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Thinking Of Subdividing Your Farm?

29 June 2014

Why subdivide?

There are many good reasons to subdivide – for example:

  • to increase the value of your farm and its saleability in the future
  • to sell part of your farm and use the cash for repayment of debt or investment (Subdivision might be particularly worthwhile if your farm is on the edge of town and you can sell valuable building sections or lifestyle blocks.)
  • to sell your farm, but retain your home
  • to set aside land for a non-farming family member
  • to change the boundaries e.g. sell part of your farm to your neighbour
  • to get extra titles through while the District Plan allows it.

 

Tax and other issues

As the law in relation to taxation of land transactions is complex, your first step should be to discuss the subdivision with your lawyer and accountant. It might be desirable for the subdivision to be done by a different entity than the entity which currently owns the land.  If you don’t take this advice you could end up paying more tax than you otherwise could have paid.

 

Can you subdivide?

Council planners may be able to give you some initial guidance as to what is possible. Your lawyer, surveyor and other professionals involved can advise you as to what is possible and feasible. The cost and time involved will be dependent on whether a hearing is required, the nature of physical work required and the professional fees and Council charges payable e.g. for reserves, roading and sewerage. The Council will also need to be satisfied that any natural hazards, such as flooding and erosion, are provided for.

 

The subdivision process

The subdivision process takes several months and is often longer than first anticipated. You will need to take the following steps:

  1. Lodge an application with your Council for a resource consent for the subdivision.Your surveyor or planner normally prepares the Council application. The Council grants its consent on the basis that you must satisfy certain conditions – for example, pay the Council financial contributions, provide for services to the new titles, form roads, entranceways and rights of way.
  2. Arrange for the physical survey work and other work required to satisfy the Council conditions.
  3. Apply to the Council for the s 223 and 224 certificates. These certificates confirm that the Council’s conditions have been satisfied and allow the new titles to issue.
  4. Lodge the documents with LINZ (Land Information NZ). The survey plan must be approved by LINZ and the s 223 and 224 certificates and other documents lodged with LINZ by your lawyer to enable the plan to deposit and LINZ to issue the new titles.

Subdivision is a complex process and problems and delays may occur. However, the right professional guidance can maximise value and minimise delays and problems to make subdivision extremely worthwhile.

 

Please email me at barbara.mcdermott@nwm.co.nz with your ideas for future articles.  Keep an eye out for next month’s column, where I will discuss another relevant rural legal issue.


Barbara McDermott is a partner of Norris Ward McKinnon, specialising in commercial and rural law.  With offices in Hamilton and Huntly, we have friendly, expert legal advisors ready to help you with your business and personal legal matters.   Find out more about us at www.nwm.co.nz