NZ Property Titles Explained: Freehold, Cross-Lease, Unit Titles, and Leasehold
A quick heads-up: The information in this article is designed as a general educational guide only and does not constitute personalised financial, tax, or legal advice. Because everyone's situation is unique (and bank policies change frequently), we recommend speaking with a licensed Financial Adviser to see how this applies to your specific circumstances. For full transparency on our terms of service, how we are remunerated by lenders, and any specific situations where a fee may apply, please read How We Get Paid.
When looking through property listings, it is easy to focus on layout, location, and presentation, while overlooking the legal title at the bottom of the details sheet.
In New Zealand, the type of property title dictates how you can use the land, your ongoing operational costs, and how willing banks are to lend against the property.
The ownership type is recorded on the Record of Title and the Sale and Purchase Agreement. Here is a practical overview of the most common property titles in New Zealand and what lenders look for with each.
Freehold (Fee Simple)
Freehold (legally called "fee simple") is the most common and least restrictive type of property ownership in New Zealand. When you buy a freehold property, you own both the house and the land it sits on outright.
This title gives you the most freedom. Want to paint the house, add a deck, or get a dog? As long as you follow the local council rules, you are generally the master of your own domain.
What to check with your solicitor
Even with a freehold title, your solicitor still needs to review the paperwork for a few specific rules:
- Land covenants: These are private rules attached to the title that restrict what you can do (such as banning commercial vehicles in the driveway or dictating what materials you can use to build a fence).
- Easements: These give other people the legal right to use a part of your land, like a shared driveway, or give the council the right to run pipes under your garden.
Banks love freehold properties. They view them as low-risk, making it very straightforward to get a mortgage as long as you meet the standard deposit and income rules.
Cross-Lease
Cross-leases were a very popular way to subdivide land in the 1970s and 1980s without going through a full, expensive freehold subdivision.
With a cross-lease, you technically share the ownership of a larger block of land with your neighbours. You then grant each other a "lease" (often for 999 years) to live in your specific houses.
To keep things peaceful, the paperwork outlines defined areas for each home: exclusive use areas (like your private back garden) and common areas (like a shared driveway that everyone uses).
Read more here about defective titles and how to resolve them.
Stratum in Freehold (Unit Titles)
If you are looking at an apartment, a modern townhouse, or a terraced home, you will likely be looking at a Unit Title.
With this setup, you own your specific unit outright, along with any extras like a designated car park or storage locker. However, you share the ownership of the overall land and the common areas (like the roof, stairwells, lifts, and lobbies) with all the other owners in the complex. Because you share the building, you share the maintenance costs through a Body Corporate.
Ongoing costs and bank servicing
Every unit owner has to pay an annual Body Corporate fee.This levy pays for:
- The master building insurance policy (you still need to buy your own contents insurance).
- Cleaning, power, and general upkeep of the shared areas.
- A Long-Term Maintenance Fund to save up for future big jobs, like painting the exterior or fixing the roof.
These fees usually range from $2,000 to over $12,000 a year, depending on whether the building has expensive extras like lifts or swimming pools. Banks treat these levies as a hard, unchangeable expense, which directly reduces the total amount of money they will let you borrow.
Before you go unconditional on a unit title, your solicitor must read through the Body Corporate meeting minutes and the Long-Term Maintenance Plan to make sure the building doesn't have major repair bills looming on the horizon.
Read more here about how banks view unit title properties
Leasehold
If you see a property online that looks suspiciously cheap for its location, check the fine print—it is likely a leasehold.
With a leasehold property, you own the house, but you do not own the land underneath it. Instead, you are essentially renting the land from a third party (like an iwi, a local council, or a private company). On top of your mortgage, council rates, and insurance, you must pay ongoing ground rent to the landowner.
The risk: Ground rent review shocks
Ground rent is not locked in forever; it is reviewed every few years (often every 7 to 21 years, depending on your contract). If the value of the land has gone up since the last review, your ground rent could suddenly jump by tens of thousands of dollars a year.
Read the truth about buying leasehold property
Stratum in Leasehold
This is the apartment version of a leasehold. You own your individual apartment in a complex, but the Body Corporate doesn't own the land the building sits on.
This means you are hit with a double bill: you have to pay the Body Corporate fee for the building upkeep AND your share of the ground rent for the land. Just like standard leaseholds, these are very difficult to get a mortgage for, and they can be hard to sell in the future.
Company Share (The older apartment model)
Before Unit Titles were invented, most apartments in New Zealand were set up as Company Shares.
With a Company Share, you do not actually own the physical apartment. Instead, a single company owns the entire building and the land. When you "buy" a property, you are actually buying a parcel of shares in that company, which comes with an exclusive "Licence to Occupy" your specific apartment.
Read more here on how lending works on company shares.
Māori Land
Māori land is a unique and important category in New Zealand, representing land that has specific cultural, historical, and whānau significance.
Because Māori freehold land cannot simply be sold on the open market, standard bank mortgages—where a bank takes the house as security and sells it if you stop paying—do not work here.
Alternative financing pathways
You cannot use standard residential bank mortgages to build on multiple-owned Māori land. Instead, buyers and whānau use specialised government-backed schemes, such as the Kāinga Whenua Loan Scheme.
This programme, supported by Kāinga Ora and Kiwibank, helps eligible people get the funding to build, purchase, or relocate a home onto ancestral land, without the bank needing to hold standard security over the land itself.
Check the title before making an offer!
The type of title a property has changes your ongoing costs, your resale value, and how much a bank will let you borrow.
Before you sign a Sale and Purchase Agreement, always send a copy of the property title to your solicitor and your mortgage adviser. We can quickly check that the property meets standard bank rules before you spend any of your own money on expensive valuations or builder's reports.
Don't let title jargon put you off
Finding a house you love is hard enough without worrying about the legal paperwork. If you have found a property and you are not sure if the title will cause issues with the bank, send the listing to the team at Home Loan Factory.
We can review the property type, match you with the lenders who favour that specific title, and ensure your finance is structured perfectly before you spend money on solicitors or valuations. Book a free chat with our team today.
