Subdivisions are a common feature in property development. The subdivision process is where a parcel of land is divided into one or more parcels. When complete, a unique Record of Title will issue for each new parcel of land.
In our experience, some of the most common issues in development pertain to an inability to obtain titles (linked to your subdivision consent) or Code of Compliance (which is linked to your building consent).
In this blog post we look at some of the more important stages of the subdivision process to highlight and hopefully mitigate critical risks associated with the process.
Council Planning Rules
The zoning rules set out in a council’s Unitary or District Plan (such as the Auckland Unitary Plan) will dictate how a given property can be used or developed. These rules stipulate whether subdividing your property is a permitted, controlled, restricted discretionary, discretionary, non-complying or prohibited activity. Each zone has slightly different rules and design guidelines that must be met for you to subdivide your property.
For example, different zones will have varying requirements for a site’s density, lot sizes, vehicular access, and more. This process is managed through the Resource Consent Application.
The two main types of consents associated with property development are (i) a Land Use Consent, which will allow you to undertake a type of activity on your land, and (ii) a Subdivision Consent which allows you to subdivide the property into separate parcels. A land use consent and a subdivision consent are two separate consents; however, they can be applied for together as a bundled consent.
The RC application involves preparing plans and consultant reports that validate the proposed design and its impact on the wider environments. Common reports that support an RC application include an AEE report (Assessment of Environments Effects), Geotech reports, Traffic reports, Engineering reports and more.
In this respect, engaging the right consultants and taking time to plan and validate your project carefully before lodging for consent will ultimately save you time and money. Skilled planners and architect’s will have in-depth knowledge of RMA planning rules and regulations. They should be able to prepare designs in such a manner that gives your application a high chance of getting approved.
Obtaining consent for your project – without dramatically changing the initial design will ensure that that assumptions made when preparing your feasibility study will hold true. If council forces you to change your plans, it may compromise the viability of your project. For example, if you can only build five houses instead of six, it will impact your project feasibility. This risk is known as consenting risk and one of the reasons non-bank lenders lend more conservatively against (development) properties that do not have an approved resource consent in place.
Section 92 Response
Once an RC application is submitted, council will review the information provided. They will then likely issue a Request for Further Information (RFI). This RFI process, known as a Section 92 (s92) request, is where council seeks additional information to identify any potential adverse effects on the environment from the proposed activity (should they issue the consent). Your consultants will then file a response addressing their questions and countering their concerns. A s92 request is a significant milestone as it provides insight into councils view on key issues and ultimately the likelihood of the consents approval.
Draft Conditions & Final Approvals
When council is satisfied with a resource consent application, they will the issue draft conditions. These will ultimately become the final conditions that will have to be satisfied for to you give effect to your resource consent. In this sense it is an important opportunity for you and your consultants object to any conditions that are unreasonable or overly onerous.
Most consent conditions will pertain to ensuring that the work is completed in accordance with the plans submitted to council, and that upon completion of the project all the additional lots are fully services and connected to local infrastructure.
Skilled consultants will know those conditions that are reasonable, and those that are not. Unreasonable conditions and additional compliance can quickly escalate a project costs and result in delays during construction.
EPA and Building Consent
In addition to your RC, you will require other council approvals before a project can commence. For example, in Auckland, most development will require an Engineering Plan Approval (or “EPA”) that permits engineering works to be undertaken for critical infrastructure (that will ultimately vest with Council or other government bodies such as Watercare). This typically relates to infrastructure that will become ‘public’ and under the control and responsibility of Council however it can also include items like retaining walls and vehicle crossings.
The final piece of the puzzle is Building Consent which applies to the structure. All building work in New Zealand must comply with the Building Code (with very few exceptions), hence almost all projects require a Building Consent.
While Building Consents are commonly associated with dwellings; retaining walls and other structures may require a separate Building Consent – such items may be linked to your EPA and therefore the underlying subdivision.
Physical works, S223 & S224(c)
A subdivision consent alone does not give you new records of title. To apply for new titles through Land Information New Zealand (LINZ) you first need to obtain Section 223 and Section 224(c) certificates (as referred to in the RMA.
As previously mentioned, your subdivision consent will have several conditions that need to be satisfied – such conditions are broken into two parts.
- Conditions you must complete before a Section 223 certificate can be issued, and
- Conditions you must complete before a Section 224(c) certificate can be issued.
S223 conditions relate to the preparation of the subdivision scheme plan and associated legal documents (such as easements or land covenants) that will be endorsed on the survey plan (and title).
This work scan be undertaken with minimal to no physical works been completed on site. This should be undertaken as early as possible to prevent delays with obtaining titles.
Applicants have five years to lodge a Survey Plan with Council. This plan is a detailed plan prepared by a registered surveyor showing the boundaries, areas, and if relevant any easements and covenants that need to be prepared. If the plan is in accordance with what was approved by Council as part of the subdivision consent, then a Section 223 certificate approval will be signed.
Once this has been signed by Council the plan may then be lodged with Land Information New Zealand (LINZ) for approval.
Section 224(c) conditions pertain to completing physical works on the site. These conditions commonly relate to the installation of services and infrastructure to each (wastewater, stormwater, power, fiber etc.). The newly created lots will also need to have accessways formed.
Understanding what work must complete before you can obtain 224c is very important. It can inform decision around the construction programme and how you chose to deliver your project. For example, you may decide to install all the services and pour the driveway before commencing the vertical construction to ensure that title delivery is ahead of Code of Compliance.
A Section 224(c) certificate is a final approval from Council relaying that all conditions of the subdivision consent have been complied with and all works are complete. A s224c application will set out each condition of the approved resource consent and have commentary as to how compliance has been achieved. This application should be accompanied by the relevant 224(c) certificate for signing.
Processing times of s223 and s224(c) certificates vary but sometimes it can take months to issue. Council officers and engineers may need to undertake further site inspections or require additional documentation; hence most delays associated with titles occurs at this stage.
As is always the case in development funding, delays at a project’s end will be more costly. This is because you will be near fully drawn on a construction facility incurring significant holding costs. This is why skilled developers place great weight on obtaining titles early. Lastly, before you can uplift your s224(c) certificate, you will need to pay any development contribution as required by the council.
Once you have the s223 and s224(c) (with any easements, consent notices etc.) you are all set to lodge for titles. This is done through LINZ who will process the information and issue titles for the newly created lots. This process is not done through council and is a separate application process. In our experience, LINZ processing time can vary between 5 to 40 working days. Yet another reason to obtain titles early.
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