Q&A: Considering leasehold house

Hello Olly,
My wife and I are looking at a leasehold property in Kohimarama, there is 1 year remaining on the lease which is owned by [snip] Holdings, the lease is currently $7500 per annum. According to the CV the house is worth $150,000 but it needs some serious TLC to make it liveable, asking price $95,000,. The land is valued $560,000.
Is there a maximum amount they can increase the lease?
If we contact [snip] Holdings are they obligated in telling us how much they intend to increase the lease?
Is there any way for us to get information like this?
We don’t want to buy the place and get stung by a huge increase in the land lease. Do you think it is wise to buy a leasehold property? The property in question is in a great location in a very quiet cul-da-sac, walking distance to school and walking distance to beach, just a few steps from [snip], we think it would be a great investment if the land lease won’t reach an outrageous amount.
What’s your opinion and your advice?
Thank you so much for your time,
Kind Regards,

Dear Matthew
The Lessor may give you an indication of what the lease rental will be, so there is no harm in asking them. However you can get a good idea by yourself by taking the land value (in this case $560,000) and use 6%-7% as the likely ground rent to be charged i.e. $33,600-$39,200 per annum.
Should the land be worth less, then naturally the likely rental will be less but it will give you a rough idea … should the lessor not want commit themselves just yet.

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