Sub-Dividing a block of land

Looking half seriously at purchasing a cheap 1,000m^2 block of land with an old house on it. Idea would be to sub-divide the land and then either;
1)reno existing house and build a 'display' home on the new 2nd block.
2)keep existing house as is and sell 2nd block un-improved
3)knock down original house and build 2 'display' homes

Obviously these decisions will rely on the numbers of various factors.

Anyway; how and where does one start in making inquiries?
How do we determine if council will permit sub division? As a side note, the block next door has been sub-divided.
What is involved in the sub-division process? I realise this varies from council to council.
Do legal eagles need to get involved? Or only if the council denies the application? If this is the case, I have an environmental lawyer mate up my left sleeve.
What research needs to be done to check that a house can be built on the new block? eg. mines, wells etc

Any words of wisdom would be greatly appreciated; especially from anyone who has successfully or unsuccessfully sub-divided and conquered

Thanks

You will find lots of good stuff on the Property Investing forums at:

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I am considering subdividing myself and got a lot of help there. There is a lot to it so take your time.

This isn't something I've ever contemplated but a friend of mine has been involved in a subdivision for about the last two years. The property still is not subdivided.

I'm in Queensland and it's possible the local council here is more than usually obstructive, though I doubt that.

His father died and left the house on one acre to four siblings. Three have their own separate homes and my friend lives in the old home on the one acre.

He started off thinking he could organise what was necessary himself, but has since realised he needs to have it overseen by an engineer, who of course charges a substantial fee.

There have been a myriad of demands from the council in terms of new drainage, sewer connections, and other projected requirements which would see the subdivided property functional for the next 20 years at least.

He has so far spent about $70,000 and there is actually nothing to show for it.
The acre remains without division.
If the costs continue to escalate, the viability of selling off the smaller parcels of land will be in doubt.

So maybe get an engineer or town planner to give you a quote for all that is necessary before going ahead with the purchase.

Good luck.

It does depend on how the land is to be split and if there is a lease. Registration of two leases for land subsequently held under one lease should cost $176.80 in Queensland. NSW and QLD are fairly similar as they were split in 1859 and follow similar laws to those in the UK.

Call your local council and see the land zoning . Some blocks you cant subdivide. You will need to give them your Lot and R P numbers this is on your rate notice. Ask them its its subdividable

Thats your first step

Cheers
J

Subdividing land can be a fairly straight forward affair.

The first thing you need to do is go to the local Council and determine:

1. The current zoning.
2. The minimum lot size.
3. What services (water, sewerage, electricity, telephone, kerb and guttering, bitumen road) are currently available.
4. What services are still needed.
5. What are Councils requirements.
6. What contributions are required.

In addition you will also need to know:

a) The size of each proposed lot
b) Is each lot only suitable for a single house or are units a possibility.
(zoning and soil tests)
c) a detail and contour plan of the lot.
d) The total cost of developing each lot.
d) If it is worthwhile spending money on development costs as opposed to what you can sell the land for once it is fully developed (i.e. whats the ROC).

The best person to see is your local surveyor who has done this exercise before and he can:

A) Help you with all of the above.
B) Coordinate any other professionals you may need.
C) Will prepare the plan of subdivision to submit to Council and Property Authority (that issues new titles for each lot).

Feel free to PM me as I have done hundreds of these.

I am in the process of finishing off a sub-division (in WA) at the moment and can relate some of my experiences. I decided to do most of the paperwork and manual labour myself to cut down on costs. Before going into the whole process I studied the zoning guidelines & regulations and subdivision information sheets from the local council.

Next I hired a draughtsman who had experience with subdivisions who drew up plans for the proposed residence on the proposed rear block, ~$1000, and a surveyor. I had to keep a close eye on the draughtsman as far as regulations went as subdivisions were not his standard work. This then went to the council for approval, after a few minor changes the plans were approved. This was the easy bit.

Next I got involved with the WAPC who issue the titles - very bureaucratic compared with the council. They insisted on including common property where none was needed which significantly increased the cost of the project to include 25m extra of earthworks for sewage and utilities.

