Transferable Rural Lot Rights
What is a Transferable Rural Lot Right?
It is the right to transfer the ability to subdivide land from one property to another subject to meeting certain criteria as set out in the applicable district plan. This transferable development right is usually referred to as a “TDR”.
Where do TDRs come from and why?
In 2010, a plan change was introduced to the district plan of the previous Franklin district, which has been absorbed into the Auckland Council, as well as the Waikato District Council and the Hauraki District Council. This plan change is called Plan Change 14 (PC14).
At the time that PC14 was introduced, many properties within the Franklin district had the right to subdivide but some of those properties are highly valuable for rural production. This is because these properties contain soil that is very versatile or significant conservation features such as native bush or wetland. If those properties were to be subdivided then it would introduce further rural residential living with an increase in reverse sensitivity issues and irreversible fragmentation.
Consequently, the TDR system was therefore introduced to offer those landowners the ability to sell the TDR(s) to other properties within the district, which are in more environmentally sustainable locations, while maintaining their existing title(s) in their current form and size to be used for countryside living opportunities. It was considered that this would provide a positive effect on the rural environment, character and amenity.
What is the criteria for a TDR?
Both the property which has the right to the TDR (Donor Property) and the property receiving the TDR (Receiver Property) must be Rural Lots as defined in the district plan. PC14 defines a Rural Lot as follows:
- “RURAL LOT means a parcel of land, not being a closed road or ROAD SEVERANCE, which is held in a separate Certificate of Title and which satisfies one of the following criteria:
- is at least one hectare in size;
- is a lot approved or granted consent by a territorial local authority;
- was separately recorded on the Valuation Roll of the former Franklin County Council as at 22 September 1977;
- had the right to erect one dwelling as a Permitted Activity as at 30 May 1994 in terms of the Transitional District Plan of the Franklin District Council.”;
There is no dwelling house on the Donor Property;
The following maximum lot number and lot size requirements apply:
Receiver Property Size 0.0 – 4.0 ha
Max. Lot Size of New Lots Created 8000m²
Max. No. of Transferable Lots to be allocated to the Receiver Property 1
Receiver Property Size >4.0 ha
Max. Lot Size of New Lots Created 8000m²
Max. No. of Transferable Lots to be allocated to the Receiver Property 2
No lot being created using the TDR shall be larger in size than the Donor Property;
The Receiver Property must contain the same or lesser percentage of versatile soil as defined in the district plan than that contained in the Donor Property; and
A consent notice will be registered against all new Certificates of Title to prohibit any further subdivision.
How does the TDR Transfer from the Donor Property to the Recipient Property?
Because the TDR is a right attached to the title, it means the owner of the Recipient Property is in fact purchasing the right itself and not the title. No actual transfer of land or title takes place. Instead, an agreement to purchase the right is required along with the consent of the applicable Council in the form of a Resource Consent. Settlement usually occurs once an instrument is registered on the Donor Property title confirming that the TDR has been allocated to the Recipient Property title. Because of the creation of the Auckland Council and the division of the Franklin District between Auckland, Hauraki and Waikato, some TDR applications may need to be consented to by two of those Councils, for example Auckland Council and Waikato District Council.
Do I Need a Lawyer to Purchase or Sell a TDR?
Yes. If you are planning on purchasing or selling a TDR then we recommend you contact us so we can provide you with advice on what terms and conditions need to be included in the agreement. We can also draft the agreement for you. While there are a number of terms and conditions that will be common in all agreements, nevertheless there will be some matters or provisions that will be unique to your transaction. Hence, it is important to get advice before you sign the agreement.