Subdividing your Section: A Beginners Guide To Subdivision in New Zealand

24 August, 2023 | Jennifer Edwards

When properties are scarce and the price of a new home seems out of your reach, some homeowners are looking to subdivide their properties.  Subdividing a property can be an exciting yet complex endeavour, particularly for laypeople seeking to divide their section into two separate parts. Whether you’re a parent aiming to create a space for your children to build their own home or simply an owner-occupier looking to explore the potential of your property, the process can seem daunting. In this article, we will delve into the intricacies of subdividing a section in New Zealand.

Finding out if you can subdivide your property

Feasibility Assessment
Before embarking on the subdivision journey, it’s essential to conduct a feasibility assessment. This involves evaluating factors such as the property’s size, zoning regulations, local council rules, infrastructure, and potential costs. Consulting with a legal professional and a land surveyor can help you gain a clear understanding of the viability of your subdivision project.

Engaging a surveyor
There are a few steps along the way to achieving a subdivision of your property, and one of your first ports of call would be engaging a surveyor to see if a subdivision can be carried out.   The surveyor would look into whether a subdivision is possible and what your costs would be They would also advise you on would be needed to comply with Council subdivision requirements and any other issues that may the subdivision. The surveyor and Council will consider some of the following when making a decision to grant you a subdivision consent:

Some but not all of the considerations are:

• Driveways and access to the new section(s);
• How you are going to get utilities to the sections e.g. power, internet and the easements that are required;
• Any special land features the property may have e.g. is the property in a flood zone, or does it have an overland flow path or poor soil
• Stormwater, wastewater and water connections and the easements that are required for these
• Any plumbing/drainage issues
• Required impermeable surface-permeable surface ratios
• Distance to the boundaries/neighbours. For example, the section might be big enough, but house is in the middle, and you would have to knock down existing house and then build two houses on a different layout of section.
• Height to boundary restrictions

Most Councils have a service where you can book a meeting with them to discuss your plans for the site. Your surveyor may do this for you or if you are wanting to be involved in the process attend this meeting together. You could phone your local Council to find out about this service in your area, they could also advise you on the cost of the subdivision.

The costs involved in completing the due diligence to assess whether subdividing is a feasible option can be significant, and you may discover once you have invested that money that subdividing is not possible, or not going to work out the way you thought it might.

Paying for the subdivision
A common scenario in Auckland, and elsewhere, involves parents subdividing a portion of their property to create a section for their children to build their own home. This process can be slightly different due to certain unique considerations. Often the arrangement is that the children will “buy” the land off their parents, and this money will be used to fund the cost of subdividing the property

Banks and financial institutions require a clear title before granting a mortgage. This means that the subdivision process must be completed, and the new titles issued before the children can secure a mortgage for building on the land, or to purchase the land off the parents. In this case, the upfront costs of subdivision would have to be paid by the parents, who could then be later recovered from the children when they buy the newly created section.

Resource Consent Application
Obtaining resource consent from the Auckland Council is a pivotal step in the subdivision process. This application includes detailed plans, surveys, and relevant documents outlining your proposed subdivision. The Council assesses the proposal’s impact on the environment, infrastructure, and neighbourhood character before granting approval.

Legal Documentation
Once the surveyor has completed plans and achieved Resource Consent, and the homeowner has completed all of the requirements Council have set out in the Resource Consent, then the lawyer can start working to complete documentation such as drafting necessary easements, utility providers documents and obtaining bank consent. Finally they will lodge your documents with Land Information NZ for new titles after Council issues their final completion certificate called a 224(c) certificate.

Costs
there are a variety of professional services and costs involved in subdividing a section. Below are some that you should factor into your budgeting decisions. (There may be additional costs that arise depending on where your section is and the nature of the land being subdivided).

• Surveying costs can vary based on factors such as the size of the property, terrain complexity, and the number of new sections being established.
• Land development costs encompass preparing the land for the new sections, which can include clearing, grading, and installing necessary infrastructure such as driveways, plumbing, drainage etc.
• Council Costs– Obtaining Resource Consent from the Auckland Council is a fundamental step in the subdivision process. However, applying for Resource Consent incurs fees that vary based on the complexity of the project and the number of sections being created. These fees cover the council’s review and assessment of your subdivision proposal to ensure it complies with local regulations and environmental considerations. Council will likely also charge a substantial infrastructure development fee.
• Legal Fees – Your lawyers fees can vary depending on the complexity of the project and the services required.
• Title Creation/Land Information New Zealand (LINZ) Fee: This process incurs fees associated with lodging the necessary documentation with LINZ and creating individual titles for each section. These fees cover administrative costs and the establishment of clear legal ownership.
• Accountant – if you need to consider tax implications.
• Tax/Brightline Test – if you plan to sell the new section/s in the near future, the gains from these sales could be subject to the Bright-Line Test. If you are running the project through a company, other taxes may need to be taken into account.
• Contingency Fund: It’s advisable to have a contingency fund set aside for unexpected expenses that might arise.

Subdividing takes the work of you, your surveyor, your bank or broker and your accountant all working together. The surveyor working with plans and Council, your lawyer with obtaining a copy of your title and existing registered instruments on your title, your bank as to how you are going to pay for the subdivision and your accountant for any tax issues.

How long does subdivision of a section take?
Subdividing is indeed a slow process and not something that can be done in a matter of weeks or months. Rather it is at least a 6 month or longer project, however working together collaboratively can reduce the stress and time to achieve your end result. It will depend on whether your subdivision is just creating 1 lot or if you are creating a few lots with services to be implemented.

Act now to secure your property’s future. Subdividing your property can be a game-changer, but the intricate web of regulations, costs, and strategic decisions demands careful navigation. Nz subdivision expert, Jennifer Edwards has a proven track record in guiding property owners like you toward successful subdivisions. With the New Zealand property landscape evolving rapidly, seeking advice sooner rather than later is imperative. Don’t miss out on the chance to unlock your property’s full potential. Reach out to Jenn today to explore how she can assist you in turning your subdivision dreams into reality.

Jennifer Edwards

Ph – 09 836 6889

Email – jennifer.edwards@smithpartners.co.nz