Cross-leases and consent to alterations – what you need to know
A recent Court of Appeal decision in Liow v Martelli [2026] NZCA 101 provides helpful guidance on how cross-lease properties work and when a neighbour can refuse consent to building works.
What is a cross lease?
A cross-lease is a form of property ownership where multiple owners share ownership of the underlying land, but each owner has a long-term lease (often 999 years) over their own dwelling or “flat”. In practical terms, you own your home, but you also co-own the land with your neighbours. Because of this shared ownership structure, decisions about the property, particularly structural changes, usually require neighbour consent. This setup provides some control over what others can do on the land, but it also means disputes can arise more easily.
The issue in this case
This case involved two cross-lease neighbours who shared ownership of the same title. One owner wanted to extend their house, add a pool, and build decking, but because of the cross-lease structure, they needed consent from the other owner, who was also acting as a lessor in relation to the property. The neighbour refused consent, and the dispute ultimately centred on whether that refusal was unreasonable in the context of cross-lease ownership.
What did the Court decide?
The Court of Appeal made it clear that there is no strict rule for when consent can be refused. In doing so, it rejected the older approach from Smallfield v Brown, which suggested that consent could only be refused if the harm to the neighbour was more than “trifling”. Instead, the Court confirmed that the correct test is a broader and more flexible one. The key question is whether a reasonable cross-lease co-owner, acting in their position as a lessor, could refuse consent. This requires looking at all of the circumstances and balancing the competing interests of the parties.
What matters when deciding consent?
The Court confirmed that the following factors can be taken into consideration when deciding whether a refusal is reasonable:
effects on privacy, light, views, and overall enjoyment
the size, scale, and positioning of the proposed works
whether one property will dominate or overshadow the other
noise, disturbance, and how the space will be used
potential impact on property value
whether the proposal limits the neighbour’s ability to develop their own property in the future
uncertainty about how the proposal will affect the property
No single factor will decide the outcome. The court will look at the overall situation and ask whether the refusal is one that a reasonable co-owner could make.
Why does this decision matter?
The key takeaway is that although consent cannot be held arbitrarily, co-owning neighbours are not required to consent to developments that materially affect the use and enjoyment of their property.
If you’re considering changes to a cross‑lease property, early advice can help avoid delays or disputes with neighbours. Our Property team can guide you on consent requirements and next steps. Contact us at enquiries@toddwalker.com or +64 (03) 441 2743.