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Just finished reading that thread and it was fabulous – like a little novella.
And don't worry about dropping $6,000 to learn a lesson, they're often far more expensive than that.
Keep at it Jelovea, and wonderful advice dispensed as well.It's often my advice that the TPP adds the first layer of value (achieved by taking the first risk) and that this should be the time assess ones position and consider realising that value (for whatever reason) and letting someone else take up the next layer of risk and reward.
The second layer is the development itself, which I believe is more capital intensive but also better understood, so more suited to those with the capital but perhaps not the desire to sit on a property without a pre-determined outcome.
Once the property is developed, then the third layer – that of investment – needs to be considered. Sell now and take the cash, or keep what you can for later?
Emptyvessel,
In most cases this is a town planning issue, and a town planning permit (or DA in the Sydney vernacular) will most likely be required. Given that the built form already exists there should be no affect on the amenity of any stakeholder and so this should not be a difficult application. Assuming this application is successful then the properties need to be formally subdivided into new titles through the creation of a proposed plan of subdivision which can then be certified and in turn registered with the titles office.
I don't work in Sydney, so some of the terminology may be a bit NQR, but planning theory is pretty much the same in all states and territories. Of course, wherever there are councils involved there will be fees to pay, so it might do you well to see if you can ascertain just how deep these might run.
Another minor consideration is rates and other expenses for each property after subdivision is completed.
There are neaps of retention systems, tanks, permeable surfaces and the like available. Try searching for storm water retention.
This is how I bought my first house some years ago. It took longer than I thought, cost more than I could afford, and taught me a few things. Importantly, it also got me into my first house.
Introduce yourself to a planner, and ask them the question. They'll be happy to tell you what they know, and if they are active in the area they'll know the answer straight up.
Hi Sash,
It can be tough work dealing with subdivisions, one little pea under the mattress and no-one seems to be sleeping properly! It is difficult to pick up each and every part of the puzzle and put it in place in the right order. I'm glad to hear your consultant has kept the project going seemingly against the odds and I'm sure there will be lessons learned that you will value down the track should you do the same thing again.
It would be great for our industry if there was a little more certainty about the process so that time-lines could be controlled a little better. Over the past 12 months our best turn around time was just over 12 weeks for a two lot subdivision approval (in Melbourne's South East) but others are taking significantly longer. It seems that the more "advice" the municipal planners want to bring to the table, the longer things take. Many of the municipal planners are over-burdened, so if you don't have useful contacts things can just get stuck awaiting assessment and approval. Personally I favour an approach of seeking early (very early) feedback and insist – wherever possible – that the planner I first speak to is the one who assesses the proposal. In this way, I know with some certainty that the project will have municipal support and will receive approval.
Best of luck with the rest of the project.
Property development is complex and expensive but not especially difficult as long as you understand the process or engage someone else who does. Here's what you need to do:
Assess the opportunity. Do some homework.
Create a strategy for the development so you're clear about what you wish to achieve and can communicate it to others.
Put together some concepts to further communicate the planning objectives. Discuss these concepts with the stakeholders.
Make application for a TPP/DA, and get your permit.
Get the project comprehensively documented.
Subdivide and/or build.
Sell or rent as set out in the second step (strategy)That's the short form. Obviously it's a little more complex than that, and lots of small things need to happen in the right order to avoid mistakes that can sometimes be costly.
The other consideration is that – should circumstances change, and they sometimes do – you would be unable to sell the granny flat as it will not have its own title.
GLT and hrub,
Ashwood and Oakleigh both have, in my opinion, fairly simple planning guidelines. There is a prevailing density pattern (single detached dwellings on larger allotments) that is gradually but surely changing. Density of 1:300m2 should be readily achievable in most parts of each of these neighbourhoods.
Both of these areas also have higher density pockets with them that would allow more "progressive" planning, but without knowing exactly where we are talking about, specific advice isn't possible. As for building double storey at the rear of an allotment, most councils "strongly discourage" this outcome, but it is not in contravention of the planning statutes. It may have more to do with the visual "bulk" of the proposal than the fact that it's double storey. The trick (if you like) is to make the buildings look and feel less dominant and to take advantage of the open space that is created when going up rather than out.
Muzz and Fergal,
The process of subdividing is not particularly difficult, but it is both time consuming and complex. There are a number of things that need to come together in the right order for a proposed subdivision to progress smoothly. Without getting into the finer points, this is how it works:
- You need to assess the technical, practical and legal constraints of your property. Essentially, you need to know that what you are proposing is legal and possible and there are no overlays, zoning issues or covenants that will preclude you from progressing your proposal.
- You need to devise a strategy for your property to make the most of the opportunities isolated in the first step.
- Turn these thoughts and strategies into concepts and gain some early feedback from the municipal planning authorities.
- Turn the concepts into a formal town planning application an ultimately have the application approved.
- Use the town planning documentation as the basis for creating working documentation so you can build.
- Find a builder that suits your needs and build according to your approved plans.
