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Subdividing sections equals money in the bank (February 2022)

The reasons that people subdivide their farms are many and varied, but at the end of the day, there is no argument that it adds value to the property.  It provides them with options that are useful either if they stay on the farm or if they want to sell up and move on. Put simply - the more titles that you have, the more options and value you have.

Out there in rural New Zealand, there are many more individual titles than you see.  The total number isn’t obvious because many are held in a larger farm holding. Throughout history larger titles have been subdivided to accommodate emerging land uses that needed less land. In turn, these have been adjusted or amalgamated in line with changing economic times to form the mosaic of titles that we have today.

Subdivisions are controlled by district councils in an effort to protect rural land for production and, it sometimes seems, to provide a pretty backdrop for their towns and cities. In areas close to cities they also seek to retain land to allow for future growth of the city. Over the years many councils have recognised the need to provide some ‘lifestyle subdivision’ in the rural areas. This has catered for retiring farmers who need to keep an eye on the next generation, dependent family members of farmers and those who just can’t cope in the city or want to raise their family in a rural environment. Those smaller titles are getting harder and harder to create in many districts and, where they are allowed, it is generally only on lower quality or hilly land.

The business-savvy farmers have long used these lifestyle subdivision rules to future proof their property by subdividing when the rules allowed it. They have then held on to the titles as long as they could but, if the economy demanded, they may have sold them to recapitalise or even settled their family on them.  Sometimes they have even repurchased these blocks when finances have allowed. 

These surplus titles on the farm are ‘money in the bank’ to many farmers. They allow them great flexibility when struck by a global downturn in commodity prices or when they want to build a retirement home on the farm and retain some independence from the family now taking over from them.

We are seeing a definite move from many councils to restrict lifestyle subdivision blocks and it is clearly only going to get harder and cost more to subdivide in the future. Some farmers, who border rural residential enclaves or cities, will get opportunities that are not shared by all - but most will be controlled.

So, if you are interested to find out how the changing scene may affect your plans for the future, please feel free to give us a call right away to discuss your situation.