Why develop instead of buying new?
When it comes to building or purchasing a dwelling currently within New Zealand, and more specifically Auckland, a large portion of the cost is in regards to the section and not the build itself. Greenfield sites ( Empty lots ) within the Auckland region generally start around $350,000 and often include restrictive building covenants.
If you live in Auckland and you have an existing home on a site larger than 600m2, then it is highly likely that you can develop this property further. As you will not be purchasing a new section and will only have development costs, you will make equity and positive capital gains on your investment that would be a lot higher than buying a greenfield site with a new house or even an existing.
We expect returns on investments to be around 6-10% per annum on average.
Can I develop?
Utilising the Auckland unitary plan, this has opened doors for a number of opportunities to develop your properties further, and for a smart and savvy investor this gives you the opportunity to generate better equity gains and rental returns out of your property.
The 3 common zones in the Auckland region are:
- Mixed Housing Suburban: You can develop up to 3 dwellings not limited to size, before resource consent is required, given that all other council requirements are met. While an empty lot can only be subdivided down to 400m2, this can go smaller if there is a dwelling going on the new lot as long as all requirements are met.
- Mixed Housing Urban: This is similar to Mixed Housing Suburban in regards to dwellings however these empty lots can be subdivided down to 300m2, but again, can go smaller if there is a dwelling going on the new lot if all requirements are met.
- Single House Zone: This zone can have one regular dwelling with the potential for an additional dwelling up to 65m2. To subdivide, each site must be a minimum of 600m2 excluding driveways.
While these are the 3 common zones, there are also other zones that do arise such as Rural zones, Residential terrace housing and apartment zone, Business zones etc. If your property falls under one of these zone please have a word with a planner or consultant as they often have specific council requirements.
How do I Develop?
If your property is located within one of the zones mentioned and you would like to explore the idea of generating a higher return on your properties, you will need to contact a planner or home consultant who has been trained to analyse developments and sites for you, let them do the hard work!
The top 4 things that they will need to know:
- 1. What is your goal for this development? What is the outcome you are hoping for?
- 2. If required, have you had a word with the bank to make sure that this is achievable? If not, finance will need to be discussed.
- 3. Your site address.
- 4. Have your Certificate of Title available when possible. This is so that any potential easements or covenants can be addressed.
If you would like to discuss unlocking your properties potential, feel free to get in touch today.
Kevin Smith and Joe Corban are home consultants that have worked on a number of projects ranging from Greenfield developments and secondary dwellings to the entire subdivision process. Keith Hay Homes has 80 years of experience with projects and developments. Being regular faces at the Auckland Properties Investors Association they are always happy to discuss investment opportunities and will be hosting seminars in the not too distant future.
Kevin Smith: 021 0857 2173 kevin.smith@khh.co.nz
Joe Corban: (09) 621 1675 joe.corban@khh.co.nz
