Subdividing land – what to expect

If you are considering purchasing land with the intention of subdividing or if you are simply looking to increase the value of your existing property by adding an additional house, there are a couple of things that you will need to understand before taking the leap, so to speak.

A subdivision involves the conversion of one large property, whether it be a parcel of land or a building, into two or more parts, to enable those parts to be sold or split into separate ownership.

To do this, a specific kind of resource consent, called a “subdivision consent”, is required from the relevant local Council.

The statutory requirements governing subdivision are contained in the Resource Management Act 1991 (the Act). This Act enables the district and city councils to oversee and manage all subdivisions through district plans and resource consents, thereby controlling any adverse effects on the community and environment that the subdivision may have.

A range of different subdivisions are possible: fee simple, unit title or cross lease. A fee simple subdivision creates a new allotment from an existing allotment. A new certificate of title is created for this new parcel of land and this is independent of the original parent title. This is the most common form of subdivision and will be the focus of this article.

Anyone that is thinking about subdividing should be aware of the length of time involved in the subdivision process, whether it be in a rural or urban area. The length of time depends on the size and complexity of the subdivision project. The council, surveyors, Land Information New Zealand, and lawyers are each required to provide their input and sometimes this means that the length of time required is longer than anticipated.
 
Below is a summary of the stages involved in a subdivision process. The times indicated will vary depending on the complexity and size of the subdivision but as general rule of thumb, the process could involve around one month per party. In other words, a typical subdivision process can take some 5-6 months in total: sometimes, more. It is essential that whoever is undertaking a subdivision project plans well in advance for matters such as interest rate changes, holding costs, and the need for certificates of title to be issued before mortgages and sales of the new titles can be secured.

The subdivision process can be summarised into five stages.

  • Subdivision consent
  • Survey plan approval
  • Section 224c certification
  • Lodgement with Land Information New Zealand
  • Certificate of title

Stage 1: Obtain Council Approval
Almost always, anyone wishing to subdivide will need to obtain a resource consent. Even in situations where the proposed subdivision is a permitted activity, a certificate of compliance will be required.

Stage 2 - Approval of Survey Plan
The subdivision consent obtained under Stage 1 above must be ‘given effect to’ within five years of the grant of the consent. This is done by obtaining approval of a survey plan from the relevant city or district council. The council will assess whether the survey plan conforms with the subdivision consent or certificate of compliance, including determining whether the conditions of consent have been or will be satisfied. If the survey plan is compliant, the council must approve the survey plan. If the survey plan is not compliant, the council must decline to approve the survey plan.

Stage 3 - Section 224(C) Certification
Before a survey plan can be deposited, a certificate must be lodged with the Registrar-General of Land confirming that the relevant council has approved the survey plan and that all of the conditions of the subdivision consent have been complied with to the satisfaction of the council.

Stage 4 - Land Information New Zealand
The penultimate stage of the subdivision process requires the lodgement of the legal title documents and the survey plan with Land Information New Zealand for approval.

Stage 5 - Certificate of Title
Once Land Information New Zealand’s approval under Stage 4 above is received, the subdivision process concludes with the cancellation of the existing title and the issue of new certificates of title for each new parcel of land shown on the survey plan.