Wellington Property Valuers
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Registered Property Valuers
Wellington, Hutt Valley & Porirua City

What are company share apartments?

​You may have come across these in your hunt for a new home.

Company Share is a now rather uncommon property ownership type, usually found in apartment blocks that were built in the 1960's and 70's.

Rather than purchasing a Freehold Title, you purchase a group of shares in a company which owns the entire block. The company doesn't trade anything, or list itself on the stock exchange. It is simply a structure that is set up to administer the purchase, sale, maintenance and other normal activities that go on in a typical apartment complex.

The company has a constitution and this sets out the rules and regulations for the shareholders - the shareholders being the owners of the apartments. This will include a regular levy that each apartment owner pays, in order to cover running expenses like council rates, maintenance, rubbish removal etc. Normally a portion of the levy goes into a 'sinking fund' - this being an amount that is saved up for larger and more expensive maintenance items like replacing a lift or replacing windows.

Company Share apartments have good and not-so-good points.

In their favour is the fact that they are normally cheaper than a Freehold Title. The shareholders have a reasonably tight control on who buys the apartments - often there is an approval process, so this ensures that the existing owners have some say in who they live with. Many people enjoy the more active involvement that comes with owning a company share apartment. Many company share blocks specify that apartments cannot be rented out - so owners always know who is living in the other units.

Somewhat negative aspects include the fact that banks/financiers will not lend as much on company share apartments. Typically a bank will only lend up to about 60-70% of the purchase price. Therefore you need a very good deposit to purchase a company share. The rationale behind this is simply because the banks see company shares as an inferior or just more complex ownership type in comparison to a straight Freehold apartment.

When buying or selling a company share apartment there is a considerable amount of paperwork that invariably has to be inspected and approved by a lawyer - thus ingoing and outgoing costs are normally quite high in comparison to a Freehold Title apartment.

Next Article: Leasehold Land. What is that?
Copyright 2021. TimStokesValuer.co.nz
  • Home
  • Articles
    • How to choose a building inspector
    • How to choose a real estate agent
    • How to choose a mortgage broker
    • How to choose a property valuer
    • How to choose a property lawyer
    • Tips for First Home Buyers
    • How to invest in property
    • How to work out a property's market value
    • Why get a property valuation?
    • Building a new home - what are the value issues?
    • What are Company Share apartments
    • Leasehold Land - what is that?
    • Rating values - can they be trusted?
    • Houses that won't sell
    • Buying property - the 5 golden rules
  • About Us
  • Fast, Free Quote
  • Client Comments
  • Contact