The PROPERTY DOCTORS, Sydney Australia Novak Properties
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The PROPERTY DOCTORS, Sydney Australia Novak Properties
EP. 1369 LEASEHOLD VS FREEHOLD! KEY DIFFERENCES EXPLAINED
What if you could own a stunning oceanfront property without actually owning the land beneath it? Our latest episode peels back the layers of leasehold property ownership, transforming this often intimidating real estate concept into an intriguing opportunity. From the breathtaking shores of Manly to the historic estates owned by institutions like the Catholic Church, we spotlight the hidden potential of leasehold properties. You'll learn why this unique form of property ownership is not only prevalent in the UK and Canberra but also offers unexpected financial benefits, such as potential land tax exemptions.
Our discussion tackles the common myths surrounding leasehold properties, such as the fear of lease expiration and misconceptions about their value appreciation. We share real-world examples, including a recently sold leasehold property on Churchland in Manly fetching a mind-boggling $35 million, proving that leasehold can indeed be a lucrative investment. Whether you're a seasoned investor or a curious newcomer, this episode promises to change the way you view property ownership, revealing why leasehold might just be the perfect fit for your next real estate venture.
leasehold, freehold, very, very unheard of, unique. Yeah, a bit complicated, a bit simple, but it happens. At least, when you think leasing a property, you think, okay, a real estate agency, you lease a house, you lease it for 12 months, but you can actually own a property by leasing a property and that's called leasehold that's right.
Speaker 2:A lot of people don't realize. So I'm actually selling one at the moment um a leasehold property which is down at five marine parade in manly um, down on the oceanfront. Now, a lot of the properties that are down there along that ocean front in manly um, particularly on that, what we call the eastern hill in manly, it's not just there, there's leasehold properties all over the world, but this particular property is actually on Catholic Church land.
Speaker 1:So who owns the lease?
Speaker 2:So the Catholic Church in this instance. It's not always the case, guys, it's not always the church. I've actually got another property where a portion of the property is leasehold and a portion of the property is freehold. So the small portion that is leasehold in this other property that I'm referring to is actually owned by the Maritimes and there is an option there to actually purchase that land off the Maritimes and it's not a lot of money because the Maritimes actually don't have any use for this particular parcel of land. But the Catholic Church never sell their land, or I should say rarely, rarely, rarely sell their land.
Speaker 1:Biggest landowner in the world.
Speaker 2:Biggest landowner in the world. But you know it's quite interesting, mark, because I know we were over in the UK about a year ago and we were speaking with some real estate agents over there and that is just so normal over there in the UK.
Speaker 1:Did you know that all of Canberra is leasehold?
Speaker 2:Yeah, that's right. I was actually speaking with someone who lives in Canberra the other day. They all make. Everyone makes money. That's right, you know so it's. But it's something you know that buyers get very, very nervous about. They're like what if they take the lease back? People freak, they really do People freak. And the reality is People don't know about it. Well, that's right, but the reality is is that they actually, particularly the Catholic Church, they don't want the land. They're very happy with the leasehold and the money that that provides for the church.
Speaker 1:I read something up on it years ago that the Catholic Church is often given these large portions farms, acres of land a long, long time ago to support their community. So there's still an onus, that's right. There's still a responsibility to support their community. So they're not going to be putting a casino on there. They're going to be doing stuff for the people to serve the local community.
Speaker 2:That's right as opposed with freehold. Now, you could certainly argue that something that is freehold is going to achieve a higher price than something that is leasehold a price than something that is leasehold. Additionally, what a lot of people don't know is, in some circumstances, if a property is leasehold, there is no land tax applicable.
Speaker 1:That's stunning, which is unbelievable in some cases, and if you guys are running a wire, if you guys are thinking, who cares? Some of these guys are paying 50 or 100 grand every single year because it's an investment property and it is subject to land tax. This is normal properties. Not only that, it's a big ticket item.
Speaker 2:That is a huge big ticket item. But not only that. A lot of people also would argue that leasehold properties don't go up in value at the same rate that freehold properties do. That is false and misleading. That is absolutely not the case. In fact, I could you know there was a property that sold down in Manly actually that was on leasehold on Churchland and that just sold for circa $35 million.
Speaker 1:So it most certainly does achieve it guys, these places are bigger than your life, bigger than your lifetime. Twice or three times you know they can be. So you can get at least for as long as normally as long as 99 years later you can get a longer, but normally you see it about 99 years as a max and then sometimes, if they're coming up towards expiry, maybe five or ten years, but generally I've never seen them not extended. Now I've got a list of other people. We talk about catholic church being. They sold it um crown.
Speaker 1:Uh leasehold land new south wales. So, um, I think you know, for instance, some places around the opera house um circular key barangaroo those places are. You look at them and think just normal unit block. Nope, they're leasehold. Uh, local government leasehold corporates can also can also do that with private leasehold land for long-term leases. Um, I know uh manufactured homes um in new south wales. So some people um actually rent out. They do like a land lease for 99 years, 50 years, whatever, and you build your house on there um and you can sell it for pretty much regular value. It's not, you can the banks lend on it. Um, it's pretty, it's yeah, so it's you certainly can.
Speaker 2:What? What I find is most people usually um, particularly with the catholic church land. That's leasehold. Most people usually will um take out a lease there for 20 or 25 years. Um. The big thing to note there is that if it is on cath Church land, usually they want that lease payment within 90 days and it's payment up front. It's payment up front. So you increase that you know lease by say, let's call it 20 years, that the Catholic Church are going to want that payment within three months up front for that 20-year duration and then normally, or there can be up front and then like a little bit of rent along the way.
Speaker 1:Yep, A little bit of rent along the way, but you know but do people buy it?
Speaker 2:Absolutely, are some of the best properties in the world on leasehold land? Absolutely, do they sell for record prices?
Speaker 1:Absolutely Some entire countries. That is their ethos, philosophy. That's right. They don't sell it out like Australia, they actually lease it out permanently. So much like our Canberra, all of Canberra leaseholds. So everyone who has a house there. It's a leasehold home, but they're worth a lot of money. They go up regular.
Speaker 2:Some entire countries are like that, as opposed to freehold, where you are the owner of that property and that land as well. But you know, as I mentioned, with that can come large land tax implications. All right, guys, it's been a short and sweet one. Hopefully that's helped some of you and if we can assist at all with landhold versus freehold, feel free to reach out. We're very, very happy to help you. Boom, see you guys. Take care, take care.