Good evening all;
We are in the process of purchasing a house on 1200 m sq in rural NSW.
We are considering subdividing the block Renting the house & selling off the
MT block in approx 12 months time.Is it preferable to subdivide now, taking advantages of current subdividing costs,
Council rulings before they change & having the block ready should a prospective buyer
come along.Or should we just wait until we are ready to sell?
Regards
DarylSubdiving the block may take longer than you expect, 6 months, 12 months or even years depending on how complex it is. So I'd suggest putting in a tenant on a 6 month lease and also lodging the DA at the same time.
By the way what rules are you expecting Coucil to change?Thanks Amanda;
Two councils are combining & whilst they are keeping the 2V zoning for the town
the rural areas are being re zoned.The council however apears very good, quoting 2 weeks for a simple sub division
& up to 6m onths if more complex.What aspects would complicate things?
Daryl wrote:Thanks Amanda;What aspects would complicate things?
There are just so many steps, tests and reports and each takes time. The following is an extract of a document off our website that explains further about subdividing:
What is Subdividing? Subdividing is when a piece of land is split into two or more pieces (ie separate lots). The process is controlled by the local Council. Planning codes and procedures vary significantly between Councils and also between States and Territories, as do the relevant fees and charges. Factors to examine when considering a Subdivision • Local town planning regulations - Land zoning restrictions
- Minimum size of lots
- Access to water and sewerage services
- Setback requirements
- Minimum building envelopes
- Parks and open space
- Easements
- Vehicle access including Council refuse collection
- Storm water management
- Increased noise from new development
- Environmental and heritage issues
Hidden Costs A subdivision can take several months (and sometimes even years) to complete so you must factor in your holding costs such as:
• Interest
• Rates
• Land maintenance – (eg slashing and weed control)Many astute Developers make the purchase contract for the land subject to the acceptance of a Development application approval with Council. This is usually done with an option agreement (see your Solicitor for more information)
Dividing the Land Before you rush out and build a new dividing fence in your backyard, you should first consult your local Council for specific guidelines and costings, as it is imperative that the property is divided correctly. Any errors at this stage will cause major problems further down the track. The Process Most Councils require a Development/Planning Application to be lodged, together with details and drawings of your proposal. A Town Planner or Surveyor can assist you with this process, and they may also be able to give advice regarding conditions that the Council is likely to require. Before lodgement of the Application, you can ask the Council for a “Pre lodgement” meeting to discuss your subdivision and determine what issues will need to be addressed in the Application.
When the Council receives your application, they may require you to erect a notice board for public viewing. The purpose of the board is to alert the public of the proposal by providing details of the subdivision. The Council may also write to the owners of the residents of the neighbouring properties advising of your intentions. We suggest that you contact the Council to find out what procedures your local Council uses.
Additional information the Council may require Water and Sewerage • Are existing services available?
• Can the existing infrastructure cope with increased use or need upgrading?
• Is permission required from neighbours to access property?Storm Water • How will storm water run off be managed?
• Is a drainage pit required?
• Are tanks required to regulate the flow of storm water?Noise • Will existing main road traffic noise affect the subdivision?
• If so, how will this be reduced? (Fences and/or earthworks)Soil Conditions • Do the soil conditions (eg.sand, clay) impact on road and footpath design? Other issues - Footpath
- Lighting
- Signage
Issues for the Developer to consider For the Developer there are also other issues to consider such as: - “Wasted” land due to unusual configurations
- Steep slopes
- Flood-prone land
- Other planning overlays (ie restrictions)
- Other factors that may reduce the number of lots and so profitability.
Approval of the Development Application The approval process for your Application may take several months depending on the complexity and size of the subdivision. You will then be issued with a conditional approval covering topics such as:
- Developer to supply a plan of survey and mark land with survey pegs
- Road reserve
- Easements over stormwater, water and sewage mains
- Requirement that storm water pipes be designed to cope with a “1 in 100 year” event.
- Dust control
- Hours of permitted work (usually Mon – Sat 6:30am to 6:30pm)
- Headwork contributions to be paid by Developer
- Open space (parks)
- Social infrastructure
- Road infrastructure
- Water infrastructure
- Sewerage infrastructure
- Street scape contribution
- Disposal of cleared vegetation
- Entry walls or features
- Connection fees to live sewer mains
- Road (width, pavement depth, footpaths, kerb and channel, ramp profiles)
- Street lighting
- Fire Extinguisher (Battle axe blocks)
- Underground electricity and phone
- Erosion and silt management
- Maintenance period of roads
- Retaining walls
- Fire ant inspections
- Portable long service leave for Building and Construction Industry
If you are not satisfied with the Council’s decision, you may apply for a review.
Operational Works Before work can begin, you will need to engage the services of a Civil Engineer to design and draw the sewer, water, road, footpaths and any other Council requirements. This is a separate application usually referred to as “Operational Works” and attracts additional fees and charges.
Final Stage All civil work will require Council and Engineering certification. When the subdivision has been completed to the satisfaction of the Council, you can then apply to register each separate title deed. Conclusion Land subdivision is a $mart way to fast track profits into your investment portfolio. However, as with all investment decisions, thorough research is necessary in order to balance the level of risk associated and ensure that the process runs as smoothly and quickly as possible, and that the best, most profitable outcome is achieved. Thanks Amanda
Much appreciated
We intend to subdivide now and keep the block for 12 – 18months before selling.
What can we do to / on the land to derive some cashflow in the interim?
Any sugestions would be appreciated…
Daryl wrote:We intend to subdivide now and keep the block for 12 – 18months before selling.
What can we do to / on the land to derive some cashflow in the interim?
Any sugestions would be appreciated…
Hi Daryl,
I'm a bit unclear on what you're asking here. Do you mean cashflow aside from the rental income from the existing house?
Once you have the DA approval for subdivision you generally have 5 years in which to execute the plans…you don't have to subdivide straight away. You can get your approval and then sit on your plans, earning rent on the large single property, until you want to push the 'go' button and execute your plans.
In the meantime are there any simple cosmetic renos you could knock off to increase the rent? We have a property similiar to yours (though it's in Newcastle) and while waiting for DA subdivision approval we did a few simple renos on the exisiting place which increased the rent by $60pw. Here's the link to a rundown of what we did: https://www.propertyinvesting.com/forums/property-investing/value-adding/25663?highlight=artaud
Cheers,
ArtHi Art,
We intend doing both:
ie: a reno on the House to increase rent,
and subdivide the block & sell in the not to distant future.
We are interested in any suggestions to generate some cashflow on the block in the interim.
Regards
Daryl
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