To Sub-Divide or Not?
Sub-dividing land is sometimes seen as a quick way to make money and capitalise on an existing asset, however it needs careful pre-planning and all the right approvals before you can even begin the process. Every State has slightly different rules and processes with regard to sub-divisions and some are more complicated than others. Your first port of call is to look into your local council requirements and pay particular attention to the zoning requirements as well as the application and approval processes.
Council approvals can be problematic, difficult to navigate and are not guaranteed to give you the result you are looking for. It is always best when considering a sub-division to get all your “ducks in a row” and obtain professional advice before you embark on this process. Do your research – not just for the planning process, but also for any tax implications!
Some people choose to subdivide a property with an existing dwelling and either sell off the second parcel of land to an investor or build and develop a second property themselves. If you are planning to live in the existing (or new) residence, developing the other property will give you some control over the style and positioning of the other residence and this is likely to impact on the value of the property that you choose to retain. Selling vacant land next to the property you retain takes this control away from you and, depending on the property that your land buyers choose to build, could significantly impact on the value of the existing property. Others may choose to sub-divide a large vacant plot and sell each parcel off separately.
Whatever you decide, there are some key considerations to take into account.
- Is the land large enough to sub-divide? Not just to satisfy council regulations, but large enough to build a property appropriate to the area and the buying demographic. Generally a property will need to be at least 700sqm before it can be even considered for sub-division. If the properties around you all have substantial gardens and cater for larger families, building smaller properties with limited space for a garden could limit your pool of buyers.
- Is there room for a driveway and good access for both properties? Access is a key focus for buyers and selling a property without easy road access will prove difficult even if you get the plans approved by council.
- How can you divide the land so that you do not block views of one property?
- What is the lay of the land? Steep land is more difficult to sub-divide and if you do, there are extra costs to consider when building retainer walls, etc. Flat or gentle slopes work best.
- Corner blocks are generally good to sub-divide as they allow for 2 street access.
- What are your local council zoning rules?
- What are your likely returns on investment?
As with all major decisions, getting expert advice is the key to your success and will prevent you from falling into expensive and unforeseen traps. There are also tax implications particularly if you plan to sell off your existing home. Do your research!