land value, not to mention the additional costs of management, insurance and maintenance of these properties," Glen said.

Other lessees expressed anger and dismay at the proposals but did not want to be named.

In a separate issue, the board is waiting to bring its case to the Court of Appeal over one of its lessees, seeking to overturn last year's High Court ruling over 21 Maungakiekie Ave.

The board had only a partial legal victory when it sought $348,284 from Chinese migrant Yong Xin Chen in unpaid leasehold fees, renovation costs and expenses after she handed back the keys to 21 Maungakiekie Ave on November 16, 2011.

She bought the house on leasehold land but in 2010 her rent increased from an annual $8300 to $73,750.

New lease

• Cornwall Park lessees offered:
• Plain English lease, easier to understand.
• Financial benefits if they agree.
• Lower rent rate of 3.9% offered for seven years.
• Development of sites no longer banned.
• Lessees able to rent or sublet without approval.
Source: Cornwall Park Trust Board.