Property Development Archives

Property briefs

November 7, 2023

First Home Partner scheme: on pause

The coverage of the First Home Partner scheme has been extended, but its availability is currently on pause.

The scheme appears to be a victim of its own success. In late September, Kāinga Ora announced that it is no longer accepting applications as the scheme is now full.

As part of government assistance for first home buyers, the First Home Partner scheme was established to bridge the gap if you are struggling to save a full deposit. As long as you meet eligibility criteria, including being financially able to make the mortgage repayments, Kāinga Ora can pay additional deposit funds up to the lesser of 25% of your home’s equity or $200,000. In return, Kāinga Ora becomes a co-owner until you repay its contribution.

Since August, the scheme has covered purchases of existing homes instead of being limited to new builds. The eligibility criteria were also extended to allow households with a total income up to $150,000 to apply (the previous limit was $130,000) and joint purchases by whānau groups of up to six people who normally live together.

The scheme may reopen in time as Kāinga Ora works through existing applications; we recommend you ask us or Kāinga Ora about the scheme’s availability if you are interested in applying.

Council delays for property developers

Subdividing off the back section or otherwise developing your property may seem like a way to ‘get rich quick’; but be prepared for a long process.

Resource and building consents have never been an overnight job. The last few years particularly have seen developers face significant delays for reasons varying from staffing shortages to larger numbers of consent applications. In some areas, councils have struggled to meet mandatory timeframes for processing applications, with some taking many months longer than expected. The extent of ongoing delays differs from council to council, depending on current resources and the number of other developments underway in the area.

Regardless of your local situation, preparation remains key. A detailed application can help avoid additional information requests from the council that may cause delays. If you are undertaking any land development, do talk with us about the process involved and, particularly, the current timeframes so you can get a clearer measure on how your proposed development might progress.

Short-term accommodation – take care

As the summer holidays approach, the lure of offering a spare bedroom or sleepout on websites such as Airbnb or Bookabach to earn extra money is tempting. You should take care, however, to ensure you are aware of the rules around offering short-term accommodation.

Some of the constraints include:

Resource consent: The extent of council restrictions will depend on the rules applying where your property is located. Some councils require a resource consent where your property is let out for more than a certain number of days or for a certain number of guests per year.
Other restrictions: Properties with a body corporate, title covenants or a mortgage all may be subject to restrictions around letting the property for short-term accommodation. Likewise, if you are a tenant, both commercial and residential tenancies are usually subject to limits on how the property can be used or sublet.
Tax: Depending on your situation you may need to pay both income tax and GST on the revenue. Further information can be found here.
Insurance policy limits: Check with your insurer that your policy will cover you letting the property.

In addition, you should ensure the booking site’s terms and conditions suit your individual circumstances; their T’s and C’s are not all the same. You should also check they include all obligations you might expect of a guest as they will form the main part of your agreement with these visitors.

To help avoid penalties or other legal disputes, we strongly recommend that you consider these points well before listing your property. If necessary, talk with us and your accountant to ensure you are not inadvertently breaking the law and to ensure your guests have a good experience.

Election impact on property issues

The election’s outcome is set to determine the future of many property issues, such as the fate of the recently passed Natural and Built Environment Act 2023 and the Spatial Planning Act 2023 as well as policy around foreign buyers, property tax rules and public housing.

At the time of writing, the election results have yet to be formally confirmed, but we will keep track of any developments and provide a fuller update in later editions. In the meantime, if you have any questions regarding the effect of government policy on your property plans, please do contact us.

DISCLAIMER: All the information published in Property eSpeaking is true and accurate to the best of the authors’ knowledge. It should not be a substitute for legal advice. No liability is assumed by the authors or publisher for losses suffered by any person or organisation relying directly or indirectly on this newsletter. Views expressed are those of individual authors, and do not necessarily reflect the view of Edmonds Judd. Articles appearing in Property eSpeaking may be reproduced with prior approval from the editor and credit given to the source.
Copyright, NZ LAW Limited, 2022. Editor: Adrienne Olsen. E-mail: [email protected]. Ph: 029 286 3650

Subdivision consents

June 6, 2023

Amanda Leahy

Commercial, House, Property, Rural

Recent changes to planning rules

In the Autumn 2022 edition of Property Speaking we discussed different types of resource consents. Since then, the government has released a new National Policy Statement for Highly Productive Land (NPS-HPL), which you can read here. The purpose of the NPS-HPL is to ensure that highly productive land is protected for use in land-based primary production, both now and for future generations. Councils are now required to consider the need to preserve highly productive land when determining any application for a subdivision consent.

Subdivision consent

If you want to change the size of your section by purchasing some of your neighbour’s property and merging it with your own (a boundary adjustment) or you want to split your property into additional property titles, then you will need subdivision consent from your local council.

Requirements

Your region’s district plan sets out the requirements that you must meet in order to subdivide your property. In addition to the requirements being different between regions, the requirements are also different depending on the zone in which your property is located. Properties are divided into zones that consider the standard characteristics expected in that area. The zones are:

Residential
Commercial/retail/town
Industrial
Rural lifestyle
Rural production, and
Special purpose.

The names of the zones may differ between regions but there will be a zone for each of those standard characteristics.

Conditions

Consent for your subdivision is likely to come with conditions. Your local council may also ask that part of your property is transferred to the council; this is known as ‘vesting.’ Sometimes the council will pay you for that land but other times it will form part of your development contribution.

Areas around waterways may be taken for an esplanade reserve or esplanade strip, whereas areas of land that will become roads may be taken for road reserves.

The council can also require that new subdivisions have certain design specifications which are dictated through the district plan; these are recorded on the property title in a consent notice.

Affected parties

Where your subdivision is not a permitted activity, or it does not fit within the standard requirements for a subdivision in that area, the council may still grant you consent on a ‘notified basis.’ This means that it provides notice to affected people who can then raise any concerns with your proposed subdivision within a specified time.

The council may add further conditions to the development or even refuse the consent depending on any concerns raised.

Highly productive land (HPL)

In addition to the prior considerations that councils had to consider, since 17 October 2022, they now must map the land within their region to determine if it is HPL. In general, land will be mapped as HPL if it is:

In a general rural zone or a rural production zone
Predominantly within an area with a Land Use Capability class of between 1–3. A helpful map shows the current class of land within New Zealand here
Not identified for future development within the relevant district’s district plan as at 17 October 2022, and
Forms a large and geographically cohesive area.

Councils have the next three years to remap all the land within their region. Until that mapping is completed, all land will be treated as HPL if it falls within categories 1–3 above.

Most of the Land Use Capability class 1–3 land is within Northland, Auckland, Waikato, Bay of Plenty (between Tauranga and Whakatāne), Taranaki, Manawatu, Canterbury, Otago and Southland, although there are smaller areas of class 1–3 land throughout New Zealand.

If you are applying for a subdivision consent, your local council will consider whether the land is HPL and, where it is, it will be much more difficult for you to obtain a subdivision consent.

Since the NPS-HPL came into force on17 October 2022, it has caused problems for landowners who had subdivision consent applications for land within class 1–3 areas pending on that date. Councils had to reassess applications taking HPL into account. This, in some cases, resulted in consent being refused.

If you are thinking about subdividing your property, especially in a rural zone, do talk with us and your surveyor early on. We can discuss the specific planning requirements that now apply to your property and help assess whether your subdivision is likely to receive consent before you proceed any further on the development.