To cut a long story short, significant costs for the project included:
laying utilities to the rear block - significant cost
surveyors fees - significant cost
fencing off the front house - significant cost
a new double car port for the front house (owner erected) - significant cost
demolition of the rear garage and pad
concreting of TWO crossovers and concrete pad under carport - significant cost
fees paid to the Water Corporation - several thousand in administration costs!
pillar and connection of underground power to the front house
cosmetic and functional renos to the front house due to changes in the amenity of the front block eg landscaping, paving etc, and
<possibly?> drainage and paving of the driveway to the rear (battleaxe leg) block. - potentially significant cost

So to answer your questions, I started by making enquiries at my local council, they were very helpful. The most important considerations for subdivision in my case were based on size and configuration of the block, zoning, and position of the front house to allow a rear block AND to allow room for rear access.

I did not use lawyers but I think there was a title search done at some stage as a legal measure, but this was done by a specialist land agency. I did not do any in depth research on soil, tests etc, as the council advised that the land in my area is fairly standard and stable.

Finally, if I had the money and were to do it all again, I would just get the approvals from the local council and then build.

I entered the project in a flat/uncertain housing market with the intention of increasing capital and it certainly seems to have paid off, but only by keeping a close eye on costs and doing as much of the work as possible myself. The trickiest bit of the project was planning and organising the utilities to the rear block, however, with a lot of thought and planning, this went without a hitch.

Hope this helps, Cheers Mattzigs

Finally, if I had the money and were to do it all again, I would just get the approvals from the local council and then build.

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Mattzigs. Could you please clarify. How can you avoid going through the WADC (I am Perth based)? How can you not provide services to the rear? How does the rear property get access to mail, if there isn't common property that at least gives them a pathway to the front street?

These are all issues I am confronting with my proposed development and I cannot see how they can be avoided. Perhaps you are located rural?

One other cost that can be applicable if there are going to be 3 or more lots after subdivision is "public open space contribution". The council can demand 10% of the total land to be contributed for public use (parks etc.). If the location of your block is such that this land would not be functionally usable by the council, they can request the equivalent monetary value.

RazzaDazzla said:

Looking half seriously at purchasing a cheap 1,000m^2 block of land with an old house on it. Idea would be to sub-divide the land and then either;
1)reno existing house and build a 'display' home on the new 2nd block.
2)keep existing house as is and sell 2nd block un-improved
3)knock down original house and build 2 'display' homes

Obviously these decisions will rely on the numbers of various factors.

Anyway; how and where does one start in making inquiries?
How do we determine if council will permit sub division? As a side note, the block next door has been sub-divided.
What is involved in the sub-division process? I realise this varies from council to council.
Do legal eagles need to get involved? Or only if the council denies the application? If this is the case, I have an environmental lawyer mate up my left sleeve.
What research needs to be done to check that a house can be built on the new block? eg. mines, wells etc

Any words of wisdom would be greatly appreciated; especially from anyone who has successfully or unsuccessfully sub-divided and conquered

Thanks

Click to expand...

I have done several things similar to what you are propoposing and there is a fair bit in it. I currently have one in Yokine (WA) which is a 3 house development.
My strategy is a bit different to yours (by the sounds of it). I target old but improving suburbs where I can get an older house on a large block, bulldoze and build high quality houses. It is a high cost strategy.
Personally, without help, I would never go it alone. I employ a proffesional project manager, and leave most of the work up to them. She has done everything from settlement, finding a building designer, subdivisions, negotiating with builders etc etc etc. I pay her a hansome sum - but it allows me to get on with my life - there is a lot of work in these things, and I dont have the time for it (also I travel out of country a lot). She can also assist with finding a suitable property.
I think at the end of it all, finding the right property is the most difficult part. You need to target a return of 25% or IT WILL NOT WORK. For a first timer ensure that you have ample cash reserves. In the current market getting finance as a small developer is very difficult (I am experiancing this first hand right now), but there are ways around it, if you know what you are doing!
It is a good strategy but there are some things to look out for.
If you want more info PM me.

