All Topics / Value Adding / subdividing basics
looking at subdividing and putting a new house behind existing house.
anyone know the implications of subdividing when the house is mortgaged. as effectively you are takihng value away from first house with the subdivision???alanak80 wrote:looking at subdividing and putting a new house behind existing house.
anyone know the implications of subdividing when the house is mortgaged. as effectively you are takihng value away from first house with the subdivision???When the sub-division has been completed, and new titles are issued, you will have created "new" properties. At this point it would be good sense to re-value the new properties and attribute the mortgage and equity to suit your needs. Conceivably, depending on your borrowing position, you could create an unencumbered property.
How much money you earn depends on the location of the property and the size of the lot.
the following link will help in assessing the costs: http://www.weplan.com.au/town-planning/subdivision
regards
Mystery wrote:Tupuraki wrote:Hi,
we just purchased our 1st house in Ipswich qld, on a subdividable block…. we were wanting to subdivide and put a removable house at the back of the block….. Has anyone had any experience with removable houses?????
also, i have friends who buys of the plan properties, they seem to be doing really well…. just wondering…. with all the time and effort that is taken into subdividing, renovating and building…. is the time and money better spent in just buying new properties???? And waiting for them to grow in capital gain???? with this subdivision we are looking at making around $100,000 but this will take around a year and the time and the effort is massive compared to just buying a buy new property??? Any advice on this one????Have you spoken to Ipswich council about the possible sub-division yet? We have recently received DA approval for a dual occupancy development. It may not be the same in your suburb, but where ours is in Redbank Plains they require 800m2 min for dual occupancy, 900m2 for sub-division and 1200m2 for sub-division on a corner block.
Don't forget to allow for the council contribution cost in your calculations … ours is $14,000 to go towards concrete paths in the shire. This is on top of all the other costs associated with the development application process.
Good returns can be made with the right structure for your block and affordability, … research all aspects to maximise the capital gain/rent return. We have just gone through the exercise of doing a numbers breakdown as to the best option for us ….a) knock down existing house and build a 2 storey duplex
OR ….
b) reno the existing house and build a detached 4,2,2 new house.Although both options would make money we found that plan b, offers the best return for us. With plan a, we found that by knocking down the existing house it makes it an expensive block of land.
Good luck ….. keep us updated
Martin
Hi Martin,
The 14k of council contribution only for headworks right? How much do you have to pay for construction of sewer, water metre..etc. Thanks
George
All this talk about subdividing has got me thinking back to the theme of the thread: "subdividing basics". I spend a lot of time talking to people about these basics, and some things keep coming up again and again. I've attempted to answer some of these below, in the hope that it might also benefit people who want to understand the basics. The answers are reasonably broad but can be considered applicable to Victorian planning law.
- What is a subdivision? Subdivision can be broadly described as the creation of several land titles from the one parent title. This is usually when a larger allotment is broken into smaller allotments, or in the case of apartments when the land is divided both "in plan" (the bird's eye view), or "in strata" (the side, or sectional view).
- Do I need a DA/TPP to sub-divide? Generally speaking, yes a TPP (town planning permit) from the local authority (council) is required to enable subdivision to proceed.
- Do I need a DA/TPP to build townhouses? Again, the answer is generally yes. If there is only one proposed dwelling on a lot of more than 300m2 a TPP would not usually be required, however, if there are two or more dwellings proposed on any allotment, then a TPP will be required.
- Must I subdivide when I build? Not necessarily, but it would be unusual not to, because the land cannot be sold in its parts if it has not been subdivided.
- Must I build when I subdivide? No. One can subdivide with the intention of selling (or retaining) the subdivided land without building, but generally the Town Planning Department will need to understand what the intentions are for the land. This will often mean selling the land "with plans and permits" for someone else to develop. Even if one does not intent to build or to sell the land in the short term, the value of the land will generally increase when subdivided.
- How much does a sub-division cost? I always have trouble with this one! It does depend on the size and complexity of the proposal. Around $25,000 is a sensible allowance for a very simple 2 lot subdivision. This does not take into account any development fees or levies as these vary from place to place.
- How long does the process take? It takes a matter of months – allow 6 months to be comfortable – and in the case of a built development it is advisable to start this process as early as possible.
- Who decides if my proposal is successful? Ultimately you need to satisfy the responsible authority (usually the local council) of the merits of your proposal. This is done formally by the lodging of a town planning application.
- Who "does" the subdivision? The subdivision requires input from the designer/architect, engineers, land surveyors and planners. The developer (this is you if you are subdividing your own land) is the one that must direct these consultants, or engage someone to do so on their behalf.
All of this ignores what I believe is the fundamental factor. Subdivision is the process of making more than one title from one allotment, of having the effect of creating more land. This is why people should be considering the merits of subdividing. Whether it is a broad acre subdivision of 100 house blocks, a simple two lot subdivision of an existing property, or the construction of an apartment above a shop, the principle remains the same. You are taking one property and dividing it onto several properties.
Given Mark Twain's assertion that we should "buy land, they aren't making it anymore", subdivision may be the next best thing.
Thank you Amanda for this post
kath Ferguson
Allow about 15K per lot for hard costs. Soft costs vary depending on number of lots and if a DA is required. Remember 3 lots or more can atttract contribution from council.
#Planning Permit | AuArchitecture
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Property subdivision costs
The following are just some of the costs you will incur for a property subdivision around greater Melbourne.
The cost of acquisition of the land if you do not own it
The interest or holding costs
Your share of equity or the deposit which is usually 10% of the cost of the property
Stamp duty which is 5% in Victoria
Legal costs for conveyancing which could be in the vicinity of $1000
Town Planning Application fee which is around $700 depending on the value of the construction costs
Subdivision permit fee of around $390
Bonds or contributions your local Victorian Council may request. Generally speaking open space contributions apply to three or more lot subdivision. A bond may apply to ensure the landscaping is completed as per approved plans
The Land surveyors fees which can be around $3000 and more depending on number of lots
The Architect and Town Planners fees which ranges from $12,000 upwards. Talk to us for our competitive fee structure
The landscape consultants fee which is under $1000
A civil engineers fee for the drainage design around $1500
The structural engineer’s fee which can be in the $2500 range upwards depending on the type and complexity of the constructionand number of units to be built. Sloping land, poor soil report will affect the engineering and building cost
The fees to prepare Building Permit/Tender documents
An arborist report if it applies. Arborists report on the vegetation on the land and on adjoining properties if applicable can cost around $900
The Building surveyors fee which can be upwards of $1500 if you decide to build. Some developers may decide to sell the approved lots with the plans and permits. A purchaser will then undertake a feasibility study and after allowing for all costs and profit margin, be in a position to make a firm offer
A soil test report around the $450 mark which depends on number of bore holes and size of land
The cost of the construction which can be $1200 per sqm and more depending on finishes and site constraints
The subdivision costs (providing services, crossovers, driveway,landscaping which can add up to $15,000 and more for a simple dual occupancy)
An open space contribution usually applies for three or more dwellings on a lot. The contributiion can be 5% of the landvale on the rates notice
A contigency amount to cover unexpected construction costs which should be 5% of the contract price
The soft costs- professional fees to prepare the development application ( design) and building permit (detailed design for construction) documents. We offer a fixed price affordable fee to do these tasks
#Planning Permit | AuArchitecture
http://www.auarchitecture.com.au/
Email Me | Phone MeProperty Subdivision expert with 250 planning permits approved by Melbourne Councils
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