The key to a successful subdivision is upfront knowledge, and most of this can be obtained before you purchase the development block.
Blogger: Erin Warbrook, Freelance writer specialising in real estate investment advice
The absolute first step in subdividing your property is learning the zoning. You can gain this information easily by looking on the local government’s website or giving them a call. The zoning or density codes determine the minimum and average site area per dwelling, the maximum plot ratio (what percentage of house coverage for each block), minimum and average setbacks, and the size of your courtyard area.
Once you have established the zoning, the builder knows exactly what rules to work by to obtain a planning approval. The planning approval is the first step in subdividing your property, and the approval process can takes months longer if it is incorrectly submitted.
The shape and slope of the block also play a large role in how many dwellings can be built on your property. The shape of the block can restrict access or reduce the usable working area of the land making construction impractical. Slope of the land has the same effect, and unfortunately many first time investors are caught out by not having this experience. When blocks are being marketed by Real Estate Agents, they also make no allowance for these attributes that have large financial impacts on your outcomes.
When making an offer on a new parcel of land, I would always make the offer subject to a survey being completed. The survey will confirm that the land can accommodate the advertised number of potential dwellings. Any builder specialising in this area will be able to tell you very quickly if the number of dwellings is achievable, giving you the confidence in purchasing the land. The cost of the survey will vary from $550 - $1500 pending the size of the block, however this should be considered as an investment in your project and not a cost, as it could potentially save you thousands of dollars in lost revenue.
The positioning of services may not have the restrictions that slope and shape may have to the potential subdividing of a property, however they may haveconsiderable cost impacts. They major services are sewer water and power.
Sewer and water require a certain gradient in order to ensure that the service will actually work when the houses have been built. The invert levels are also found on the same survey we would order to ensure the slope and shape will not have an adverse effect on the project. If the topography of the block does not lean towards the correct gradient for these services to work, it may cost multiples of thousands to make good the levels to ensure a successful development.
In WA, The Water Corporation and Synergy charge the developer a fee to connect additional dwellings on one site to the existing services. For example, if you purchased a four villa site, The Water Corporation will charge a head works fee for the additional three dwellings for water and sewer. Synergy also charge a similar fee for additional dwellings connecting the power, and you get an estimate for these costs by calling the appropriate authority.
Many people go through the process of subdividing each year, and if you are working alongside a good surveyor and experienced builder who works in this area the outcomes can be rewarding. The key to a successful subdivision is upfront knowledge, and most of this can be obtained before you purchase the development block.
About Erin Warbrook
Erin Warbrook is a freelance writer who specialises in real estate investment advice, health and automobiles. She is writing on behalf of Ventura ID Unit Developments, who can do amazing things with your block of land. If you want to invest in multiple properties, then subdividing and developing units or villas on one block can be cost effective and easier to manage.