Three Strategy tips on How to Subdivide Land
Are you wondering how do you subdivide land in Western Australia? As an investment strategy, buying a property to subdivide is a great way to increase your property portfolio and potentially increase your wealth. People have different reasons for buying property to subdivide. The goal may be to live in a house in an otherwise unaffordable area by battleaxe-ing and selling off the rear parcel of land. By putting the sales proceeds into the mortgage of the retained house, they have created an affordable place to live in a desirable suburb. People may want to help provide land for adult children or elderly parents to build a house on and live close by. Or they may be subdividing purely with the end purpose of selling some or all of the newly created lots to fund other development projects or more property investments.
Whatever the end goal, the selection of the correct property to subdivide in Perth is just as important for all investor types and must be made carefully. Purchasing the wrong property can become a costly mistake and turn the easy flip into a nightmare, and is certainly not what you need when investing, particularly for the first time. This article will explore some of the basic but most important considerations you should keep in mind when looking at property for your subdivision projects. It is not an exhaustive list, but a good start for your own research purposes. The advice is general in nature and can help guide your investment considerations in the early stages of market research.
When looking at a property, consider the following three tips as a start point and the impact they will have on development potential. It is easy to overlook some of these facts! It is all information that will be freely available from either a site inspection or from the real estate agent.
Consider the size of the land parcel as a whole in line with its zoning and correlated residential coding, and if there is even going to be enough land to subdivide into 2, 3 or whatever the desired number of lots is. For example, you are looking at an 809m2 block in Forrestfield to subdivide, with a retained dwelling. The zoning is R25. In accordance with the Residential Design Codes (R-codes) this means the property sits in a scheme map where 25 lots are permissible per hectare (10,000m2) . If we divide 809 by 10,000 and multiply the result by 25 , we get 2.02 . This means the property is sub divisible into 2 lots. A similar property on the same street in the same scheme map (also zoned R25) is for sale for $50,000 less and is 760m2. It may seem like a bargain. You will save yourself $50,000, but if we apply the zoning math’s as above you will be left with a property that will not be sub-divisible into two lots. Really you will have bought a lemon!
Lot Shape and Access.
Consider the lot shape. This means the depth, width and any shape irregularities. You need to make sure that sufficiently accessible and workable lots can be created in the subdivision process. Long, narrow blocks can be difficult to work with and market. As a rule of thumb, particularly if you are retaining the existing dwelling, we need to ensure that the access to the rear lot/s on one side of the house is 3.5 meters wide minimum. If it is not, you will not be able to subdivide without demolishing or cutting back the retained dwelling. Also, consider any existing easements (from local Government or Utility Providers) on the property. They will affect the portion of created land parcels that can have permanent structures built on them. A reduction or limitation of the potential building envelope on land parcels will effect the size of the house that can be build on the new land and may affect the marketability of the land parcel to prospective buyers.
Placement and Condition of the Retained Dwelling.
If you want to retain the existing dwelling as part of your subdivision project to rent out or live in, you must consider the placement of the house on the block of land you wish to subdivide. It must be orientated such as that a sufficiently large enough parcel/s of land can be created on the rear of the block, access to the rear lots is sufficient, and that the subdivision process will not impede access to the house itself. Houses sitting askew or in the middle of blocks can be difficult or impossible to work with. Also, consider the condition of the house itself for marketability (rent or sale). There may be considerable renovation costs to bring it up to scratch. Finally, any retained dwellings must be made retrospectively compliant with the R-codes as part of the subdivision process. This may include prime cost items such as the addition or removal of carports and entertainment areas, utility and drainage upgrades, and aesthetic improvements such as render and paint.
Flynn Subdivision Experts provide a wealth of free information on subdivision costs, potential and processes on the property subdivision section of our website. You can also learn through our courses and educational material, or contact us directly with your queries for help. We look forward to hearing from you soon!