What costs should I budget for when subdividing?
A subdivision can involve several different professional, Council and development costs.
Surveyor's fees
Your surveyor is likely to be one of the first professionals involved.
Surveying costs can vary depending on factors such as the size of the property, terrain, complexity and number of new sections being created.
The surveyor can also help establish whether your proposed subdivision is feasible before you progress too far.
Council fees and contributions
Obtaining the necessary Council approvals can involve application fees and other charges.
Depending on the subdivision and location, development or infrastructure contributions may also apply.
These costs can form a significant part of the overall subdivision budget.
Infrastructure and development costs
Creating a new section may require physical work on the property.
This could include:
- driveways and access
- water connections
- wastewater
- stormwater and drainage
- power and other utilities
- other infrastructure required by the subdivision consent.
The amount of work required will depend heavily on the individual property.
Legal fees
Your lawyer assists with the legal aspects of creating the new section or sections.
This can include reviewing the existing title and registered interests, preparing easements and other legal documentation, dealing with lender requirements and assisting with the creation of the new titles.
The legal cost will depend on the complexity of the subdivision and the work required.
LINZ and title costs
There are also costs associated with lodging the necessary documentation with
Land Information New Zealand and creating the individual titles for the new sections.
Accounting and tax advice
Depending on what you intend to do with the newly created property, you may need accounting or tax advice.
For example, if you intend to sell or transfer a newly created section, there may be tax implications depending on your circumstances.
Getting advice before proceeding can help ensure these considerations form part of your overall financial planning for the project.
Don't forget the unexpected costs
Subdivision projects don't always go exactly to plan.
Site conditions, additional infrastructure requirements or other issues identified during the process can result in costs you hadn't initially anticipated.
Building a
contingency fund into your budget can give you some room to deal with unexpected expenses.
Don't spend too much before checking feasibility
This is an important point that can easily be overlooked.
Before committing substantial money to a subdivision, you need to know whether the project is actually feasible.
The due diligence required to establish this can itself cost money, and there is always a possibility that you'll discover subdivision isn't possible or won't work in the way you expected.
Starting with a surveyor can help identify potential issues early.
Is subdividing financially worth it?
The fact that your property can be subdivided doesn't automatically mean that it should be.
You need to weigh the potential value of the new section or development opportunity against the total cost of creating it.
That means looking beyond the obvious expenses and considering the whole project, including professional fees, Council costs, infrastructure, financing, legal work and potentially tax.
The earlier you understand those costs, the better placed you'll be to decide whether the numbers stack up.
Want to understand the whole subdivision process?
We've put together an overview of the key steps involved, from assessing whether your property can be subdivided through to creating the new titles.
Subdividing Your Property in New Zealand: What You Need to Know →
If you're considering creating a section specifically for family, you may also find this useful:
Can I Subdivide My Property for My Children? →
Planning a subdivision?
Smith and Partners can assist with the legal aspects of your subdivision and work alongside your surveyor, lender, accountant and other advisers as the project progresses.
Talk to our
Property Law team
