Lets Talk About Subdividing!

27 July 2021

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Imagine this…

You wake up early on a Saturday morning, the sun warming the frost left behind by the night that has passed. You take a sip of your morning coffee and look out to the backyard. You think to yourself 'could fit another house in there, I reckon'. Boom… the seed has been planted. You want to subdivide your property.

Subdividing your property is a great way to get maximum potential value out of your property. Whether you decide to sell or rent the property, it can be a great way to make some money with space that you may not be using.

The idea seems simple, right? Sign some papers to split the land, build a house, sell it or rent it, make some cash. Easy! Unfortunately, not. There are many hoops you need to jump through to subdivide your property and they are a bit more complicated than they seem. Here are some things to consider before you take the first steps:

 

First things first: planning, planning, planning.

It is crucial to make a strong, well thought out and flexible plan for everything, from the type of subdivision you’re doing to earthworks to where you want the front door. It is a great idea to talk with your lawyer and a builder to go over your plans to make sure that you are able to pull it off and to make sure you are making the most of the space you have. Imagine being in the space that you are wanting to create, think about where the sun will be, consider the best place for the living spaces, think about what you will see when you look out of the windows, these things make all the difference to the feeling of the home and the value of the property.

Next… tax, tax, tax!

Good old tax. Depending on what your plans are for the subdivision, when you purchased the property, and if you’ve had work done on it, you may be stung by a hefty amount of tax! Have a chat to an accountant and they will be able to give you the run down of everything you need to know regarding the tax that you may need to pay. There are tax exemptions that you can apply for depending on what your plans are. If you are planning on living in the property, renting it, or using it for business purposes, you may be able to apply for a tax exemption. This can be another long process that requires a lot of hoop jumps so it is best to talk to a lawyer and take their advice.

Subdividing is not a fast process.

From the conception of the idea to having another house built could take years. That’s right, multiple years. Depending on your local council, obtaining Resource Consent alone can take between 16-24 weeks and getting engineering approval and building consents can take another 4-6 weeks on top of that – this is all before construction begins and we all know how long that can take. Subdividing is a big commitment; you will need to make sure that you are committed to the idea, the time it will take and the costs.

Something is bound to go wrong.

This is where timing and cost may not go exactly to plan. This is where flexibility and stability are important. In order to be safe, it is important to make sure you have stable income or a safety net for those times where things can get mucky. Whether it is something to do with building consents, unknown watermains making an accidental swimming pool, inevitable weather hold ups, or tradies not showing up on time, things don’t as ways go to plan so having a flexible backup plan (and another) are always great to cover all bases in case things go wrong.

Subdivision your property is a big decision.

The best thing to do before beginning the process is to get some advice from a lawyer. They’ll run you through everything you need to know, the cost, the logistics, the good, the bad, the ugly, and the beautiful. Need a lawyer? Have a coffee with Convex Legal, they are happy to run you through everything you need to know and more.

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for more help feel free to reach out. Get in touch with Hamish Mexted