Having ‘upside rent potential’ simply implies that your property has the potential to generate more income. We explore four options that you may not have considered; adding a minor dwelling, knocking down the current house to build multiple dwellings, subdividing or changing the current configuration.

Adding a minor dwelling 

A minor dwelling is a small, self-contained, detached building which sits on a property that already contains an existing residential house. With a maximum floor area of 80sqm and maximum height of 5.5m, only one minor dwelling can sit on the site. Both the main house and minor dwelling must have at least one carpark each and the buildings must comply with the District Plan and meet the minimum site area and outdoor living space requirements. It’s a great option for sections that are too small to subdivide, but it’s worth noting they cannot be sold on separate titles.

Example: Three bedroom house in Hornby on 750sqm section is nicely positioned at one end of the section rented for $465pw.  Add a minor dwelling, 3 bedroom/2 bathroom, approx. $240,000, rent for $465pw. Gross yield for minor dwelling 10%.

Demo and build multi dwellings 

After the earthquakes a lot of land was rezoned, especially around major shopping hubs. Many owners don’t realise they can now build multiple dwellings on sites that were once only zoned for one. We’ve found that getting the right advice from the start, from planners, architects, surveyors and engineers, makes a huge difference. Ideally you want to build as many units as you can on the site and these professionals will help you plan, calculate and devise whether this option is viable. For definitions and zoning information call Christchurch City Council or visit ccc.govt.nz.

Example: A property around Hornby Mall was rezoned from a single dwelling to medium density. A property with one house on a 683sqm section can now have four, two storey, two bedroom townhouses.

You could choose to keep all as rentals for ten years and avoid the Brightline Test of having to pay tax on the capital gain upon sale, or sell some and keep some (and pay tax), thereby downsizing the mortgage and increasing passive income.

Subdivide

If you want to build or make changes to your existing property, you’ll need to view the District Plan to see what is possible. There are six residential zones for Christchurch but the majority of properties fall under the following three categories;

Residential Suburban (RS) – this general suburban zone replaces the Living 1 Zone and is characterised by reasonably large lots (minimum 450sqm) containing single 1-2 storey dwellings. Minor dwellings are also permitted.

Residential Suburban Density Transition Zone (RSDT) – this suburban zone has smaller lots, replacing the Living 2 Zone and is generally characterised by a mix of single dwellings and small-scale multi-unit developments (up to four units).

Residential Medium Density Zone (RMD) – this zone replaces the Living 3 Zones, providing for both detached dwellings and multi-unit developments up to three storeys high. There is no minimum site area but there is a minimum density requirement. This zone is typically for terrace housing, low rise apartment blocks and RSDT zone typologies.

Example: Property bought in Riccarton, with one standalone dwelling on 769sqm, zoned as RMD, can be subdivided and five, two storey, two bedroom townhouses built, terrace style with off street parking.

Reconfiguration to create more bedrooms

More bedrooms equals more rent! Where there is an extra lounge or living space, carving this into two bedrooms has been hugely popular over the years throughout the Uni suburb of Ilam.

Where there is a big bathroom and separate laundry, consider changing the bathroom into a bedroom, turning the separate laundry into the bathroom and moving the washing machine into a cupboard in the kitchen. 

Where there is a separate kitchen and separate lounge in a two bedroom flat, consider moving the kitchen to sit along one wall in the lounge and turn the kitchen into a third bedroom. 

In some cases you can also turn the garage into a bedroom but Council is quite strict on this and it will need to meet the Building Code as a habitable space, plus you’ll need to have more parking available onsite and a be able to meet a few more criteria as well.

Before you make any changes to a property be sure to check with Council to see what is permitted. Renting an unlawful dwelling can get you into all sorts of trouble with the Tenancy Tribunal.

We have experience in all of these upsides so please talk to us today and we can point you in the right direction to find out if you have fully maximised the potential of your property.