Opportunity in having additional titles
Having your farm in several titles allows you to keep the mortgage under control whilst you expand and restructure.
You may not have realised that in owning more than one adjoining block of land with a separate certificate of title you potentially have a significant opportunity. Now that rural subdivision rules have tightened up significantly in most Districts, moving or reducing the size of and amalgamating titles is really coming into its own.
Most Councils allow some form of adjusting or moving boundaries and have various rules governing how you can do this. Relocating and shrinking the size of titles can be a huge advantage to some when they need to raise capital for a purchase or dispose of a house on the farm, for example.
Recently I was asked to advise a client who wanted to purchase an adjoining block which suited his farming and view to the future. The current state of the sector that he was in did not allow him to increase his gearing a great deal. However, we found that he had real options due to the number and size of titles that he is currently farming.
Firstly, he had two surplus houses which were rented out. These were actually on large titles which we proposed could be reduced in size to create lifestyle blocks – the balance of these titles could be amalgamated with adjoining land that he owned.
Secondly, the large property that he was aiming to purchase contained a substantial house which was also marketable on a lifestyle block – once again giving him the opportunity to release some immediate capital from that block.
Acting on these opportunities would give him the ability to lower his lending requirements by potentially well over a million dollars once expenses have been paid. In short, this could well make the difference between the bank supporting his purchasing proposition or not.
This proposal is actually a double edged sword, not only enabling him to purchase the addition to the property that he required to become economical long term but also allowing him to quit the rental properties that had always been a distraction and were quickly becoming a liability.
Luckily for this farmer we have not exhausted his opportunities because, following this adjustment, he still owns several titles that can be adjusted in the future to provide further opportunity. In addition to these opportunities we have managed to retain some limited subdivision opportunities with both the balance of his current land holding and that land to be acquired - allowing him the flexibility to create small farming blocks for family in the future.
If you are planning your future and wish to clarify any subdivision or boundary adjustment issues, feel free to give me a call. I am happy to discuss the situation with you to see if it is worth pursuing.
Brent Trail, Managing Director of Surveying Services, specialises in resource consent applications for subdivisions across the Waikato, Bay of Plenty, and Coromandel. For further information call 0800 268 632 or email firstname.lastname@example.org