November 2021

For a number of clients subdividing off part of their land is a successful formula for reducing their debt but there’s not one of them that steps back from the process and says ‘wow, that was easy…’.

It’s not that the process is difficult, it’s just that there are a few steps involved and a number of players. If you are considering completing a subdivision, here are a few hints to make the process as streamlined as possible:

1. Assemble your ‘A’ team at the beginning – this will include your surveyor, your lawyer, and your accountant. Make sure they know who each other are so that they can work together for your best advantage.
2. Scope the project with your surveyor – what do you need the new title to look like and, more importantly, what will the resource consent require you to do physically to establish it? Will you need to form a four-lane highway, install five kilometres of cables, or one kilometre of fencing?
3. Work out if you are going to need to talk to third parties. Will you need a right to go over someone else’s land to get to the transformer? If you can’t get someone’s permission to go across their land, with persuasion or otherwise, you may need to come up with a creative solution to get your deal across the line as no one is likely to want to purchase a property without electricity or a fibre connection in 2021.
4. Will you need electrical, gas, or internet companies to put in infrastructure? If so, you will likely need to provide them with certain promises regarding easement registration.
5. Will you pay tax? You might find yourself inflicted with a couple of types of tax on your profit from the venture so best to have an awareness of that now.
6. Talk to your bank. Your lender will need to consent to the subdivision and the registration of any easements or covenants on the land. They also will want to assess the value of the property that you retain afterward to work out whether there is sufficient collateral for your borrowings. Maybe don’t assume they will let you keep that extra money for your new campervan.
7. Finally, don’t underestimate how long this will all take. The council can take time to deal with the consent application, the surveyor may have weeks of work lined up before your job, and it may take time for the third parties to get advice on the legal documents you require them to sign. Give yourself plenty of time.

I hope that is a helpful introduction to make you think about getting your ducks in a row. It can be a really profitable exercise if you are prepared for the long haul.

If you’re considering subdividing or need any help with your subdivision, please contact  your lawyer.