Ground down by rent rise

Auckland City Harbour News - - Front Page - By Janie Smith

RES­I­DENTS in a cen­tral city apart­ment com­plex are strug­gling to make ends meet af­ter be­ing hit with a mas­sive ground rent hike.

Beau­mont Part­ners, which leases the land to apart­ment own­ers at Beau­mont Quar­ter, in­creased the rent by 400 per­cent this year.

For res­i­dent and busi­ness owner Juliet Pratt that means pay­ing more than $20,000 a year in­stead of about $4000.

Ms Pratt says she was dumb­founded by the in­crease.

When she bought the prop­erty, she asked her lawyer about the ground rent and was told it would in­crease in 2008, but she did not ex­pect it to go up so much.

“I thought at the time I could cope with a 200 per­cent in­crease. No way did I think it would go up to 400 per­cent.”

Run­ning her busi­ness from home means she can claim busi­ness ex­penses, mak­ing her sit­u­a­tion slightly dif­fer­ent to oth­ers in the com­plex.

Ms Pratt says a meet­ing was called in De­cem­ber to in­form res­i­dents of the in­crease, which came into ef­fect on April 1.

“We’ve had ur­gent meet­ings since March.”

The res­i­dents have also formed a steer­ing com­mit­tee in the hope of find­ing a so­lu­tion.

She says there is a lot of emo­tion and grief among own­ers at­tend­ing the meet­ings.

“Many had no inkling what was hap­pen­ing when they bought the prop­er­ties. Peo­ple need to ask more ques­tions when they buy prop­er­ties.”

Ms Pratt moved her in­sur­ance busi­ness to Beau­mont Quar­ter from Three Lamps in Oc­to­ber 2006 and moved into the town­house in March this year.

She says since the in­crease, own­ers try­ing to sell their prop­er­ties have found it hard.

She had planned to stay at the com­plex for six months and sell if she was not happy.“

That’s not even in the equa­tion now be­cause no one will buy here.”

In an ef­fort to cut costs she no longer em­ploys an as­sis­tant and will be work­ing as many hours as pos­si­ble.

Beau­mont Part­ners bought the land last year and di­rec­tor Mark Francis says the in­crease is based on two re­cent land val­u­a­tions.

“The land value hasn’t been re­viewed in seven years. Prices have moved con­sid­er­ably.”

He says the lease spec­i­fies ground rent is 7 per­cent of the land value.

The Quar­ter’s 2.2 hectares were val­ued at $64 mil­lion by two valuers in March, mak­ing the to­tal rent $4.435m a year.

Mr Francis says the res­i­dents were of­fered a stag­gered rent in­crease across three years.

“They told us they weren’t in­ter­ested and wanted to go to ar­bi­tra­tion and that’s where it’s head­ing. All we’re do­ing is what the lease says to do.

“We’re do­ing a lot more than is re­quired of us. So far they are two months over­due. We’re be­ing flexible and do­ing ev­ery­thing we can to make it work for them,” he says.

A Build­ing and Hous­ing De­part­ment spokesman says the mat­ter is a con­trac­tual agree­ment be­tween the two par­ties.

“The only leg­is­la­tion per­tain­ing to the mat­ter that the de­part­ment is re­spon­si­ble for is the Res­i­den­tial Te­nan­cies Act, which doesn’t gov­ern com­mer­cial res­i­den­cies.”


Com­plex prob­lem: Juilet Pratt says apart­ment own­ers at Beau­mont Quar­ter are strug­gling to get by thanks to a 400 per­cent in­crease in ground rent.

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