Gaining consents for subdivision can be a daunting process for beginners. Due to restrictive bank LVR requirements for buying second-hand housing stock, many investors are creating a second income stream on existing property by subdividing and adding another dwelling, or alternatively buying property with potential for subdivision. Subdivision is a fantastic way of raising both yield and equity, but you need to do your homework first.

Prendos director Gordon Edginton has seen residential subdivision go well and go badly. Issues with gaining consent aren’t always obvious and it’s important to employ really good professionals including surveyors, town planners, engineers and architects.

For most councils there are about 150 rules to comply with. “It is a minefield of problems,” Edginton says.

“Councils don’t make it easy.” You will need resource consent for the initial subdivision, and building consent for an ancillary dwelling.

If you are careful it’s possible to avoid the need for (and extra cost of) resource consent, and neighbour’s consent for the new dwelling if it’s compliant in the first place. “As soon as you need neighbour’s consent or resource consent you can run into big delays,” he says.

Be warned, subdivision is often not as cheap as investors assume, but profitable when you get it right. Edginton himself is currently subdividing a property in Auckland’s Torbay, which is costing $80,000 to put in the services, plus a council contribution of $25,000.

Whangaparaoa Subdivision

Jolene Bagby and Jacek Baranowski have done a few subdivisions in their time and say it’s crucial to speak to an experienced surveyor as your first point of call. This will help you to understand what is possible and what will be required in the consent process for a particular property, before you commit to a purchase.

‘It is important we are 99% sure we can do what we want – we have to do all our homework before we buy it’ JOLENE BAGBY

“It’s quite a process and the key is having a very good surveyor,” says Bagby. “The council will answer ‘yes’ and ‘no’ questions, but an excellent surveyor will know the complicated council rules and processes inside out and advise you on how best to achieve a subdivision if it is possible for the site you have.”

One of the couple’s most recent subdivisions was a section on the corner of Brightside and Beverley Roads, Stanmore Bay, Whangaparaoa.

Bagby and Baranowski’s process for subdividing the site started as soon as they heard about the property. Bagby looked up the site on the council GIS viewer immediately to determine what might be possible. “The viewer shows where the services are located, which gives an idea of how difficult the job would be,” she says. “It is important we are 99% sure we can do what we want. We have to do all our homework before we buy it.”

The property was on a corner site with two small conjoined (semi-detached) 1980s homes at the top end of a steep slope. It wasn’t advertised as subdividable, but the couple knew there must be a way and pondered it with surveyor Chris Wech of C&R Surveyors in Orewa. “Chris knows the ins and outs and ways around. That is how we are able to do this type of thing.”

The solution was to subdivide the title under the two units – carving one off onto its own small site. The second was reclassified as a minor dwelling on the larger site leaving space to add a main home.

Being a corner site was very fortunate. It meant the top unit had its access on Brightside Rd and the other title opened onto Beverley Rd.

“We made sure that the land was over 600m2 so we were allowed to have a house and a minor dwelling,” says Bagby. The second step was to add a main home to the bottom 600m2 section and in the process have the unit reclassified.

“We start initiating every professional from when our offer is accepted. If you don’t keep onto the process, each person in the chain can take a few weeks extra to get around to your job which can add up quickly.

“Chris comes and does the initial survey plan. He submits that to the council to get the resource consent to sub-divide. After that we applied to add the “new” dwelling [an older-style home] and got the building consent.

The couple kicked off the consent process the day the offer was accepted. “The main point is that there are several professionals needed: surveyor, engineer, draughtsman, drain layer, electrician, Watercare, Vector for power and Chorus for phone and so on, and they all need lead in time,” she says.

Bagby says getting to know the system makes subdivisions go a whole lot easier. “I talk to the key people in the council in our area who make the decisions as to what the drainage specs will be and what will be required.

“That way I can have my engineer design a plan that will be accepted the first time and not have countless back and forth with council which would take up time and money.”

The trickiest part of a subdivision, she says, is often to do with the storm water and sewage connections. The council is concerned with inundation and flow paths and wants all the storm water piped away, says Bagby. But most subdivided properties don’t have the piping in place or it may need upgrading.

“It’s really important to know where they want the connections to storm water,” says Bagby. “It might be two to three houses away and you have to get neighbours’ permission and a town planner to do the [paper] work. That could cost you $10,000 or $60,000.”

When looking to buy the relocatable house for the ancillary dwelling the couple had to search out one that would fit the site and its services. “At first we thought that would be simple but with all the various requirements for connections to services, avoiding a flow path, space for outdoor living areas and parking, and height to boundary requirements it was a bit of a puzzle to find the right one, [although] a process we really enjoyed.”

Kawerau Subdivision

Yvonne Gattung has twice been through the process of converting a 54m2 garage to an ancillary dwelling. In both Kawerau and Rotorua. The Kawerau property proved profitable to sub-divide first. In the latter, the garage was converted to a minor dwelling on the same title.

The Kawerau property was an 845m2 $108,000 corner section with a brick and tile 1960s home on it. The valuation at time of purchase was $136,000, which made the purchase price a bargain.

“We did the house first so we could get it rented,” says Gattung. “Then we put the fence in between the two properties and worked on the garage.”

One eye opener for Gattung was the different approach of the Kawerau and Rotorua councils. “The Kawerau District Council was extremely helpful. They were really proactive because they wanted development in the town. They allowed us to draw up our plans ourselves. We had a surveyor to do the paperwork. You have to have one for a subdivision.” There were many more hoops in Rotorua.

“The main problem they helped us with was the services. These ran through the property that we were converting from a house to a garage and there was something on the neighbour’s section that we needed access to. “The surveyor worked with the council and with my lawyer.”

The standard Versatile-style garage was reclad, insulated in the ceiling and walls and had windows added.

Gattung was able to be creative with the garage, which was too low to the ground. “There were rules around how high above the ground [a home] had to be. We just dug the dirt down around the building and suddenly we complied,” she says. “There are many ways to skin a cat.”

The budget for all the work including professional reports, council fees and renovation was $50,000.

After subdivision, Gattung was left with 482m2 and 362m2 titles. When revalued the same year as purchase but after the work the original house, which had been converted to four bedrooms, was worth $165,000 and the smaller house: $130,000.

“It has never been empty,” says Gattung. “The new home created from the garage is a small three-bedroom house. The tenants are typically singles, couples or single parents.”

When Gattung compares the two garage conversions she says the Rotorua property was easier because they didn’t need to subdivide. She just built a fence between the two houses. But the Rotorua District Council needed “way more detail” for the building consent.