Investor82 said:

In the current market getting finance as a small developer is very difficult (I am experiancing this first hand right now), but there are ways around it, if you know what you are doing!
It is a good strategy but there are some things to look out for.
If you want more info PM me.

Click to expand...

I'm curious as to what methods there are to get around it.

I'm assuming the bank would only lend 80% the value of the property as is; and not lend more based on you doing improvements.

We have some cash and also hopefully increased equity in our apartment my partner and I live in. But curious to know what a bank would be willing to lend.

RazzaDazzla said:

I'm curious as to what methods there are to get around it.

I'm assuming the bank would only lend 80% the value of the property as is; and not lend more based on you doing improvements.

We have some cash and also hopefully increased equity in our apartment my partner and I live in. But curious to know what a bank would be willing to lend.

Click to expand...

Well - normally they will lend you 80% of land value plus 80% "contract price" but depending on the lender this is only for up to two properties. When you go to a 3 property development the goalposts can move.
But there are also different ways of subdividing the land. eg - I am building 3 houses on what is currently one title, and the title will be subdivided during the construction phase, and titles will issue somewhere mid development. This has both advantages and disadvantages. Ie, I could subdivide prior to construction - but it means sitting on a vacant block waiting for the titles (anywhere up to (or over) 3months). However by subdividing now, I could have 3 titles in my hand which increases the value of each block (ie each block is probably worth about $300k however the one title is only worth about $750k). So I could borrow more money. However it means producing an extra $25-30k in cash now. The costs are not much different, it is purely cash flow. Also I am able to include this expense in my contract, get the builder to do it, and borrow against this as an expense.
I say "contract price" in inverted brackets as you are able to modify what you get the builder to do. As you can see I include as much as possible in the contract so that I can borrow against it.
If you are planning on doing any of the work yourself you wont be able to borrow as much against the contract.
Some banks used to do an "on completion" value and you could borrow against the completed value (normally 70-80%) but I have discovered that most banks have stopped this practice now.
It is also difficult because you cannot get finance approval, until you have a building contract. But Im not willing to sign a building contract until I know that I can finance the construction. So it can turn into swings and roundabouts.
I would also reccomend that you draw down a loan on your existing house, and keep the development seperate (at a seperate bank) dont "cross collaterlaise" the properties. At least this way if anything goes wrong you have a chance of keeping your house. It also provides access to cash without relying on the banks to cough it up when you need it, cos typically just when you need it they dont give it.

Personally I would suggest you speak with a project manager - I use Momentum Wealth (Emma Everett) (can I say that on this forum?) and would recomend them. But there are others who I have not used.

Good luck
Blacky

bellenuit said:

How can you avoid going through the WADC (I am Perth based)? How can you not provide services to the rear? How does the rear property get access to mail, if there isn't common property that at least gives them a pathway to the front street?

Click to expand...

I believe that if I had built after receiving local government approval, the whole process would have been alot smoother (and definately quicker) without having to involve the WAPC at the planning level. However, as I didn't have the money to build, I did not pursue that option - but I did notice other subdivisions in the area being built while our block was a long way from approval.

All of the services you mention still need to be provided to the rear property, but they are required for planning approval at the local government level. The original plans we submitted were for each property to be independent, which were approved by the council, but were disallowed by the state's planning authority (based on an interpretation of the zoning laws). For example, the battleaxe driveway would belong solely to the rear residence, and the front house to have it's own vehicle access.

Just sharing thoughts on my experience, good luck with yours

Cheers Mattzigs

Last year we demolished our house on our 1/4 acre block to build a new house, my wife wanted potential to subdivide so we are building the new house to one side of the block. I personally am not interested in going through the process of subdividing but when we sell at a later stage if somebody wants the challenge the potential is there.

