Land subdivision is arguably the simplest form of property development.
It often involves the least additional outlay of capital as opposed to other types of developing such as building town houses for example. Subdividing property has long been considered a relatively straightforward exercise by many people and it can be if you follow the correct process, however you can get yourself into all sorts of problems if you don’t.
Following are 7 processes that if followed should point you in the right direction.
7 Secrets of Successful Subdivision
- Get to know the local Council zoning and planning regulations – every property in the country is governed by the local Council’s town plan which determines how many lots that original lot can be subdivided into. Every piece of property will have a specific zoning under the local Council’s town plan and within that zoning there will be a minimum size (area) specified that you need to exceed before you can subdivide. Find out what the minimum size for a new lot is, remembering that when you subdivide, each lot created is treated as a new lot. It’s then a matter of multiplying the minimum lot size by the number of lots you wish to create. The land area in your answer should be smaller than the area of your land.
- Lot Dimensions: It’s very likely that each zoning may require different minimum dimensions, so you need to ensure that the lots conform. Check the dimensions of your property, especially the frontage, to see that the existing property dimensions will enable each new lot that you propose to have the minimum requirements. Frontage is especially important along with average width in determining if a subdivision is possible. For rear lots you will need to provide a legal access which will usually range upwards from 3.6M in width.
- Overlays: When you check the zoning of your land you should also check for what are known as ‘overlays’. These are other things relating to issues covered in the town plan that relate to your particular block of land some of which may be restrictive and affect your ability to subdivide. These could include flooding, overland flow or traditional housing precincts for instance. Any subdivision application will need to address the issues raised by these overlays, usually backed up by an expert’s report and opinion. Whilst they do have the potential to kill your proposal it may not necessarily be the case. In these circumstances you should consult an expert for advice.
- Understand local council Infrastructure requirements – It is assumed that you or someone else will build on the subdivided land, so each new lot is required to have the minimum services that are provided in that area which can be ascertained by an enquiry at the local Council. In urban areas this will likely involve the provision for each new lot of town water, sewer, stormwater drainage, electricity, telecoms, and legal access to name just some. So, make sure you can provide / access these. Rural area requirements will likely differ – check with Council.
- Existing Improvements: The location of any existing improvements within the property may impede or affect where you draw the line of your proposed subdivision and your ability to satisfy the issues outlined in points 1,2 & 3 above. You need to decide if you wish to keep or demolish those improvements in light of this and the costs / benefits of so doing. In some zonings you may not be allowed to demolish or remove those improvements although sometimes they can be moved within a property at a cost of course that needs to be factored in.
- Timing & Stages: There are several stages to go through in the subdivision process all of which take time. It’s not a 5-minute process and patience in following the process and allowing for the necessary time will be rewarded in the end. State legislation provides minimum and maximum time limits and other procedural processes that Councils and other bodies must comply with. The least time it will take would be 6 months if you are very lucky however 12 months to completion is very common, though it could take 2 years in some cases. Don’t forget to factor in your holding costs during that time such as rates, interest and land tax.
- Feasibility – Understanding the costs – Certainly not the least thing that you need to consider is the cost of doing a subdivision and if it is feasible. By feasible we mean – is it worth doing? A common mistake first-timers make is underestimating the cash needed to undertake a subdivision, which is usually in the tens of thousands of dollars and covers works such as demolition of some existing improvements, retaining walls, fencing, engineering reports, surveying, Council fees and infrastructure contributions & costs mentioned in 2 above. Remember, the bank the bank probably won’t fund a lot of this, so be sure to set aside enough cash to cover these costs – otherwise your project will stall. At the end of the project, if you sell, you may also be subject to GST and capital gains tax.
And …. here’s another secret that so many people forget
- Know your market – What you really need to ascertain is what will be the value of the new lots once completed minus the value of the existing property & the costs of doing the subdivision. Sounds simple right? Unfortunately, it does require a bit of thought and investigation and, to complicate things, the costs of doing a subdivision can and do vary from one property to the next in different locations and markets. Therefore, it is important to ensure that even if the lot is zoned for subdivision, the price of the property when added to the costs of buying it and completing the subdivision will at the very least equate to the finished value for the location and preferably be less so there is some margin left for profit and risk.
Subdivisions: Can I subdivide? 7 pre-requisites your property ‘Must Have’ to succeed.
Subdivision stages – The Process – the other 8 steps
Subdivisions: Getting your subdivision underway – the1st steps
And…finally……if it’s all too much for you give us a call