As property markets continue to evolve, homeowners in New Zealand often find themselves contemplating the idea of subdividing their property. Subdivision involves dividing a single parcel of land into multiple lots, either for residential, commercial, or mixed-use purposes.
You're able to complete a subdivision yourself however it's suggested you get the right team around you from day one, especially your real estate agent. This is so they can understand the value of your property and advise who are the best contractors for you to use. This process is like a surgery - you don't do it yourself, you entrust the experts around you to do so.
The prospect of subdividing can be alluring, offering potential financial gains and the opportunity to maximise land usage. However, it's essential to weigh the benefits against the drawbacks before embarking on such a venture.
After employing the expertise of your real estate agent, the initial first step is done in consultation with your surveyor to ensure you have a section or sections that will best maximise your return. Some surveyors can be strictly mathematical while others can visualise a house site and what would be the best outlook when completed. This can be especially important for rural blocks. Some might even do both!
Subdivision of land and buildings is governed by a variety of legislation and local council rules. It is important that you investigate what the requirements are for your local area prior to making any investment decisions. The process can take months to complete, so keep this in mind when in the planning and research phase.
It's important to remember that more subdivisions are not always better, access costs are almost always an issue and you must always consider stage 2 or stage 3 plans. The loss of a small amount of land in the wrong place may limit the potential to subdivide further at a later date. This could be due to limited access or average size of lot issues. Some areas may have a rural parent title or specific access widths for further development.
When it comes to tax (specifically GST), if you plan to own for over 10 years it's best to reach out to your accountant. If it's in a trust, company or any other entity you should advise your solicitor of your plans as they will need to be involved with titles, easements and releasing the mortgage from the bank.
Many property owners have considered subdividing their land as a means of capitalising on its value. This is due to the significant growth in recent years across urban centres like Auckland, Wellington and Christchruch. In a competitive market subdivided properties often command higher prices per square metre translating into substantial financial gains for property owners.
Moreover, subdividing property can contribute to addressing housing shortages in densely populated areas. With New Zealand facing housing affordability challenges, particularly in urban centres, subdivided lots can provide much-needed housing options for buyers and renters alike. This aligns with the government's efforts to promote urban infill development and improve housing affordability across the country.