Leased Parking to body corp

[Tom_84]

Hi all just wondering if many people have come across these? I have seen a few recently. The apartments are strata titled and advertised as having a car space. On inspection of the contract of sale, the car spaces are not actually on title, rather on 99 year leases which gives you exclusive access to that car space.
Firstly is this false advertising as you are not actually buying a car space rather leasing one. Are things like this able up change? Eg become a seperate title? It's a bit frustrating as this really affects the borrowing capacity as it is really buying something without a car space in effect
Thanks

 

[RPI]

Often in QLD it is not on title either, just an exclusive use space. I would have thought 99 year leases give the bank some level of security. Canberra is all that way.

 

[Tom_84]

I guess it comes down to size sometimes. Most vic banks require minimum 50sqm which can be inclusive of carspace and balcony, so by not having they car space on title and if the apartment is say 45 sqm, the leased car space means you fall below the 50sqm

 

[Tom_84]

Just a side note to this. Wondering if people on here believe something like this could potentially affect the resale value of the apartment, even if it is above 50sqm.
For example if it was a 99 year lease and it was to be sold in 40 years time with 59 years left on the lease?
I know I'm speculating 40 years into the future but it may affect the resale value of the apartment if there is a timeframe to the lease ending

 

[DaveM]

Its a dodgy practice becoming more common in Sydney.

On completion and while 100% owner, developer does a 99 year lease of car spaces from the owners corporation for $1, and then offers them back to lot owners for $25,000 a car space.

 

[Tony3008]

Is this legal? I was under the impression (following the Arrow case) that when the developer is wearing the OC hat he is obliged to act in the OC's present and future interests and leasing OC property at a below market rate would be anything but.

That said, I don't see what he's gaining by doing this: why not just sell the car spaces on separate titles to apartment buyers?

 

[Tom_84]

Is this legal? I was under the impression (following the Arrow case) that when the developer is wearing the OC hat he is obliged to act in the OC's present and future interests and leasing OC property at a below market rate would be anything but.

That said, I don't see what he's gaining by doing this: why not just sell the car spaces on separate titles to apartment buyers?

It appears to be a more common practice coming in. Just wondering if people think this affects a) property value and b) re-sale value?

 

[S.T]

its one of the nominal $1 leases over 99 years or something. I looked at a property like that once, that had a fence off court yard that was leased by owners corp to the owner of that lot on a 99 year lease. Yes, it does affect value as it's not on the actual title. In saying that, the valuations I've had done usually state that the valuer hasn't been able to site the title to confirm.

 

[Tom_84]

its one of the nominal $1 leases over 99 years or something. I looked at a property like that once, that had a fence off court yard that was leased by owners corp to the owner of that lot on a 99 year lease. Yes, it does affect value as it's not on the actual title. In saying that, the valuations I've had done usually state that the valuer hasn't been able to site the title to confirm.

What sort of discount would you expect? 5% of what it would be worth with a carspace on title?

 

[S.T]

What sort of discount would you expect? 5% of what it would be worth with a carspace on title?

hard to say, is there other similar apartments with no car space that have sold in the area recently? maybe compare similar priced suburbs? I wouldn't touch it to be honest, I'd find a place with a car space on title.

 

[Tom_84]

hard to say, is there other similar apartments with no car space that have sold in the area recently? maybe compare similar priced suburbs? I wouldn't touch it to be honest, I'd find a place with a car space on title.

Thanks for all your replies so far.. greatly appreciated. It is a tricky one.. You still get to use the carpark and have 99 years access and im sure you can probably re-negotiate the 99 year lease with the body corporate when needed. I haven't come across this kind of situation before but i feel it would probably affect the price as you are buying 1 title not 2. In saying that, if something ticked every other box, would this still be enough to put many people off?