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Subdividing Sunnynook

An experienced Auckland renovator is undertaking his first subdivision while wrestling with the challenges of Covid-19, writes Joanna Mathers.

By: Joanna Mathers

1 October 2020

Auckland Council Subdivision To Do List

1. Consult an engineer or a lawyer.

2. Have your property surveyed and get pre-application guidance if necessary and then apply for a subdivision consent.

3. If granted consent, there are likely to be conditions you will need to follow.

4. Once the consent is granted, submit a more detailed survey plan to us to get a s223 RMA certificate (your surveyor will help with this process).

5. Once the survey plan is approved, you can begin works. You must comply with subdivision consent conditions such as installing services (water, wastewater, power and phone), entrances and driveways.

6. Once all physical works required by the consent have been completed, apply for a s224(c) RMA certificate from us, providing evidence about how each consent condition was met.

7. Once you have your certificates and have paid all fees, lodge the subdivision plan and certificate with Land Information NZ (LINZ), who will issue the new Records of Title. Your lawyer will help with this process. A Record of Title is needed to sell each parcel of land separately.

Source: Aucklandcouncil.govt.nz

Subdivision isn’t a process to be taken lightly: it can be arduous, risky and extremely frustrating. There are multiple layers of complexity to navigate, and even before building takes place, you are likely to have spent six figures.

But Auckland property investor Jordan Duffy hasn’t shied away from the challenge of subdividing. And he’s done it in an intelligent way, sharing the burden of risk (and debt) with his wife, and another couple.

Duffy started his property journey in 2015, renovating and selling his first home building capital for future projects. In 2016 he struck a deal with a family member who owned a rundown rental property in Tauranga. “It had been trashed by the previous tenants and they were wanting to get rid of it, due to the amount of work that needed doing,” he says.

The property had a registered valuation of $550,000 prior to the renovation due to its poor state. Working with a friend, he travelled to Tauranga every weekend for 12 weeks to work on the home (while working a full-time job). The result was $80,000 spent on renovation costs, many long days of work ultimately selling at an early auction for $900,000, well above the expected sale price.

It was the start of an investment journey that would see him buy, renovate, and/or sell several properties, both for himself and for clients.

“Working for clients was a different beast in terms of pressure,”
he says. “I had to be available whenever they had a query, and I was working at the same time. To be honest, I didn’t enjoy it so much, when compared with trading.”

Duffy had set up a company with his father, for the renovations: “Dad was the money man and I vetted the properties; and looked after the renovation,” he says.

Joint Venture Opportunity

For his current subdivision project, he’s decided to work with a friend, a plumber, who he’s worked with on earlier reno projects.

“I approached him about the project. He was wanting to buy his first home, and we decided we could co-own the property together and complete the subdivision slowly, as we could afford to.”

The property they purchased is located in the popular North Shore suburb of Sunnynook. A 1970s fibre cement home on just over 1000m2 of land, it is zoned as mixed house urban, allowing them to split the site in three and add an extra two homes. The three-bedroom, two-storey home was purchased for $950,000, in June last year.

The original home was in poor condition and needed a bit of work to become liveable. Ultimately the intentionbis for the property to be fully renovated but this will not be done until the house is moved.

It is currently the home of Duffy’s property partners: “It’s been great, because it means they have their first home and can live here while the subdivision takes place.”

Consent Headaches

The consent process is notoriously fraught with frustration; this has certainly been the case for Duffy et al, when a “big stuff up” in one the consenting processes occurred.

“We were told by multiple people that the process should just take a few weeks. But this didn’t happen. Firstly, our consent was assigned to someone who no longer worked there; then it was given to someone who left halfway through. The whole process actually ended up taking seven months.”

There’s also been the challenge of Covid-19. Going in and out of lockdown has been a nightmare for trade work: tradies working on site were unable to access it for weeks at a time. Fortunately, having Duffy’s property partner living on site and paying for some of the holding costs has softened the financial blow.

‘We try to do as much work as we can ourselves: from painting to plumbing, kitchen installs to building walls’ JORDAN DUFFY

Now all consents have been granted and the earthworks are underway. “I have been able to cut costs significantly,” he says.

This has been done by removing the middle-man and managing the jobs himself.

“We try to do as much work as we can ourselves: from painting to plumbing, kitchen installs to building walls.”

He says that it’s incredibly important to get multiple quotes for any work. “You can save a lot of money by simply asking around.” He says it’s important to ensure the scope is also well defined, and you are always comparing apples-with-apples when it comes to quoting.

Next year he also hopes they will be able to move the new houses on site. They have decided that transportable homes are the way to go; this will cut costs, save time, and mean that much of the building consent process inspection occurs prior to the home being put on site.

They are aiming for three-bedroom, bathroom homes: “This seems to be the standard for this area,” he says.

They plan also to add an additional bedroom and bathroom to the existing home, turning it into a four-bedroom, two-bathroom dwelling. They are hoping to sell this home for $900,000, with the other two around the $800,000 mark.

They haven’t yet decided if they will sell or hold the properties for rent, once the process is nearing completion, they will make a final determination. We’ll check in with them next year see how their grand plan is progressing.

The Low Down

Builderscrack’s Jeremy Gray discusses the subdivision processes and professionals needed.

Typically a subdivision project requires several specialist, professional skill-sets, of which a suitably competent project manager would organise.

Typically the first contact would be a surveyor.

Consultants usually include:

· a suitably experienced and specialised surveyor

· a planning consultant

· an engineer

· a lawyer.

A resource consent is typically required for all subdivisions. Subdivision rules are dependent on the zoning of the land in question.

Not all lots are able to be subdivided, and not all subdivision projects guarantee a positive return. Engaging a suitably experienced consultant early in the process can reduce risk and save time.

With the planning and consent taken care of, typical contractors include:

· Earthworks;

· Drainlaying;

· key service installation including electric and gas

· paving/driveway

· landscapers

Interestingly, we have seen an almost doubling of management, surveying, planning and consent related jobs since Covid with particularly strong growth in the major centres.


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