Commercial Property Newsletter - May 2018 Developing or refurbishing buildings for lease - what is an ‘agreement to design, build and lease’? Written by Elliot Scott - Senior Solicitor, Christchurch (Property) In rare cases, a developer may start construction or refurbishment of a building without securing any tenants. In such cases, the developer would need to be confident in the market and have significant capital to finance the build as lenders will generally require a certain level of preleasing prior to providing finance. More commonly the developer will want to secure an ‘anchor tenant’ or tenants before they commence the design and construction or refurbishment of the building. This will be achieved by entering into an agreement with the tenant or tenants to “design, build and lease” the building to them. An ‘agreement to design, build and lease’, is an agreement between a landlord and a tenant that provides for the tenant to lease a premises (or part of a premises) from the landlord following design and construction of the premises by the landlord. For the tenant, it will ensure a purpose-built facility, which the tenant will then be able to fitout to satisfy its needs. Alternatively, the landlord could undertake those fitout works for the tenant as part of the construction process. For the landlord, it will help provide the necessary tenant commitment and construction detail that the landlord requires to commence construction. The ‘agreement to design, build and lease’ (Agreement) can take various forms. It could be a bespoke agreement drafted by the parties’ solicitors or, as is often the case with smaller buildings, using the Auckland District Law Society’s form of Agreement to Lease with an extensive set of further terms added to cover all facets of the design, construction and lease. Some of the more important terms that are usually included in the Agreement are discussed below: Shared Equity Schemes - how do they work? Written by Ann-Maria Buckley - Senior Associate, Christchurch (Property) With the increasing unaffordability of housing in our main centres, many local authorities, Housing Trusts, and even public companies like Fletchers are looking at shared equity schemes as a way of bridging the gap between the market value (say $600,000) and what first time buyers can afford to pay for that same property (say only $400,000.) The NZ Housing Foundation in Auckland and the Queenstown Lakes Community Housing Trust have been the pioneers of such schemes in New Zealand. The schemes are worth considering when you have land but could afford to wait to receive the land price in the future, including a share in the capital growth! In this article, we look at some of the key features of shared equity schemes. Split Ownership Maintenance
Our commercial property experts; (front row) Stephen Brent, Janine Ballinger, Emma Ferguson, Ann Maria Buckley, Emily Nind and Lauren Jerard. (back row) Mike Parker, David Fitchett, Elliot Scott, Jeroen Vink and Tim Stevens. |