Subdividing a property can be quite a valuable opportunity, whether you want to sell off your piece of land, build an additional home for your family, or create an investment opportunity.
However, it isn't quite that simple. There are a number of key considerations and steps to be taken prior to proceeding with the subdivision by the property owner.
1. Understanding Zoning and Local Council Regulations
First, to understand subdivision, you need to know the zoning of your property. In New Zealand, every district has its own rules and regulations guiding the subdivision, which are contained in the District Plan managed by your local council.
For example, in Wellington, the subdivision rules differ depending on the zoning of your property. In the Outer Residential Zone, which covers much of suburban Wellington, the minimum lot size for subdivision is generally 400m². However, in higher-density areas such as the Inner Residential Zone, the minimum lot size can be as small as 200m², encouraging more compact housing closer to the city centre.
Wellington City Council will consider your ability to subdivide based on a variety of factors, including the size of your land, proximity to existing infrastructure, such as water, stormwater, and sewage, and environmental hazards such as landslides or flooding.
In addition to the above, consent will be considered by taking into account factors that include vehicle access and parking, and neighbourhood character impact
2. The Resource Consent Process
To subdivide land, you will need to apply for resource consent. This is a legal requirement to ensure that your subdivision adheres to environmental and planning standards. The application process involves preparing a detailed plan that outlines your proposed subdivision and submitting it to the council for approval. The council will evaluate the environmental impact, how the subdivision fits with neighbourhood character, and other factors such as stormwater and wastewater systems.
3. Feasibility and Costs
The subdivision process can be costly, with expenses ranging from infrastructure requirements to professional services. Costs vary depending on the complexity of the project. This figure includes:
- Surveying: A licensed surveyor is needed to assess the land and provide a design for the subdivision.
- Council Fees: These cover the cost of processing your consent application and development contributions.
- Infrastructure Costs: Connecting new sections to essential services like water, sewage, electricity, and telecommunications can be a significant expense.
- Legal Fees: Once the subdivision is approved, legal work is required to create new titles for each lot.
4. Infrastructure Requirements
New divisions resulting from subdivision must also provide adequate access to infrastructure, including safe vehicle access and drainage, and utilities such as water and electricity. Sometimes additional work is needed for the installation or upgrade of infrastructure. This increases the cost of a project many times over.
5. Involvement of Professionals
Subdividing your property is never a straightforward process; it involves various professionals, including but not limited to:
- Surveyors: They are responsible for the designing of the subdivision and overseeing the survey to ascertain new boundaries.
- Lawyers: The new titles need to be registered with legal assistance to help in the process, including all property-related laws.
- Engineers: Infrastructure may involve the use of an engineer, such as stormwater systems.
6. Post-Subdivision Considerations
Once the subdivision is complete, there are other considerations you must address. For instance, you may have to build fencing or attend to landscaping and/or ongoing maintenance of the newly formed lots. Also, subdivision may have an impact on your property rate and taxes, especially when you intend to sell the new sections. This may be due to the fact that, depending on the time of sale, the proceeds will be caught under the Bright-Line Test, a requirement on the taxation of gains on the sale of property within a specific period.
7. Timeframes for Subdivision
Subdividing a property may take at least six months, though larger subdivisions, or those more complex, could take much, much longer. It depends on a host of factors, such as length of time to secure resource consent, complete the physical works, and obtain new titles.
8. Why Subdivide?
There are many reasons why property owners choose to subdivide, including:
- Selling Land: Some owners divide their property to sell part of it, potentially making a profit.
- Building for Family: Subdividing to create a new section for a family home is a common scenario.
- Investment Opportunity: Some owners use subdivision to build rental properties on the newly created lots, providing an additional income stream.
Subdividing your property in New Zealand can be a rewarding but a complicated venture. It requires careful planning, research, organisation, professional guidance, and compliance to local council regulations.
If you're thinking about subdividing your property, ensure you understand the costs, legal requirements, and potential impact it will have on your financial situation. It's also wise to understand the potential return on your rental income by completing a free rental appraisal.
Consulting with surveyors, planners, and legal professionals early in the process can help ensure a smoother subdivision journey.
