Thomas Gibbons: What the Natural and Built Environments Bill is missing

Subdivision is all about the creation of titles. Photo / Bevan Conley, File

OPINION

In an economy such as ours, where most housing is delivered by the market, subdivision rules are critical to the provision of housing.

People mostly don’t buy houses – they buy titles, and put houses on them. And the creation of titles is what subdivision is all about.

Separate titles allow for mortgage finance, which helps families into their own homes. Separate titles allow for separate ownership – which remains, or should remain, an important idea, if we want any semblance of a property-owning democracy.

So now we have a new Natural and Built Environments Bill, and a new Spatial Housing Bill, and a lot of excitement about change in the resource management system. Spatial Plans! A National Planning Framework! No restricted discretionary consents!

What we don’t have is better subdivision rules. Because, in all the excitement about new concepts, new terminology, and the length of the proposed legislation, subdivision has been treated like a poor cousin, with many provisions taken word for word from the RMA.

The link between subdivision and the housing seems to have been forgotten.

Environment Minister David Parker, pictured flanked by fellow Cabinet ministers, says new reforms should make resource management rules more effective and workable. Photo / Mark Mitchell, File

While there is a lot of current interest in “build-to-rent” arrangements, we shouldn’t forget about “build-to-sell”.

Separate titles enable most of the new homes that New Zealand needs.

To create separate titles, and to spread ownership among our citizens, we need good subdivision laws. There are five key changes that are needed to the subdivision provisions in the Natural and Built Environments Bill.

First, we need to avoid the filter that says that subdivision and reclamation belong together. Subdivision is about carving up pieces of land into smaller parcels that can be separately owned. By all means, put in requirements about esplanade reserves where land adjoins water. But that’s not the core of subdivision law.

Second, we need a better definition of “subdivision”, one that is inclusive rather than strict. The definition of subdivision should “include” certain things, but allow that other things may still be subdivisions. Creation of encumbrance arrangements that look and feel like cross leases? These should be treated as subdivisions, even if they don’t meet a technical definition. Because working around strict definitions is how we got all the problems of cross leases (and encumbrances) in the first place.

Third, we need to change the vesting rules to recognise that roads and reserves arising from subdivision are a public good. There have been a plethora of new easements and land covenants since the RMA was created, and where land with a covenant is to be vested as a road, various third-party consents are needed. These consents can be extensive if neighbouring land has been subdivided already. The solution? Often, it’s going to court to get the covenant removed from the land to vest. There is a cottage industry for court decisions of this nature, with many more to come, at great expense to the cost of new properties. Unless the presumption is changed, and we allow land to be vested as road without these consents, which is easy to do at this point.

Fundamentally, we need to speed up subdivision processes and make them more rather than less efficient.

Thomas Gibbons. Photo / supplied

So, fourth, we don’t need additional requirements, such as that Land Information New Zealand must be consulted on, and approve, amalgamation conditions for subdivisions. These decisions can be left to councils without having further processes added.

Fifth, we need to preserve sales off the plans, as these are critical to financing developments. That means moving a tortuous provision about pre-sales out of the Bill. Pre-sales are about an arrangement between a developer, a purchaser, and a financier, and have nothing to do with environmental legislation. We might move this provision into a property law statute, and also remove the word “rescind” while we’re at it.

We want a modern, forward-looking Natural and Built Environments Act, that caters to the needs of present and future generations. We should want the same for our subdivision law.

Almost anyone who buys a house, also buys a title, and efficient delivery of housing requires efficient delivery of subdivisions. This is one area where our law could be a lot simpler and easier to use.

Thomas Gibbons is a specialist property and resource management lawyer, dealing with complex issues in subdivisions, unit titles, land development.