If the phrase “too good to be true” or “suspension of disbelief” has ever made sense to you, it will ring very true in your ears in the case of Subdividing. Your brain will contest how dividing an existing home into two halves can nearly double the money you fetch through it?
And can profit making be this simple in the complex world of real estate? Truth be told: it is not. Theoretically, it all sounds good but the difference between the cup and the lip can be a gigantic one here.
While there are many who know about the red tape and the ever-lengthening procedure in its wake, very few know that Subdividing property may not be achievable on a strictly physical level either. It is a fact that a few properties are just well suited for subdividing and there are a whole lot which are not.
There are factors you must judge before you even start ruminating over the idea.
- Property must belong to an area where the local planning council has permitted Subdividing
- Mass acceptance of the area is important. Subdividing a faraway suburban property may not get you anywhere (surprisingly, many people keep doing it anyway). You need to ask yourself- Do people like these areas enough to buy subdivided plots at high stickers?
- Look for other subdivided properties in the vicinity. Such properties do well over areas where they are not the only one of their kind; does help the property assessors too (they have precedence to fall back upon).
Subdividing necessitates professional involvement
This makes professional help a significant part of the adventure. You cannot wholly rely on yourself while going through the development application grill. The points mentioned above need professional guidance. A Consulting Surveyor well-versed in the intricacies of the Planning Council can be the difference between profit and loss for you (you might choose to call it the difference between wish fulfilment and frustration).
A consultant surveyor knows all about the Due Diligence and seeks answer to these two questions.
- Will the proposed Subdivision yield plots that confirm to the minimum lot size requirement- both width wise and area wise?
- Does your property fall in the zone that allows Subdivision?
Issues pertaining to storm water and sewage
Even if you seek succour from the Consulting Surveyors, things might not turn out to be all that simple. Subdividing and selling at a higher sticker also means providing all the facilities that are available throughout the area. These may include, but are not limited to, water, electricity, storm water draining and sewage. This is where the tricky terrain starts. Water and electricity do not pose problems (at least not perseveringly). The difficulties are largely related to storm water draining and sewage.
You may have to seek permission from your neighbour
By and large, you will need to seek permission from your neighbour for using the sewer mains. This is usually the case when the sewage connection happens to be on one side of the block and there is no way you can connect the other side to it without touching the sewer mains. So what do you do? You ask the neighbour politely. Real good chance that they will give you a go ahead but what if they don’t? Your local council can pressurise them but what if they don’t? Local councils in a few areas might not be legally authorised to challenge the neighbor at any rate. In all such cases your plan will fall into the Doldrums.
The same problem may occur for the storm water. Note- It is always recommended to look for properties that slope up because sewage or storm water cannot flow uphill.
A few more obstacles worth discussing
If you thought this may be where the rough patch ends, let us offer you a few more insights
- If your property is in the overland flow zone, you may have to engage a hydraulic engineer to give you a clean chit and this entails a cost. You may have to fork out in excess of $5,000 and in addition, be thrown back a couple of months behind schedule.
- If your property is more than a century old, issues related to heritage may also creep in, thereby inviting red tape.
- Prefigure if the Contribution Fee applies to your area. The councils impose these fees to offset the infrastructure costs (read water, electricity and sewage) which are increased due to addition of lots. These fees can range between $50,000 and $70,000 in some of the capitals across the country.
Subdividing can be lucrative if everything falls in place
Having lobbied against subdividing so far, it must be said that the process can of course turn out to be a money spinner if everything falls in place. However, you only stand a chance if you fulfil the first prerequisite – hire the services of a consultant surveyor. You can also choose an alternate idea – home renovation. Renovate well, indulge in home staging if required and get your property valued higher.
Are you planning to subdivide your property? Feel free to give me a call to discuss your project if you’re in Sydney.