If you own a home with land space to work with, there are a couple of options to develop your property and significantly increase earning potential from your assets. Building a minor dwelling and subdividing are both profitable ventures to be considered, especially if you live in the Auckland region, where this is promoted and encouraged through the Auckland Unitary Plan. The method you choose depends on your goals and plans for your property.
Building a Minor Dwelling
Adding a minor dwelling will allow you to rent out the extra home on your property and earn an income from tenants. For the most part, this is commonly done in the ‘granny-flat’ style, and your land will remain on the same title – just with two houses on it. This method of land development will require less financial investment than a subdividing strategy and will provide a long-term avenue of generating earnings from the added space.
Minor dwelling additions are generally favored by those that do not have the resources to go through the considerable process of subdividing a property but still have space on their land to benefit from. While the investment may be smaller than the alternative, there will still be a substantial cost. Depending on your location, section, and strategy with a minor dwelling addition, there may be the risk that this venture won’t add justifiable value to your property. This is usually the case with those looking to sell their property shortly, as minor dwellings are generally most profitable when proposed for tenancy.
Challenges When Adding a Minor Dwelling Include:
- Gaining Resource Consent
- Foundations and land work
- Building and labour expenses
- Ongoing maintenance
Subdividing a Section
Subdividing land is an option that will allow you to separate your property into two unique titles; At the same time, it is generally the most profitable venture you can take; it will require significant financial input. Property owners across New Zealand, particularly in Auckland, have benefitted from the move to subdivide their section.
Subdividing is usually favored by property owners looking to sell the two titles upon completion. Separating a property into two sections will increase the overall capital value of the land. While it’s not always easy and will depend on how your home is zoned, it is a way to improve the resale value of a property vastly. Once you have followed through with the subdivision process, you have the further option to add a minor dwelling on the second title, opening up further earning potential.
Considerations Before Beginning the Subdivision Process Include:
- How your property is zoned by your local council
- Whether you are planning to sell or not and, if so, the time frame between your developments and when your property goes on the market
- Your budget and the estimated price for the entire process. Make sure to take everything into account to ensure that your efforts are worthwhile.
Adding a minor dwelling or subdividing a section are viable options for all homeowners with space on their land. For some areas, physically moving the original home on the property may be necessary to free up space and create a more functional area to work with. Both of these land development strategies will require significant financial and time investment; speaking with a property professional will help you make an informed decision about your asset.