Articles

Is subdivision an option to reduce debt? (May 2021)

If you are moving on to a new farm and looking at subdividing to reduce debt levels, you may have a lot to learn. Don’t assume that the rules are the same as in the district that you have come from. Although subdivision of land is ultimately controlled nationally by the Resource Management Act (for the time being anyway), all district councils have a different take on what they will allow.

It may be a surprise to some, but many subdivision rules vary considerably between neighbouring districts. These rules have evolved over time and are often shaped by political influence as much as environmental or sustainability issues. As they evolve there is one common thread though – subdivision of rural land is becoming harder by the year. And if you are sitting back waiting for the new and improved legislation promised, to make the land development and subdivision process easier, then I wish you the very best of luck.  Every time there has been new legislation or amendments in my lifetime the process has got harder.

The general principles governing the development and subdivision of rural land include sustainability, productivity, and rural character. To simplify the process, district councils set rules which are often based on past land use and reflect a ‘one size fits all’ approach.  This is where the 40-hectare minimum rural land block, adopted by many councils relative to dairy blocks at the time, evolved from in recent years – earlier there was a 4-hectare size (the old 10 acre block) commonly adopted as a standard for more intense farming.  As farming changes, due to technology and demand for different produce, these sizes can become meaningless, but they live on in the rules for eternity it seems.

There are sometimes opportunities to apply for subdivisions outside the prescriptive rules of a district plan, however the application costs are significantly higher, and success is very uncertain. Once rules are introduced, a council will often fight hard against any alternative approach in an effort to defend their district plan.  This can have the effect of stifling innovation and limiting individual choice when it comes to subdivision and availability of rural land.

Some subdivision opportunities unrelated to minimum sizes include the subdivision of sections in return for environmental protection, limited lifestyle blocks in some regions and boundary adjustments between existing titles. If you manage to purchase a farm that has multiple titles, then you are often on to a winner.  If you don’t, you might consider getting the farm subdivided into additional titles within the current rules to give you options in the future.

So don’t make any assumptions around subdivision rules, particularly if you are new to an area.  They will be different to where you came from for sure, and the fact that the neighbour has subdivided doesn’t mean that you will be able to also.  So, you will need to do your homework before you bank on any subdivision to keep the accountant happy.

If you have any desire to create additional titles from your land to provide your family with financial flexibility, please feel free to give me a call to discuss your options before it’s too late. We’ll see how we can ‘help you make the most of your land’.

Brent Trail, Managing Director of Surveying Services Ltd, specialises in resource consent applications for subdivisions across the Waikato, Coromandel and Bay of Plenty.  For further information call 0800 268 632 or email btrail@surveyingservices.co.nz