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Home / The Country

Subdividing farm can unlock capital

By Mike Barrington
The Country·
22 Feb, 2017 07:59 PM4 mins to read

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Lifestyle block buyers may want enough land to run horses or a few cattle and sheep.

Lifestyle block buyers may want enough land to run horses or a few cattle and sheep.

Subdividing part of the family farm may be an option for Northland farming families wanting to unlock some of their farm's capital value without selling the entire farm to do so.

But, while subdivision can provide a profit, a good financial return is likely only with thorough planning and expert advice.

Bayleys Northland area manager Tony Grindle said the appeal of subdivision had never been stronger when put in context with the present extremely buoyant rural lifestyle market.

"Real Estate Institute of New Zealand sales data to the end of 2016 highlighted just how strong this market is," he said.

"Lifestyle blocks have taken a significant lift in value on the back of the buoyant housing market. There were 2191 lifestyle property sales nationally in the three months to December last year with their median price a record $583,000 - $33,000 higher than a year earlier."

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Mr Grindle said the extremely buoyant urban property market in most of the main centres was flowing through to the lifestyle block market, and in areas not always associated with strong property values.

Growth in the area north of Warkworth had resulted in small rural communities like Maungakaramea, Mangapai, Hikurangi and areas of the Kaipara benefiting after years of languishing.

Subdivision opportunities were arising on farm land around these centres thanks to an influx of people seeking cheaper housing or rural lifestyle opportunities within a two-hour drive of Auckland's boundaries.

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But Mr Grindle said the old days of just chopping off a few corners from the periphery of the farm were no longer viable.

He urged land owners tossing up about subdividing some of their property to seek good advice before even turning the first sod or spending the first cent on their project.

"Good advice before embarking on a subdivision project is vital, and while it may cost something up front, the returns for doing it properly make it a really viable choice for landowners looking to maximise the returns from their subdivision," he said.

Whangarei planning consultant Ian Bentley agreed there was more to farm subdivision than simply "chopping off a section for a house".

"Basically, when I first talk to farmers about subdivision I get them to tell me what they would like to see happen and I explain whether their concept would be easy or difficult to carry through in terms of council rules and then I give them an idea of the costs involved," he said.

There could then be a debate about the size of the proposed subdivision.

Mr Bentley said a farmer might think an acre or two would be adequate, but most people aiming to set up home in the country wanted enough land to run a couple of horses, cattle or sheep.

"Also, if a subdivision is 20ha or more it currently requires only council approval, but if it is under 20ha it becomes a discretionary activity needing approval from neighbours," he said.

"It gets complicated as council rules change. The Whangarei District Council is bringing in new zoning at present and this will bring changes to planning regulations."

Councils could require engineering reports to approve subdivision building or roading.

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If the property to be subdivided had been an orchard sprayed with herbicides or had contained a sheep dip there could be issues to be settled to ensure ground contamination would not affect human health.

Mr Bentley said a thorough site investigation was essential. While rarely stopping a subdivision in its tracks, engineering reports or the discovery of contaminated soil could add considerable and unforeseen costs to a project.

"Subdivision is not simple and it's not cheap," he warned.

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