New planning rules allow smaller sections which suit townhouse builds.

The housing landscape in New Zealand is constantly changing, and over the last few years it is increasingly noticeable with infill housing taking a more prominent part in urban centres.

With an encouragement of density and new planning rules to allow this, houses in suitable locations are being subdivided into smaller sections or replaced with new homes and townhouses. This has many people looking at what opportunities may be available for land they own.

If you own a property with land and are considering whether there are future options with your site, here are some initial questions to ask yourself to help get you started and determine if this is right for you.

IS IT POSSIBLE?

Not all land is zoned for greater density. The first step is to determine if planning rules allow development and if it can physically be undertaken on your site.

Key items which may determine this are:

ZONING: Local planning rules will determine if higher density development is allowed where your property is located. Councils will have planning (or zoning) maps identifying where development is permitted and encouraged, and what they are trying to achieve within these areas

INFRASTRUCTURE: There are several key items required to develop a site to allow it to be serviced for its lifetime. The key services being water, wastewater, stormwater, electricity and telecom/fibre. In urban developments these are typically serviced by publicly-owned assets, so you may be constrained to what is available or required to pay to bring these services to your site.

SITE SPECIFIC FEATURES: Even with the above items in favour, there may be features on your site which will make development impractical or unfeasible. Consider the site contours, site shape, areas which may flood, overland flow paths, areas near waterways, protected trees and vegetation. You will need to ensure there is access to the site and building platforms, and identify any areas of instability.

Much of this information is available online from your local council. You can also receive free desktop input from council planners at this early stage to answer some initial questions.

Your local council’s online resources will help you decide if your development plans are feasible.

It’s key to consider all potential costs and to make sure your end result is an increase in your site’s value.

IS IT FEASIBLE?

While it may be technically possible to develop your site, the next key question is if it is feasible. Or more simply, is it worth it? You want to be certain that if you go through this process that on completion you will be better off than when you started.

A simple way to do this is to prepare a feasibility spreadsheet. A feasibility is like preparing a budget with every cost item included, but also includes the market value of land you start with and forecast values on completion. The goal is for the end value of a development to be greater than the current value of your site, plus all of the costs to develop. These costs include the physical site development, consultants, consenting, development contributions, finance and holding costs, allowance for your time, a contingency and a margin.

You also want to be certain that if you start this process you can complete it. Subdividing and subsequent construction of new homes is expensive and this alone rules most people out from undertaking it themselves. You need to be comfortable in having finances or lending available to complete the project as your property
will only achieve its full value once the development is completed.

‘In reality there are a lot of decisions and input needed into every step’

SHOULD I INVESTIGATE?

The above is a very high level and simplistic view of evaluating your property for development. In reality there are a lot of decisions and input needed into every step. And there are varying design solutions and development outcomes you could choose from for any site. Going on this journey is a personal decision based on your situation and overall goals for your property and portfolio, as well as your risk appetite and available finances.

Take the time to evaluate your goals in detail, weigh up the risks, and also consider alternative strategies outside development to achieve this. This evaluation is best done at the start of the project, but a good practice to regularly undertake.

NEXT STEPS

High-level desktop investigations can be done fairly easily and affordably, but taking the next step with design and site investigations does start costing money. As you progress development costs quickly start adding up, much of which cannot be recovered if you do not complete the development.

If you think your site and financial feasibility work to develop, get some professional advice. Developing requires a team of experts to be involved: planner, designers, engineers, lawyer, accountant, contractors, etc., so as you progress seek the right input. You want to remove or manage risks and assumptions as you progress with a project. There are also many exceptions to the standard case and items to consider which are not included here.

Developing is not for everyone, as you expose yourself to much greater risks. However, it does allow you to achieve a specific outcome on a property you may own. And with a good vision and management of the project you can achieve greater financial gains in the process. Do not rush the early steps in evaluating, costing and
research … go in with your eyes wide open and be realistic. Seek input from those who have expertise, and get professional advice throughout the journey.