PROPERTY DEVELOPMENT

5 things to know about subdividing your property

September 15 2016
Subdividing your block

Whether you’re looking to subdivide your own block or have your eye on a block to buy, here are 5 things you should know about subdividing your property.

For those of us lucky enough to be owning larger blocks than we need or want to maintain, the idea of subdividing may have crossed your mind. Subdividing can provide genuine investment opportunity if you know what to look out for. That’s why we’ve put together the 5 things you should know.

  1. Know your zoning

The first step in subdividing your property is to understand the zoning. You can obtain the zoning information easily through your local shire or council website or by contacting them directly.

The zoning or density codes will determine:

  • Minimum and average site area per dwelling
  • Maximum plot ratio  (what percentage of the of the block can be used for each house area)
  • Minimum and average setbacks
  • Size of courtyard area

Once you have established the zoning of your block, an experienced development builder will be able to provide you with information on what rules you need to work by to obtain a planning approval. The planning approval is the first step to subdividing your property, and to avoid timely delays it is important that the application is submitted correctly the first time.

2. The shape and slope of your block will effect how many homes you can build

The shape and slope of your block  will also play a large role in how many dwellings can be built on your property. The shape and slope of your block can restrict access, or reduce the usable working area of the land, making construction impractical.

Unfortunately many first time investors are caught out by overlooking the shape and slope of their block. This is particularly dangerous if the block or property is being marketed by a real estate agent, who may also lack experience in fully understanding the true development options and financial impacts of developing a block, past the zoning classification.

3. You should seek advice before purchasing a block on the market as ‘sub dividable’

If you are looking to put an offer on a new parcel of land with the intention of developing, you should always make the offer subject to a survey being completed. The site survey will confirm that the block can accommodate the advertised number of potential dwellings. The cost of a survey will vary from $550 to $1,500 depending on the size of your block, however this should be looked at as part of your investment and not a cost, as it could potentially save you thousands.c

Any unit development builder will also be able to quickly inform you if the number of dwellings is achievable, giving you the confidence to make the land purchase. During their consultation they should also be able to give you a better idea of the types and designs of units that could be build on the block, giving you a more holistic view of your potential development.

4. The services on your block can restrict what and how you build on your block

The positioning of services, such as sewer, water and power runs, while not restricting your development the same as block shape and slope, may still have a considerable cost impact on your development.

Sewer and water require a certain gradient in order to ensure that the service will actually work when the houses have been built. Using gravity to assist the flow of wastes away from your property. The invert levels are also found on the same survey you would receive regarding the shape and slope of the block. If the topography of the block does not lean towards the correct gradient for these services to work, it may cost multiples of thousands to make good the levels to ensure a successful development.

In Western Australia, the Water Corporation and Synergy charge the developer a fee to connect additional dwelling on one site to the existing services. For example, if you purchased a four unit site The Water Corporation will charge a ‘Head works’ feed for the additional three dwellings for water and sewer. Synergy also charge a similar fee for additional dwellings connected to power. You can get an estimate of these costs by calling the appropriate authority/

5. Know your end game

Knowing the reason for your subdivision is going to help guide you through the entire process. We are assuming you are subdividing to build, but you may wish to subdivide your property and sell the newly created rear strata lot on the real estate market to make a bit of quick cash. Be careful with this option though and make sure you truly understand the market for land in your area, as you don’t want to be selling a more difficult block for a new home builder, than is already available in that area.

The option with the most opportunity is to subdivide as an investment. With this option once again you need to understand whether you are building to sell, building to rent or intending on a mix of both (selling one, keeping one). This comes down to what you want to achieve in the long term in regards to returns.

Many people go through the process of subdividing each year, and if you are working alongside a good surveyor and experienced Builder who works in this area the outcomes can be rewarding. The key to a successful subdivision is upfront knowledge, and most of this can be obtained before you purchase the development block.

If you’d like to read more about the types of development opportunities available, take a look at these articles:

5 Things you should know about duplex developments

Rear Strata/ House behind house development opportunities

What to consider when building a house behind a house

Subdivide call to action

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