Is your property ready for a split? Our essential guide to subdivision
Have you ever considered subdividing your property? Whether you are looking to free up capital, maximise land use, or create investment opportunities, subdivision can be an attractive prospect.
This article is intended to be a useful guide informing you of the steps required to subdivide your property.
1. Due diligence
Once you have settled on the objectives of your subdivision, you will need to do some due diligence to check if those objectives are achievable for your property. This could include:
- reviewing the interests registered on your property’s title that may prevent subdivision or require third party consents (such as easements, covenants or encumbrances);
- considering what planning rules apply;
- how much will it cost and will the project be financially viable; and
- any tax implications as a result of the proposed subdivision (and potential on-sale).
2. Preliminary survey plan
You will need to engage a surveyor early on to prepare a draft preliminary plan. The plan sets out the proposed boundaries for your subdivision and any easements or restrictions required. This will be used as part of the resource consent application (discussed below).
3. Resource Consent
The Resource Management Act 1991 (RMA) and Council district plans dictate land use regulations, including zoning, density limits, and environmental considerations. Each Council has its own set of rules. The various regulatory and RMA requirements are complex and can be overwhelming.
You will need to apply for a resource consent(s) for the subdivision. A lawyer, your surveyor, or a planning consultant will be able to assist you with preparing your resource consent application.
Once the application is submitted and fees paid, Council planners process the consent applications. “Non-notified” applications should be processed within 20 working days on receipt of all required information. An application may be non-notified where the Council is satisfied that:
- the adverse effects which may result from the subdivision are “no more than minor”; and
- any affected persons have agreed in writing to the subdivision.
If the environmental effects are significant or neighbours are adversely affected, the application may be assessed as limited or publicly notified. These applications may take three or more months to be processed (including hearings).
The Council would then issue its decision. If the subdivision is approved, conditions are likely to be imposed in the resource consent (discussed further below). The Council may also specify easements which must be granted, such as the provision of utilities (between properties and/or connecting to utility providers’ existing connections) or new rights of way to ensure properties have adequate access.
If the application is declined, there are options to object. Our Resource Management team can provide further information on this.
Other consents – If you intend on erecting any dwellings or other structures on your subdivided property, you may require further resource and/or building consents.
4. Final Survey
Once your resource consent is approved, your surveyor will prepare a more detailed survey plan and submit this to Council. This is known as a “Land Transfer Plan”, or “LT Plan” for short and conforms to Land Information New Zealand’s (LINZ) surveying requirements.
When the Council is happy with the LT Plan it will issue its approval in the form of a certificate under section 223 of the RMA.
Note: Under the RMA, the subdivision resource consent must be ‘given effect to’ within 5 years of granting the consent by obtaining approval of a survey plan under section 223.
5. Complying with resource consent conditions
Your resource consent will be subject to conditions. These can include:
- engineering works to form rights of way, entrances, car parking and turning bays;
- installation of services and connections for water, wastewater, stormwater, electricity, telecommunications and gas (with Council and/or utility providers);
- paying relevant development contributions, levies and planning fees; and/or
- the Council preparing a consent notice to record any conditions, and engaging its lawyers to prepare legal documents, such as easements or bonds.
Once all the resource consent conditions have been met, you or your planning consultant will apply for a certificate from the Council under section 224 of the RMA. Council officers will check compliance with the resource consent conditions. If the works comply with the Council’s requirements, the conditions will be approved – if not, then further works may be required.
As noted above, the Council may require a consent notice to be registered against the new titles to ensure conditions are met. This is common where conditions must be met on a continuing basis – examples include:
- minimum floor levels for any future dwellings or buildings to mitigate potential flooding;
- geotechnical or engineering requirements for dwellings or building foundations; or
- maintenance and operation requirements for any wastewater systems.
When all conditions have been met, the Council would issue its certificate under section 224 of the RMA confirming its approval.
Note: Under the RMA, your section 224 certificate must be lodged with LINZ within 3 years from approval of the survey plan.
6. Preparing the legal documents
While the conditions of the resource consent are being satisfied, your lawyer can prepare the required legal documents based on the LT Plan. This may include:
- liaising with parties on easement terms (including Council, utility providers and neighbours);
- mortgagee consent; and
- LINZ Authority and Instruction forms.
You may also want your lawyer to prepare land covenants if you want to set rules and restrictions on how the subdivided lots can be used in the future.
Once all documents have been signed, Council certificates (under sections 223 and 224 of the RMA) have been provided, and the LT Plan has been lodged by your surveyor, your lawyer will then lodge the legal documents with LINZ and request titles.
7. On-selling
If you want to on-sell any of the subdivided properties, our Property team can prepare the sale and purchase agreements. The agreements can be prepared and signed early in the process – they just need to be made subject to resource consent and new titles issuing for the subdivision. Settlement will take place once new titles have issued.
Subdividing your property offers exciting prospects but requires careful planning and adherence to legal and consent processes.
There are many moving parts, but our Property, Tax, and Resource Management teams can assist to streamline the process and answer any queries you may have.
Special thanks to Partner Alysha Hinton and Special Counsel Bridget Cameron for preparing this article.
Disclaimer: The content of this article is general in nature and not intended as a substitute for specific professional advice on any matter and should not be relied upon for that purpose.
