Subdivisions: Subdivision Services and Partnerships

Subdivisions - Partnerships and Services

Subdivision is an excellent way of unlocking the additional value in the land you own whether it is a single residential house lot, or a larger acreage site. However it is a costly, time consuming and often frustrating procedure that waits to trap the inexperienced.

Thanks in no small part to the ill-thought out Resource Management Act, lengthy and costly delays caused by often understaffed local councils, the number of different consultants often required to be employed, and much smaller percentage of purchasers that are willing to buy a bare, newly subdivided development site, the subdivision of even a single house lot can often take 12 – 24 months to complete and sell, and can cost in excess of $100,000.

On Auckland’s North Shore alone, we are aware that there are many residential properties that have yet to be sub-divided. In most cases it is because the owners do not have the time, the expertise or the funds available to them.

This is where we can provide a solution.

If you own a property, irrespective of whether it be a single residential property or a much larger piece of land, we might be prepared to enter into an agreement with you which will see us carry out all of the work required to sub-divide your property, pay for all costs, and remove all of your risk, on the basis we have a share in the profits upon the sale of the newly subdivided site(s).

How does it work?

It's quite simple. If after having viewed your site we believe that it is feasible to subdivide, we would enter into a written agreement with you which would see us prepare the Resource Consent Application along with the all of the reports and documentation required to accompany that Application. We would cover and pay for all of the costs associated with not only the preparation and processing of the Resource Consent Application but also all of the work required in the completion of the subdivision, including any construction work and installation of services, and issuance and registration of the new land titles. All legal costs and valuation costs are included so as to ensure that you do not need to pay for anything.

Upon completion of the subdivision a formal valuation will be obtained from a mtually agreed to independant registered valuer, and the newly created sites will be made available for sale at that price. Upon the sale of the newly subdivided sites, we will be repaid all of the costs incurred in the subdivision, and the remaining proceeds from the sale will be split between yourself and ourselves on a ratio that shall be determined and agreed to in the written agreement. This formula provides for a win-win opportunity for both parties.

How do we remove your risk?

Your risks are removed by the fact that we pay for all costs associated with the subdivision to the extent that you are not required to pay for anything whatsoever. Furthermore the title to the newly subdivided sites are issued in your name and the entire process and procedure is documented in a written agreement between yourselves and ourselves before any work is done.

How do we minimise our risk?

We minimise our risk by requiring that the newly subdivided sites are sold within 60 days of being placed on the market, and in the event that the the new sites remain unsold after that length of time, we shall have the right to purchase the site ourselves on "builders terms" at for the amount provided in the formal valuation.

"Builders Terms" are best described as a situation where we enter into a formal purchase agreement to buy the site, but pay for that purchase after the completion of construction of a new house on the site. We suggest this solution because the number of people willing to purchase an empty site is generally much less than the number of people that want to buy a new house. The ownership of the site remains in your name until the amount detailed in the purchase agreement is paid in full.

How does the profit share work?

The profit share that we seek generally ranges anywhere from 20% to 50% of the net proceeds from the sale depending on the the amount of time and work involved, the number of new sites created by the subdivision and the value of those new sites. Generally, the greater the value of the new subdivision, the smaller the percentage we seek.

How much work is involved in completing a new subdivision?

To give you some idea of the considerable amount of time and work involved in subdividing off even a one house site, please take a look at our Resource Consent and Subdivision Check List.