Cutting the jargon

Buying, Regulations, Selling

House with question marks floating above it
Cutting the jargon edition 1: On the hunt for your home

Welcome to our first edition of cutting the jargon – a blog series dedicated to helping you understand the most common (and sometimes cryptic) terms of the industry. In this edition, we lift the curtain on the top 10 terms* you might come across as you begin hunting for your home.


Understanding types of land ownership

Picture this – the market is hot, your deposit is ready and you have finally decided to start looking for a home. You log onto your favourite listings site and begin. As you put in your filters – your budget, number of bedrooms, bathrooms, desired locations and type of property – you come across listings that surely can’t fall within the same price bracket, can they? Types of land ownership play a big role in indicating the price of a property, knowing which one you’re after is essential. Let’s take a look:

  • Freehold: The exclusive ownership of the land and any associated buildings, subject to any interests registered on the title.

  • Cross lease: This type of ownership is common where there is more than one home on a block of land. All owners own the land, and each leases their home from the owner group. The lease will usually provide for an exclusive use area for each cross-lessee. A cross lease is similar to owning a freehold property, but there are restrictions.

  • Leasehold: You buy the right to own the home and lease the land for a certain time. You pay rent for the land. You can sell the lease if you want to move on. There may be restrictions on your use of the property.
  • Unit title:
    • To understand unit title, let’s first take a look at what a subdivision means. A subdivision is a tract of land divided into individual lots for a housing development.
    • When you look to buy a property on subdivided land (such as a townhouse, unit or block of flats) a unit title is in place, taking into consideration your part of ownership based on the horizontal and vertical subdivision of air space. Owners have a certificate of title, are absolute owners of a freehold flat and have an undivided share of the common property.


Property reports 101

Now you have your options lined up and your open homes scheduled. It’s time to deep dive into the quality of the homes you’re looking at to make sure you’re getting value for money. Property reports can be the assurance you need to help you make a sound decision. There are a number of reports to look at:

  • Building report: An expert assessment of a building’s condition that identifies any current or future problems. The Real Estate Authority recommends that potential purchasers get a building report done by a qualified building inspector who has professional indemnity insurance, understands the legal requirements and carries out their work in accordance with the New Zealand Property Inspection Standard.
  • Certificate of title: A description of a property with the name of the registered owner, encumbrances, i.e.: mortgages or easements on the property. It must be produced by the vendor before the sale of the property.
  • LIM (Land Information Memorandum) Report: A LIM is a report that contains all the relevant information the Council knows about a property or section. It includes information about issues with drainage and plumbing, erosion or permits and any unpaid rates.


Know your value

At this point, you have a real contender in mind – but is it worth it? It’s important you have all the information to find the balance between affordability and value. Knowing these key terms and the figures they present is key to ensuring you get a fair price. These figures often appear under these terms ultimately leading to a sale price:

  • Valuation: A written analysis of a property’s estimated value as prepared by a qualified valuer. This is often referred to as a registered valuation and is based on a full assessment of the property’s land, size, condition and the local market.
  • Capital value: Unlike the registered valuation, capital value (commonly known as the CV or RV – rateable value) is the value your local council or government authority places on your property. Councils use this valuation to determine how much they should charge you in annual rates.
  • Market value: The price at which a seller is happy to sell and a buyer is willing to buy. This assumes that there is sufficient activity in the marketplace to generate enough buyers and sellers so that neither party controls the price. The market value takes into consideration the property valuation/appraisal as well as the capital value.


*Source information: Definitions in this post are gathered from or based on a combination of glossaries provided by the Real Estate Authority and For the full glossaries on each of these sources, please visit Glossary | The Real Estate Authority or Glossary of Real Estate Terms |

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