Leasehold warning for apartment investors

A woman who bought an Auckland apartment to get on the property ladder has been left "financially strained" and says the property is now worth about half what she paid for it.

Joo Yom bought her three-bedroom Scene 2 apartment on Beach Rd for $436,500 in 2007, and a year later the leasehold property was deemed to be worth $455,000 in an Auckland Council CV.

Although city-wide capital values have risen on average 34 per cent since 2011, with some shooting up more than 50 per cent, the value of Ms Yom's property has dropped to $425,000 - $11,500 below what she paid.

Ms Yom wants to sell her fifth-floor apartment, but has been told by real estate agents this was "not a good time".

Some had told her the apartment could fetch "about half" what she paid seven years ago - about $100,000 less than the $344,000 she borrowed to buy the property. She believes an increase in ground rent and a car park complex obscuring her sea views had contributed to the drop in value.

In 2012, a three-bedroom penthouse apartment in the next block, Scene 3, with a CV of $625,000 was passed in at auction for $300,000 and sold for $330,000.

A Bayley's real estate agent said the low prices were due to leasehold issues.

Prime Minister John Key suggested in October that first-home buyers should consider an apartment instead of a standalone house as a good first step. But Ms Yom said her foray into buying an apartment had left her "financially strained" and suffering from stress, anxiety and insomnia.

"I have had no overseas holidays since 2007 and have been forced to watch every cent because of all the outgoing costs I have to pay."

Ngati Whatua o Orakei Maori Trust Board won an arbitration two years ago to set higher valuations for the land, which meant leaseholders - such as apartment owners - must pay landowners Kupe Trust much higher rents.

She now has to pay $6215 in annual ground rent, up from $1300 - a rise of 378 per cent.

The operating expenses levy had also nearly doubled from $2814 to $5310.

Ms Yom said she was assured before the purchase by real estate agents that her harbour views would not be blocked. But a new multi-storey car park complex now stands between her apartment window and the harbour.

Auckland Council said that as of Monday night, it had received 8643 objections to its 2014 revaluations. Property owners had until 5pm yesterday to lodge objections. Although the final number would be known today, it was lower than at the corresponding time in 2011 when 11,500 objections were received.

"Once an objection has been lodged a valuer will inspect the property ... objectors will be notified of the change in value, if any," a council spokesman said. "If the objector is unhappy with the decision they can opt to hear their objection before the Land Valuation Tribunal."