X-Lease or Subdivide?

[FreezingandHot]

Hi

There is a section of land at the back of a friends house that I think could be used for another House or minor dwelling. What is the best way in which to part the title of the property. Is X-lease cheaper therefore better than subdividing the property, or is subdivding the best way to go? I know it can cost at least $30,000 to subdivide not to mention land purchase, house construction and other expences.

I have finance to buy existing houses but thought this would be a better way to get a greater yield.

Has anyone done this recently that could make my option a little more clearer.

Regards

FH.

[Dean@Massiveaction]

Assuming in Auckland probably more like 60K to subdivide by the time you've finished. If in Papakura you need current section to be over 800sqm or you can't do it. MAy be big enough for a MDU but that doesn't help you unless you buy the whole property.

[FreezingandHot]

Hi Dean

Yes I was told by an agent yesterday that 800sm was the min size, what about applying to the council for a special permit if the size of the land is less than 800sm.

FH.

[Dean@Massiveaction]

Generally speaking don't waste your time. Talk to Chris kitson at Barry satchell if you want a professional opinion 630 4296

[casacamo]

Crosslease (X-lease) has mostly been phased out in favour of sub-division. This is mainly because of legalities of having to consult and get approval over the other property owners. The rules (council district scheme are basically the same. and therefore costs are the same, and yes, they do sock you for a reserve contribution, based on the value of the land. This is suposedly to allow they to buy up more land for public reserves etc.

Casacamo

[FreezingandHot]

Hooray more costs to add to the total.

I am investigating the viability of this deal to uncover the true costs.

FH

[nzfrazer]

FH, here are some real figures from a place we are subdividing and going to build on in auck at the moment. council fees have increased greatly over the past couple of years, so do yr homework b4hand.

ACC = Auck City Council

ACC Subdivision fee $940
ACC drainage plan approval $462
ACC Survey plan approval $235
ACC Completion Certificate $462
Engineers fees (drainage + subdivision) $5000
Surveyors $4000
Geo Tech report $1700
Reserve Contribution $22,000 (this is council's nice little tax based on a $360,000 section valuation).

Add onto this holding costs, architect drawing plans, etc, you are looking at serious $$$. This particular site is not straightforward, so you could lower most of these costs for developing an easier site. But then again like the RE agents tell me over and over "all the easy ones are done!".

Be aware also, that you are at council's whim - if they say you need a geotech report like they did in this case, say goodbye to another couple of grand.

Oh and they delays in getting approvals can vary. Supposed to be 10 working weeks, but our approval took about 3 months from memory. Kept ringing them to be told "we are understaffed".

Not to mention they came back with a list of issues that we had to rectify (such as geotech) before re-submitting and finally getting approval = more delays.

Another thing is to be aware of are site coverage ratios, you cannot have more than x sq metres impermeable surface area - have to have x amount of the site in gardens, lawns etc to comply with stormwater runoff rules. This along with height to boundary ratios can restrict what can be built on the subdivided section.

Oh and great website, been following since 2004, never got round to posting.

[Heg]

We are in the process of subdividing in Papakura on a section that is less than 800m2. To do so we need resource consent.It is also situated in a flood plain so we have had to get a flood report done for the council ($5000 on top of all other surveyor and engineering costs)
Will post a final breakdown of costs when we are done.

[helpmehelpyou]

this is all you need

easiest way to explain.. refer link;

http://unlimited.net.nz/unlimited.nsf/unid/A23D26548CE7A716CC25701B007A0E20

a minor dwelling is the best way to go. but do your figures first to verify minimal return.

regards,

David

[FreezingandHot]

David

As I do not own the front house is a minor dwelling still the best option, can I rent this out as separate?

FH

[helpmehelpyou]

no you cant. a minor dwelling is a second dwelling on 1 title.

maybe you could come together with your friend who owns the property and purchase the property under a trust which will put you and your friend under part ownership of the whole property. your part of the deal could be to build, service and rent the minor dwelling. You would have to agree with your friend a cost for your portion of the land etc.. added costs to any normal minor dwelling development would be that to set up the trust between you and your friend.

i wouldnt advise this unless you absolutely trust your friend.

regards,

David