In our previous blog we explored key factors property developers should consider when undertaking pre-purchase due diligence. In this blog, we revisit some of those concepts with a particular focus on neighbour consents and approvals.
In our experience, neighbours will object to having a property development occur in their back yard. This is not surprising as even the most considered projects will impinge on previously enjoyed privacy due to newer higher density zoning rules being rolled out by various councils. Furthermore, all projects will have a certain amount of disturbance resulting from noise and dust during the construction period.
In most cases, neighbours have no say as to whether a project can proceed (so long as the development complies with relevant zoning rules). However, failing to undertake proper due diligence may result in you being entirely reliant on your neighbour to proceed with your development. If your neighbour refuses, it may prevent you from obtaining development funding.
Infrastructure and services
Identifying how a project is going to connect to surrounding infrastructure is a critical component of due diligence. Subdividing a property requires all newly created lot needs to be fully serviced – this includes the installation of water, wastewater, stormwater, power, telecoms, and fibre.
In an ideal world, these services will be readily available from the road frontage. In some instances, however, the closest connection points will be on your neighbour’s property. Naturally, you will not be able to access this infrastructure without your neighbour’s consent. Should they decline, at best you will be forced to consider other (likely more expensive) solutions to connect services to your site, or at worst you will be prevented from proceeding with the project at all.
In such instances where there are no viable alternative connection points available to you, you can make an application to council requesting them to undertake these works on your behalf. This application is made in accordance with Section 181 of the Local Government Act 2002. This is a long, protracted process whereby neighbours are still afforded a right of objection under the act. Should parties continue to disagree, then the matter will ultimately be heard before the courts. In our experience, councils are very reluctant to go down this route and we do not consider it a viable or cost-effective solution.
Shared rights of way
As infill developments have increased with popularity, issues relating to shared rights of way have become more common. A starting point for shared rights of way is to assume that you will not be able to subdivide the property (as of right).
Properties that have a shared ROW, typically have corresponding easements that grant the respective owners a right to access their property by crossing over the easement area. As a developer, the extent to which you can rely on an access easement to subdivide a rear lot will depend the increased burden on the servient land. If the neighbouring landowner claims that the use of easement is above and beyond its initial intended use, they may have a case to stop or prevent works from proceeding. At the very least, you may face a long-protracted battle through the courts costing time and money.
In addition, most resource consents will require you to upgrade the driveway and vehicle crossing – this will likely result in the ROW being blocked while construction occurs, breaching essential terms in the easement instrument.
Zoning & Overlays
Simply put, a property’s zoning will dictate what you can use the property for, and what you can build on the property. As a developer, a high-level understanding of relevant zoning rules will enable you to quickly assess (i) how many lots a site can yield, and (ii) potential typologies (both of which will inform revenue assumptions in your feasibility).
This is not something that should be taken lightly. Incorrect revenue assumptions will undermine a project’s profitability. It is important that expert advice is sought – both your architect and planner can give guidance around more complex planning rules such as: height in relation to boundary (HIRB), minimum set back and outlook provisions, and more.
In addition to planning rules, local councils provide data as to other special property features. This may include special character areas, flood plains, overland flow paths, erosion & slips, wind risk and subsidence, protected trees and more. Each of these special features will impact the developability of you project – for example, a property located in a flood plain may require you to raise the floor levels of a proposed building. Overland flow paths may dictate the positioning of certain build footprints. Erosion and slip risks may dictate a specific foundation design. As you can see, planning is a complex area that often traverses other area of expertise (such as engineering).
Site access & air rights
Small sites, or those with unusual dimensions should be treated with care – there will likely be technical challenges that need to be resolved when it comes to access and construction methodology.
This includes addressing how plant, equipment and materials will be delivered onto the site and how they will move around the site during the construction period. Keep in mind that you need to operate within the boundaries of your property at all times.
High density apartment developments that require a tower crane need to consider neighbouring air rights. The crane will need enough room to operate and maneuver without crossing over neighbouring boundaries. Health and safety aside, breaching a neighbour’s air space (or ‘air rights’) is an act of trespass, similar to traversing over a neighbour’s land without consent. It is common for apartment development to buy air rights to operate a crane over neighbouring properties during the construction period.
Fencing
Fencing is a better understood aspect of development, and the Fencing Act clearly sets out who is responsible for what when it comes to installing a boundary fence. As with any works on neighbouring land, both parties need to agree as to what is to occur. Best practice is to engage with your neighbour early to ensure that you have enough to work through the process should the parties not be able to agree to form of boundary fence.
Of note, the cost of installing a new fence is to be shared between you and the neighbour, on the basis that the proposed fence is “reasonably satisfactory” for the purpose it is intended to serve. Legal arguments aside, we are of the opinion that the developer should bear the brunt of the cost for the upgrade – after all, they developer can expense the cost and will also be making a margin on the product. This is a small price to pay for the inconvenience and disruption caused to the neighbour during construction.
Agreeing to pay for the cost of a new fence, can be an effective negotiation tool to get the neighbour to agree to the form of fencing that is to be erected. If you cannot reach an agreement then there is a formal process that can be followed which involves; issuing a “fencing notice”, and if agreement cannot be reach; mediation, arbitration and formal legal proceedings may follow. As a developer, the aim should be to avoid lengthy legal disputes at all costs.
Tips to avoid your project stalling
- Avoid situations where you are reliant on a neighbour’s consent. In our experience, neighbours are not naturally inclined to work with you. As they see it, they will be better off without the nuisance of development occurring next to them. Those who are willing to work with you, will likely require compensation.
- Should your neighbour agree to works occurring on their land ensure that it is correctly documented. Standard form agreements/consent forms provided by councils are not sufficient (primarily because they are revocable). Formal neighbour agreements should:
- identify what work is to occur, when it will occur, and who will be undertaking it;
- provide the developer a time to undertake work during which the consent is non-revocable;
- require the neighbour to notify any successive owners of their property of your agreement, such that it remains enforceable even if they sell the property. This covers you in the event your neighbour sells, and the new owner is less agreeable to works commencing.
- Even though council may have approved a resource consent, engineering plans or building consent does not mean that you have a right to undertake work required if said consent requires work on, under or above someone else’s land. We have seen many a consent that cannot be practically delivered.
- Any works set to be undertaken on neighbouring land should be done first. Neighbours who were once amenable tend to change their mind when they realise the size and scale of the development that is due to occur next to them. For example, complete the drainage before commencing other works.
- While many disagreements between neighbours can resolved through the courts, the main factor to consider is time. Even when you are legally within your rights, the time it takes for you to achieve the desired outcome should be a key factor when deciding what course of action to take. As a developer, you will continue to incur holding (finance) costs and long drawn-out court battles can quickly erode any project margin.
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