diff --git a/functional/test_create_update_neutron_subnet.py b/functional/test_create_update_neutron_subnet.py
new file mode 100644
index 0000000..6dad7f2
--- /dev/null
+++ b/functional/test_create_update_neutron_subnet.py
@@ -0,0 +1,88 @@
+#    Licensed under the Apache License, Version 2.0 (the "License"); you may
+#    not use this file except in compliance with the License. You may obtain
+#    a copy of the License at
+#
+#         http://www.apache.org/licenses/LICENSE-2.0
+#
+#    Unless required by applicable law or agreed to in writing, software
+#    distributed under the License is distributed on an "AS IS" BASIS, WITHOUT
+#    WARRANTIES OR CONDITIONS OF ANY KIND, either express or implied. See the
+#    License for the specific language governing permissions and limitations
+#    under the License.
+
+from heat_integrationtests.functional import functional_base
+
+
+test_template = '''
+heat_template_version: 2015-04-30
+description: Test template to create/update subnet with allocation_pools.
+resources:
+  net:
+    type: OS::Neutron::Net
+  subnet:
+    type: OS::Neutron::Subnet
+    properties:
+      network: { get_resource: net }
+      cidr: 11.11.11.0/24
+      allocation_pools: [{start: 11.11.11.10, end: 11.11.11.250}]
+outputs:
+  alloc_pools:
+    value: {get_attr: [subnet, allocation_pools]}
+'''
+
+
+class UpdateSubnetTest(functional_base.FunctionalTestsBase):
+
+    def setUp(self):
+        super(UpdateSubnetTest, self).setUp()
+
+    def get_alloc_pools(self, stack_identifier):
+        stack = self.client.stacks.get(stack_identifier)
+        alloc_pools = self._stack_output(stack, 'alloc_pools')
+        return alloc_pools
+
+    def test_update_allocation_pools(self):
+        stack_identifier = self.stack_create(template=test_template)
+        alloc_pools = self.get_alloc_pools(stack_identifier)
+        self.assertEqual([{'start': '11.11.11.10', 'end': '11.11.11.250'}],
+                         alloc_pools)
+
+        # Update allocation_pools with a new range
+        templ_other_pool = test_template.replace(
+            'allocation_pools: [{start: 11.11.11.10, end: 11.11.11.250}]',
+            'allocation_pools: [{start: 11.11.11.10, end: 11.11.11.100}]')
+        self.update_stack(stack_identifier, templ_other_pool)
+        new_alloc_pools = self.get_alloc_pools(stack_identifier)
+        # the new pools should be the new range
+        self.assertEqual([{'start': '11.11.11.10', 'end': '11.11.11.100'}],
+                         new_alloc_pools)
+
+    def test_update_allocation_pools_to_empty(self):
+        stack_identifier = self.stack_create(template=test_template)
+        alloc_pools = self.get_alloc_pools(stack_identifier)
+        self.assertEqual([{'start': '11.11.11.10', 'end': '11.11.11.250'}],
+                         alloc_pools)
+
+        # Update allocation_pools with []
+        templ_empty_pools = test_template.replace(
+            'allocation_pools: [{start: 11.11.11.10, end: 11.11.11.250}]',
+            'allocation_pools: []')
+        self.update_stack(stack_identifier, templ_empty_pools)
+        new_alloc_pools = self.get_alloc_pools(stack_identifier)
+        # new_alloc_pools should be []
+        self.assertEqual([], new_alloc_pools)
+
+    def test_update_to_no_allocation_pools(self):
+        stack_identifier = self.stack_create(template=test_template)
+        alloc_pools = self.get_alloc_pools(stack_identifier)
+        self.assertEqual([{'start': '11.11.11.10', 'end': '11.11.11.250'}],
+                         alloc_pools)
+
+        # Remove the allocation_pools from template
+        templ_no_pools = test_template.replace(
+            'allocation_pools: [{start: 11.11.11.10, end: 11.11.11.250}]',
+            '')
+        self.update_stack(stack_identifier, templ_no_pools)
+        last_alloc_pools = self.get_alloc_pools(stack_identifier)
+        # last_alloc_pools should be []
+        self.assertEqual([], last_alloc_pools)