- Complete the subdivision registration and sell as required.
Sounds simple enough, but the advice you get early in the process will be the most telling. So put some effort into the first steps and the rest will follow more easily.
In terms of subdividing and selling the land only, generally speaking, the local authorities will want to know what will happen to the land after it's subdivided. They may request that you provide full documentation that shows what is to be built, and the subsequent owner would also be held to these. Alternatively a description (maybe in the form of a S173 agreement) might adequately describe how the land will be used. Or occasionally, the land can simply be subdivided and the new owner can deal with the town planning requirements.
If you are looking to subdivide without changing the ownership of the land the requirements will likely be less onerous that they would be if you were to sell the land. The DA (or TPP) can in essence be considered your permission to subdivide, however, the DA is not in and of itself a subdivision. So, you need to approach your local planning authority (or a private planner) tell them what you've told the forum and plot your shortest route to the outcome: Two titles. If you were looking to sell the land, the authorities often want you to carry out all or most of the hard works and have the land certified prior to the issuing of new titles. Generally the plan of subdivision is first certified and then can be lodged for registration.
Planning permits (or DAs) do expire, and that expiry date will generally be explicit in the documentation.
It's not unheard of for builders to enter into JVs with owners. In this scenario it would be usual for all parties to share risk and reward, and of course to share security. For example, if a property were wholly owned, then a builder could take a first ranking security over the land until such time as the agreed amounts were paid, either by percentage or some other agreement. This is fairly sophisticated and perhaps risky structuring, but it happens.
Hi Eleanora,
Not much of a response so far!
The question is a little hard to get around, but I'll give it a go:Firstly, if the blocks are worth $700,000 each, why is a house worth $640,00? I would have to assume that land is reasonably scarce and that the average is affected by smaller land types like units and apartments.
Planning for 10 x 2 bedroom apartments – up to the point that you have a DA or TPP would be in the order of $50,000. If the apartments had an end value of say $500,000 each then a developer would be looking at a land purchase of somewhere around $170,00 per planned dwelling, or in this case $1.7m. This assumes a rule of 3/3 is applied whereby land costs $1.7m, development costs of roughly the same ($170,000 each) and a margin of 1/3. Before costs and taxes.
It's my opinion that the first layer of risk and reward is in the issuing of the DA/TPP and that the second (greater) layer is in the delivery of the project. Preparing land for someone else to develop does not entail as much risk.
I understand a company by the name of Onyx is doing a lot of NRAS aligned property at the moment. I can't endorse their offering, but I have dealt with them on other issues and they have been good to deal with. Might be worth checking out.
As a rough rule of thumb, one dwelling per 300m2 is generally achievable. Higher densities can be achieved closer to town or close to transport and commerce hubs. Lesser densities will be encouraged further from town or in the "leafier" suburbs. Find someone who – as suggested elsewhere in this thread – is able to look after your needs from inception to completion. It has been my experience that continuity is the key in delivering projects. This means that each part of the process needs to be handed on as smoothly as possible and someone needs to ensure that all of the parts are being attended to.
From the information provided it seems feasible. First stop should perhaps be your local council town planning department, they are generally happy to help with this type of enquiry. Alternatively you can contact a private planner and engage them to assess the merits of your proposal.
Hi Limefroggy,
I do quite a bit of work within Banyule and their requirements are of course much the same as the other municipalities. What you are proposing is not unusual, although it may in fact be under-utilising the land in planning terms.
The advice sought and received, and the decisions made, early in the process are vital. Before you spend too much time and money there are a couple of things I believe you should do, or get someone to do on your behalf:
- Ascertain if there are any planning issues, covenants, overlays or physical constraints that will preclude you from subdividing the land.
- Do some basic feasibility work to establish that it is indeed financially viable.
- Consider several options for the use of the land. Keep your options open.
In getting to a position whereby you can actually sell the land and make some money, there are quite a few hoops for you to jump through. There's concepts and feasibility work to make sure it works and is worthwhile; then some development of those concepts and liaison with the municipal planners; formalisation of the process by way of a formal town planning permit application for the development and/or subdivision of the land. Along the way this will also mean some surveying work, basic hydraulics, traffic management and landscaping must be considered.
Ultimately, the TPP is your currency, and at the point at which you have your TPP you can decide whether you wish to sell the land with its attendant permissions, or to complete the subdivision, fencing, hard works and landscaping and sell the parcels individually and complete.
I hope that's useful information, and good luck with the project.
As ever, you must understand what it is you are trying to achieve, and to the best of your ability, describe this in a business plan for your project. You can then use this plan to communicate your ideas and the feedback you get will in turn help you to refine the plan. If you're not sure about the design then focus your plan on your other strengths. For example you may heave a really clear vision of the profit you wish to generate; this is also a useful starting point. Essentially all decisions will come done to a triangulation of three issues: cost, time, design. You need to prioritise these and get talking to those that can help you to make it happen.
Feel free to PM me if you have any questions you think I may be able to help with.
