RSS Feed

Kevin Smith: To develop, or not to develop, that is the question

Thursday, February 20, 2020


At Keith Hay Homes we get asked this question on a daily basis. In truth, it’s one of the reasons we love this job so much. Don't get me wrong, property is a pretty rewarding game but seeing and being part of taking a property to its full potential is something else.

As a member of APIA, you will have had access to great material for how to manage your properties, but may not have thought about developing your property further. Why would you? For so long landlords have been able to get a decent amount of return from rents alone. But with the growing trend of increased compliance, more and more investors are pushed to explore different ways to add value and create new income streams. What if you want to maximise returns by adding a new dwelling? Where to from there?

A few things that we would look at to start:

Why develop when you can buy new?

When it comes to building or purchasing a dwelling in New Zealand, more specifically Auckland, a large portion of the cost is in the section and not the build itself. Greenfield sites (i.e, empty lots) within the Auckland region can start around $350,000 and often include restrictive building covenants.

If you own a property 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. You are not buying a new section so you are funding only the development costs. All things going to plan, you will make equity and positive capital gains on your investment that would be a lot higher compared to buying a greenfield site with a new house or even an existing dwelling. The average returns for this type of developments are area-specific and are typically between 6% and 10%.

Can you develop?

The Auckland Unitary Plan has dramatically increased the site potential of many properties. Now is the time for smart and determined investors to generate better equity gains and rental returns out of existing holdings.

The 3 common zones in the Auckland region are:

  • Mixed Housing Suburban: You can build up to 3 dwellings per site that are not limited on 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 council 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 council 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.

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 zones, have a word with a planner or consultant as they often have specific council requirements.

Find your zone: https://unitaryplanmaps.aucklandcouncil.govt.nz/upviewer/

How do you 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. How the project will be financed. If required, have you had a word with the bank to make sure that this is achievable? Finance will need to be discussed to ensure that the project is structured the best way for the desired outcome.
  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.

Development flexes different muscles for buy-and-hold investors. Your first few projects can be daunting. I would very much like to be part of your journey in any way I can. If you would like to discuss unlocking your properties potential feel free to reach out by emailing me at Kevin.Smith@khh.co.nz.



Kevin Smith

Kevin Smith is a home consultant that has worked on a number of projects ranging from Greenfield developments and secondary dwellings to the entire subdivision process. Keith Hay Homes has over 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 some events in the not too distant future.






Recent Posts


meth contamination property apprentice TCIT positive cash flow property cycle Gluckman winz holiday house watercare letting fee investment strategy fixed-term tenancy debt enforcement re agent maintenance airbnb meth cash-flow off the plan negotiation p lab property reserve bank speculator rent building trust interest rates twg report gluckman report Case study ocr rta reform equity rent arrears banking extractor fan buying Investment tip landlord Must know television Property (Relationships) Act auckland Must knows initio cgt trespass ask an expert ird market Jeff Bezos Level 4 minor dwelling insurance asbestos personal growth tenancy issues early termination property value khh sale and purchase management Guest blog financial advisers act wealth creation heater anti-social behaviour commerce commission warm up new zealand anz relationship Holler kiwibuild nzpif worksafe CCC barfoot and thompson data security privacy heating smoke alarm renovation beginner investor rental wof buying rules HHS market rent advice DTI subdivision legal inspection tenancy services sublease investor trademe scotney williams rental market How to shower dome tenancy tribunal first home buying cat finance Market report election 2017 auckland council ring-fencing house prices short-term rental housing bubble development property maintenance boarding house insulation education mindset Tribunal case study bond form Investor story HHGA recycling equity mortgage HSWA CoreLogic return opes partners Kris Pedersen Mortgages and Insurance unitary plan interest only RBNZ buyer's agent income parry v inglis rta skill shortage tenant election2020 business productivity lvr Standards New Zealand tax ventilation capital gain water bill LIM will principal and interest housing affordability Sponsored post termination RTAA 2019 Q&A bad tenant clnz damage Question and answer letting Editor's Choice rtaa2020 Landlording structure yield sale and purchas property management robert kiyosaki rent increase covid-19 warren buffett bond partners government wins


Introducing Our Partners
Principal Sponsor - Kris Pedersen Mortgages & Insurance logo Gold Sponsor - Barfoot & Thompson logo Gold Sponsor - CoreLogic logo Property Apprentice logo The Insulation Warehouse logo The Renovation Team logo The New Zealand Property Investors' Federation logo
09 360 2376

The Tenancy Practice Service and TPS Credit Control work closely with the Auckland Property Investors' Association. Our vision of bringing helpful resources, documents and high quality services to Auckland Property Investors and Property Managers is shared by APIA, so its a partnership that works well. 

The Auckland Property Investors' Association is a great organisation for those who want access to advice and information from a range of industry experts and partners. 

Mathieu Holt- Managing Director, The Tenancy Practice Service & TPS Credit Control
Through the Association I found the channels and methods to fund the purchase of property I never dreamed about. Grant Brown

All round it has been one of those things Neil and I felt was really worthwhile belonging to. We have learned so much it has just built our confidence in what we are doing.

Janice Bieleski
I read two articles in the monthly magazine that saved me over $5,000. That is my membership fee for the next 26 years and I am sure I will learn a whole lot more! John Duncan
Fantastic organisation. The networking opportunities are brilliant and provide us with information and opportunities that cannot be obtained anywhere else. We learn something new at every meeting and we've been in this game for nearly 20 years. Pauline and Gyanen Kumar

I find the information obtained from various APIA meetings very useful in guiding my own property investment and rental management.  I also enjoy the networking opportunities with like-minded investors.  I am inspired by other investors’ success and find the more experiences and knowledge that I share with others, the more confident I become.  

Thanks to all APIA event organizers and administrators for your brilliant work. 

Stella Shao

I like talking to people and learning from their experience because it gives me the confidence to invest well. I think it is a knowledge thing. I now know I am doing things the right way.

Stephen Weatherall

My APIA membership has become a total success.

Every time I attend a monthly or regional meeting I come away with so many useful and positive tips that have added value to my property investments and management.

Not only that, the website is a great place for practical advice and useful information. It has now evolved into an important resource for my business.

Talk about value for money! The discounts I have been getting at Bunnings when I present my APIA membership card have more than paid for my annual subscription!

Tim Duffett, Plan A Investments Limited