Subdivision is essentially the process of dividing one block of land into two or more lots, usually for the purpose of investment. That’s in simple terms, however subdividing a plot of land can be complex if not carried out thoughtfully and by a credible home builder. This blog will break down each aspect of subdivision to give you an all round view and explanation. Let’s begin!
TYPES OF SUBDIVISION
- Torrens Title
Torrens Title simply means the purchaser owns the land and the building on that plot of land with no common areas present. This type of land division sees the land being subdivided into at least 2 allotments with no shared areas. This also comes with the responsibility of the owner to upkeep the property (e.g. garden maintenance).
- Community Title
Community Title land division is the division of land into at least 2 allotments with an area of common property (e.g. driveways).
- Strata & Community Titled
Strata and Community Titles relate to subdivisions where units or townhouses have been built and there are common/ shared areas on the property (e.g. driveways, parking areas, gardens). This type of ownership is designed for the efficient management and maintenance of these shared areas.
- Strata Title
Strata Title land divisions are no longer possible under the Strata Titles Act 1988. In saying this, existing Strata Titles can be cancelled or converted to Torrens Titles.
PROS AND CONS OF SUBDIVIDING
- Great investment opportunity
- Can be your entry into real estate investing
- The opportunity to generate profit
- Build equity
- When subdividing you may face lots of red tape and disapprovals
- Frustration due to lengthy approval times
- Potential for unexpected costs to arise
- Market changes can influence cash flow
FINDING A PROPERTY TO SUBDIVIDE
So you’re wanting to subdivide, but how do you find a suitable property? What do you look for? What are the requirements? Well…there are a range of factors that can determine whether a property is suitable for subdivision including, but not limited to:
- Ensuring lot size is large enough to be subdivided
- Local guidelines surrounding subdivision in that area
- Take note of location and the amenities nearby (e.g. schools, shops, parks, public transport, etc)
- Consider the topography of the land. i.e Is the land sloped?
- Are there trees on the land that need to be cleared in order to subdivide?
- Are there any public landmarks impeding on the land? (e.g. power lines, bus stops, pedestrian crossings, etc)
Our tip for subdividing for investment – Look for properties or land in growing areas. You’ll be able to attract higher rent and yield a better return on your investment.
COSTS ASSOCIATED WITH SUBDIVIDING
Depending on the venture, the costs associated with subdivision can vary significantly. In South Australia, the average cost of a simple subdivision of one block of land into two is estimated to cost between $20,000 to $25,000. However regardless of the specific circumstances, there are some common costs that apply across the board including:
- Application fees
- Surveying, town planning and project management fees
- Contributions to utility providers (electricity, water, local council, etc)
- Civil or geotechnical engineering design costs
- Subdivision site works (e.g. earth works, retaining, drainage, fencing, etc)
Once again, this does depend upon the particular subdivision project as there are different council laws, environments and budgets to consider. However, it is fair to say that if all goes well a subdivision could take between 6 – 9 months and for larger homes/ townhouses this process could take an additional 9 – 12 months.
STEPS FOR SA
- Seek advice and lodge a preliminary enquiry at your local council
- Contact Land Surveyor and possibly Registered Conveyancer or Solicitor
- Lodge an approval from the State Commission Assessment Panel
- Ensure all conditions are met
- Lodgement at the Lands Titles Office
- Examination of Plan (timeframes and costs)
- Examination of Documents
- Deposit of Plan
- Issue of Title
Subdivision can be a fantastic way to begin, or add to, your real estate portfolio, as well as a great way to tap into property investment as a whole. With the right block, and if done correctly, subdividing is a fantastic opportunity for first time investors. We hope this blog has provided you with a complete 101 of subdividing; the good, the bad and the unexpected. For more information on subdividing land, get in touch with Lofty Building Group on (08) 8266 0011.