Freehold Property | What it is and what its pros and cons are?
A freehold title is one of the most common types of ownership in New Zealand. Under this title, you get to own the land and everything or anything built on the land forever. Although to say whether or not it is the best type of title is another story.
Today, in this article, you will learn what a freehold title is and its pros and cons. Before we get to that, let’s discuss what is a freehold property.
What is Freehold Property?
Freehold property, commonly known as ‘fee simple’, is a type of property ownership, and it’s about the land. With this title, you own a land and everything that is built on that piece of land.
The term “freehold” comes from the term, “free from hold” of any individual or entity other than the owner.
Now that we have discussed what freehold title is, let’s discuss what are the pros and cons of freehold property.
Pros of Freehold Property
- You own the property and the land outright
- Easy to sell and own
When you hold a freehold title, you own the property without having to pay any additional money once you have purchased the property. On top of it, you won’t have to worry about ground rents (leasehold title) or body corporate fees (unit titles).
The good thing about freehold property is that its value increases quickly in comparison to leasehold property. Another good thing about a freehold title is that banks are often more willing to lend against freehold properties.
Cons of Freehold Property
The only con of holding a freehold title is that it is more expensive than other titles.
How to find if the property is freehold?
If you wish to find out whether the property is freehold or not, there are a few ways to do so.
Trade Me
Most of the listings on Trade Me have the information on whether it is a freehold property or not. In addition to that, the real estate agent will typically write this into the description.
OneRoof
Another platform that would provide you with information on whether the property is freehold or not. To check this, all you have to do is click on the “estimate” button, type in the property address and hit search. Scroll down to the property data, and you will be able to see “type of title”. Here you will find the information on the title of the property.
Common Mistakes Buyers Make while Buying Freehold Properties
Many people assume, “I own a freehold property, so I can do whatever I like with it.” But that’s not always true.
Freehold ownership doesn’t mean your land is completely without restrictions.
For instance, your title might have an easement registered against it. An easement is a legal right that allows someone else certain use of your land.
Take a simple example: imagine Bobbi Brown owns a freehold home with a driveway that leads to another house behind hers. Even though the driveway sits on her property, an easement could require her to let her neighbour use it to access their home. That means she can’t block the driveway or build on it. She might also need to allow utility companies to use the space to connect services like power or water.
Other types of restrictions include covenants (rules about what you can or can’t build) and conditions under laws such as the Resource Management Act 1991.
So, while freehold gives you strong ownership rights, it doesn’t mean total freedom. Owning the land doesn’t automatically give you the green light to put up a seven-storey apartment building or ignore existing legal obligations.
Conclusion
Freehold property remains one of the most desirable forms of ownership in New Zealand because it gives you full rights over both the land and the home built on it. Its value tends to appreciate faster, it’s easier to sell, and it usually comes with fewer ongoing costs compared to other titles. However, higher upfront costs and certain legal restrictions, like easements or covenants, mean it’s not entirely without limitations.
If you’re considering buying a freehold property, it’s important to weigh both the benefits and the responsibilities. Understanding these details upfront will help you make a smarter investment and avoid surprises later.
