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The land governance cost on co-ownership: A study of the cross-lease in New Zealand

Author

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  • Cheung, K.S.
  • Wong, S.K.
  • Wu, H.
  • Yiu, C.Y.

Abstract

Higher land-use intensity can be achieved by subdividing the land or by subdividing the structure built on it. The former avoids co-ownership but is subject to topographical constraints, whereas the latter (e.g. apartment units) uses each unit of land more efficiently but entails management of the common parts. This study examines a hybrid approach to subdivision, known as “cross-lease” in New Zealand, where land is co-owned, and each co-owner singly and separately holds his or her structure (a detached or semi-detached house) through a very long lease. The delineation of boundaries and the maintenance of communal resources relies on self-governance. From the owners’ perspective, how well does the self-governance of cross-lease work, as compared to government regulation of unit titles? Based on preferences revealed by property transactions, cross-lease is found to trade at a price discount of 0.42% per owner relative to unit titles of property of equivalent quality. Moreover, the discount increases with the number of owners sharing the land. Self-governance is, therefore, more costly than government regulation when there are multiple co-owners, making monitoring and conflict resolution difficult.

Suggested Citation

  • Cheung, K.S. & Wong, S.K. & Wu, H. & Yiu, C.Y., 2021. "The land governance cost on co-ownership: A study of the cross-lease in New Zealand," Land Use Policy, Elsevier, vol. 108(C).
    • Handle: RePEc:eee:lauspo:v:108:y:2021:i:c:s0264837721002842
    DOI: 10.1016/j.landusepol.2021.105561
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