Selling or subdividing sections: a brief guide

If you’re looking to subdivide your land for sale then you will be aware that there is a long road ahead. Understanding the subdivision process is important, especially if you’re after the best price possible for your land and want to have everything in order before taking it to market. No matter whether you’re a seasoned veteran at subdividing or a first-time seller the process is the same, and we often see people fall into the same typical traps regardless.

Selling a bare section can be riddled with legal wrangling, hidden costs and unexpected issues. As buyers will expect to either continue using the land as is or more likely build upon it, there will be dozens of questions about the section’s suitability for the intended use. That is why it is important to understand the numerous questions and considerations before you dive into your subdivision project. Once you understand the process and pitfalls and engage a team of professionals then you’re ready to reap the benefits of subdividing your land, and there are many.

In this article, we dive into defining subdivisions and give you guidance on how to see if your land meets the subdivision criteria, as well as discuss council considerations that need to be considered.

What is a subdivision?

A subdivision is a piece of land that is divided, re-subdivided, or partitioned into smaller sections of land that could be called lots, units, sites, parcels, or blocks depending on local real estate and building laws.

The amount of land that you can legally subdivide, and the minimum size of those parcels will depend on how much land you are starting with, and is dictated by the local building permit and zoning laws within your area.

Subdividing can be a complex process and it is likely that you will need to seek advice from multiple specialists during the course of the process. This list includes, but is not limited to a surveyor, accountant, solicitor, real estate agent, architect, valuer and many more. Engaging in the services of professionals is essential and while this cost might be recuperated should the sections sell, you should expect there to be some time between enlisting their help and the first sale being finalised.

Some parcels of land have subdivision restrictions in place. These restrictions are set by the local council and can be added to ensure parts of the district retain their current use, or to stop density housing from creeping too far from the main council-run infrastructures. You can find these district plans on the local government’s website. For example, you can easily find the proposed district plan for New Plymouth online.

How do you know if your land is good to subdivide?

The first step you should take before you begin the subdividing process is to get professional confirmation that your property is able to be subdivided, and if doing so will result in a healthy return. There may be council restrictions, existing easements, soil and erosion issues or you may have a site of historical or archeological importance nearby. It is important to do your due diligence on the condition and safety of the land, which could cause costly repercussions down the road. The things you should especially consider include:

Size of the land

Many councils impose minimum allotment sizes that you are allowed to create through subdividing. Depending on your regional plans and in which environment area the property is located you may be able to create many parcels of land, or only a few. For more information about the New Plymouth District Council’s restrictions for subdivision click here. Note that individual properties may have additional subdivision restrictions planned in the proposed district plan. The key here is that the guidance and requirements are frequently changing. What was possible seven years ago may no longer be permitted. Likewise, what you plan to do maybe permissible today but planned restrictions may mean you’re rejected if your submission is received after the amendments have been implemented.

Stability and hazards

If you’re looking to sell your section with a new home builder in mind as the target buyer then soil stability and site suitability for the build will be key. The land that you’re subdividing needs to be stable enough to support a new dwelling, and an engineer’s assessment should be sought for confirmation. Many prospective buyers will want to know that the land is fit for their plans and won’t want to shoulder the costs only to find out it’s an unsuitable site. There may be hazards that come with building on the land. Some of these hazards are:

• Slope
• Inundation (such as flooding, overland flow, storm surge, tidal effects and ponding)
• Plot boundaries
• Erosion
• Slippage
• Risk of falling debris (such as soil, rock, snow and ice)

Utilities

The sections may need to meet the utility requirements of being connected to gas, water and electricity infrastructure, especially if a residential dwelling is likely to occupy the new title. Not only this, but storm-water and wastewater drainage may be necessary, or existing pipes may need to be upgraded to service a new build. A subdivision often comes with the expectation of centralised services. Depending on how small the sections are you may have to consider installing the infrastructure before sections are sold and before titles are issued. There may also be easements in place for existing services which may restrict building locations or the desirability of certain sections.

Vehicle access

All new sites must have vehicle access for emergency and everyday use. There must be enough space to connect a regulation driveway to a public road system and safe visibility requirements must be met. Additional council approval may be required for the location where the subdivision meets the existing roading infrastructure, especially if congestion or incidents could occur.

Zoning

1. 1. Environment
   2. Heritage
   3. Culture
   4. Conservation
   5. People

If you're not sure which zone your land falls into. Check with your local government body and they'll be able to direct you to the information.

Council considerations

Local councils are responsible for managing and approving activities and developments in their districts. Taranaki has the South Taranaki District Council, New Plymouth District Council and the Taranaki Regional Council and, depending on where your land is located, you will fall within one of the areas. The councils are also responsible for reviewing and approving subdivision applications and will do so in accordance with their respective district plans. During the review, they establish the level of risk to any new building site, road or infrastructure. You can do your own research and see what future plans are outlined within your section’s area by reviewing the NPDC District Plan or the South Taranaki District Plan first before you start your application. The district plans also include subdivision rules, which are clearly outlined. 

The rules generally relate to the following:

• Minimum allotment sizes.
• Whether the property can be, or needs to be, serviced with roads, water supply, sewerage and stormwater disposal.
• Whether suitable building platform(s) exist (with no flooding or stability problems).
• Whether the proposal meets other planning requirements (such as the need for existing buildings to be a minimum distance from the boundary).
• Whether the proposal creates additional users on a right-of-way.
• Whether the property is affected by areas or items of value or importance to the community that has been identified on the planning maps.

Selling a subdivision with McDonald Real Estate

We have listed and sold many subdivisions, ranging in size, all over Taranaki. We have worked with a number of experienced and first-time developers to deliver the subdivision sales they seek. In many cases, we have been part of the project from the very start offering advice and expertise on ensuring a subdivision appeals to the ideal buyer. We have a great range of professional contacts that specialise in subdivisions including lawyers, surveys and valuers etc… so if you haven’t approached these yet we can help.

We offer a no-obligation property development appraisal to help assess how much profit you could make by subdividing your property, as well as highlight any significant issues or considerations early on. 

What is included in the initial consultation?

1. The sooner you can contact us, and we can visit the site the better, we look at your section objectively and scope the potential resale value.
2. We then like to meet with you and your surveyor, again on-site, to ensure all parties are on the same page and that the desired lot sizes, locations and prices are feasible.
3. We stay with you right the way through the process and ensure all bases are covered, we also discuss all the possible covenants that you may wish to discuss with your solicitor.
4. Once a scheme has been completed, and prior to it being submitted to the council, we again meet with you on-site to ensure the plan meets your requirements and our best ideas of resale value.
5. Once the titles are issued we list the sections and plan and discuss with you the marketing options. 

That’s the advantage of working with McDonald Real Estate, we are experienced in subdivisions and we even have our own full-time subdivision specialist in our team. We even have a list of potential buyers looking to buy land already waiting, reducing your time to sell. So if you’re in the early stages of considering a subdivision, section sale or any land sale then get in touch with us to see how we can help.