With many farmers in New Zealand feeling the financial pressure and with future forecasts looking grey, some farmers are looking outside the box as to what other options they have to ease their current financial burdens but still secure their future in the industry.
Some choose to get by reducing employed farm workers while others are reigning in personal expenses. An idea that hits the drawing board for many is subdividing and selling a portion of their land.
Farm owners that are sitting on large farms in desirable locations that wouldn’t be significantly de-valued, may consider this option, as an alternative to reliance on financial assistance from Banks, or the Government.
Subdivisions are governed by the Resource Management Act 1991 (RMA) together with any restrictions under the local Council’s District Plan.
Rural subdivisions fall under the Rural Environment Area with varying levels of activity permitted with the key objective being to preserve the natural rural environment as much as possible.
The question often asked is where I start and who do I talk to? Where rural subdivision is concerned, a number of professionals should be involved.
The size and nature of your subdivision will determine the involvement of each industry professional but you can expect to need advice from the following professionals:
- Accountant – You need to discuss the tax implications of the development with your accountant. They will provide essential advice around tax exposure on sale of subdivided lots, guidance around ownership structures and claiming expenses and will help you reach an assessment on the financial benefits of completing the development.
- Surveyor – The surveyor will be an important first point of contact to establish if what you want to achieve is possible and guide you through a Resource Consent Application.
They will prepare a draft plan setting out the development also referred to as a scheme plan which is later followed up with a digital title plan submitted to obtain new titles.
The surveyors will have a good understanding of the local district plan to ensure the submission to Council is realistic.
- Council – Acting on the receiving end of a Resource Consent Application the Council will review the recommendations of the surveyor to ensure they comply with the zoning and any restrictions surrounding the subdivision of the land, together with ensuring compliance with the District Plan and RMA.
They will impose any necessary conditions depending on the nature of land and location to things such as native bush protected water ways or other specific areas.
In consideration with the District Plan, the Council will also give approval on the minimum areas for the subdivided lots based on the submission by the surveyor.
Following completion and acceptance of Council protocols a Resource Consent for the development is issued.
- Lawyer – The lawyers are often seen as the link between each of the professionals. A lawyer will review Resource Consent Approvals to ensure legal compliance, prepare necessary documents to formalise conveying utilities or shared access in the form of Easements.
The lawyer will also obtain any bank or affected party consents and manage the process through to the point of new titles issuing. Often in conjunction with the subdivision process lawyers can also be documenting the sale of any lots subject to the issue of new titles.
It is essential that the industry professionals take a collaborative approach with communication between professionals encouraged to solve problems, achieve deadlines and achieve the best result for the farmers.
The content of this document is necessarily general and readers should seek specific advice on particular matters and not rely solely on this document.
If you would like more information on any of the topics in this document, please contact your usual Auld Brewer Mazengarb & McEwen adviser.