I first saw a town planner and he was able to get me detailed maps of the areas and pointed out my sewer connection for a sub division would be a pita. The main council sewer connection is behind us in our neighbours yard right next to a massive jacaranda tree. He said that we would need to obtain permission from neighbours to rip up their back yard to upgrade to the mains there to suit the subdivision. Not a cheap venture I imagine and no guarantee that anyone would agree to it.

Personally if I was looking for an investment property to subdivide that would be my first thing to look for is the access to the main council sewer line.
The rest of the process didnt seem to bad and would be worth going through for the right property.

what state are you in ?
if you are in NSW I would start by checking the zoning and then reading the LEP Local Environment Plan & DCP Developement Control Plan which will be available on the local council website. This will clearly state requirements for subdivision if it is allowed under the zoning etc .. Once you have read through call the local Council Town Planner and have a chat to him ..

I must say this is an excellent thread full of helpful ideas....
I learnt one lesson with my subdivision....
I had been looking for the corner block so that each would be a stand alone , each with its own separate title, no common areas, each with its own street frontage etc...ie not a strata plan when finished....
I checked with the council prior to the purchase of the existing home, to ensure it would be allowed to be sub divided....

I spoke to council and followed their instructions, got the surveyor to do all his work etc....then obtained the finance, called construction finance for the 80% of the final market value....which is easy as the land was unencumbered...
I gave strict instructions to the builder, regarding a separate sewage pipe was required in order to provide the separate titles....I did not want a joint sewage which would only provide a strata title.......

So imagine my surprise after the building was completed, and the application for title was in progress, to find he had left the old sewage pipe running under the new house....so now I am stuck with strata titles
I propose to engage another to separate the sewage lines, and obtain the title I want, sometime in the future....at further costs...

On another note, after 4 years I finally received the strata titles to a commercial property....it was supposed to be a straight forward exercise of about 2 months duration.....the first solicitor did nothing for 6 months, then gave wrong advice, the 2 nd solicitor stuffed up on every angle, I believe I have paid about 3 lots of LPI fees, since some ran out of time (solicitors fault), solicitor messed around, then charged me double the quoted fee.....
am probably out of pocket $20,000 plus, from the original quote of $4500
of course apart from the surveryor, all others involved will not get my business again...
it was a straight forward job, 2 buildings on the one title.....not possible to sub divide, but the strata is a valuable tool for the future...

I will be on the lookout for another subdivision on a corner block later this year
cheers

if you are looking for finance, this group is associated with the master builders assoc, so they are apparently focused on building and construction, and better able to offer solutions, than your average bank manager....
www.chocolatemoney.com.au

1) Go to local council for guidance on development possibles
2) Engage draftsperson to draw footprint of 2nd house
3) Submit to council for approval
4) Rob bank to pay for the fees involved
5) Sit in corner and wonder why you started this whole mess in the first place
6) Consider strata title ... much cheaper in the long run
7) Engage a planner to do all the work for you
8) Rob bank to pay for the fees involved
9) Sob uncontrollably in fetal position until pain goes away
10) Do battle with Water Authority & Power provider to get services connected
11) Find someone with experience previous (next door neighbour) apparently
12) Find him in padded cell in loony bin
13) Finally pay through the nose to get approvals from concerned bodies
14) Start building second home on rear of property
15) Rob bank to pay for second home on property

Ad infinitum ........ be prepared to fight the good fight at every step of the way in this kind of development. Oh yeah, have a lot of patience. I have just started building my 10 unit vacant strata development. Only took 3 years to get all the necessary approvals in place.

Hi there, Trainspotter. Being a building contractor, I know where you are coming from.

Is this a "Voyager Homes" development?

Hey there Macquack .... The parent company that performed the initial development was my own private company. This company still is involved with property development similar to the one in question. I have a 32 unit site and a broad acre farm yet to be developed into 100 acre "lifestyle", self sufficient, eco friendly, hobby farm type blocks. Also basic green title blocks of land to build "spec" homes on just so I have got all bases covered. Voyager Homes just so happens to be the builder in question !! Thanks for the gratuitous plug of my building company !

"safe as houses"

Gday m8 ......... can see them doing something up the top there ...


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