Subdividing for Profit
In theory, subdivision sounds pretty simple. You buy a large block of land, split it into two or three blocks and sell it for a massive profit. But when something sounds this simple, the reality is often a little different and slightly more complicated.
That’s because when you subdivide a property, you need to get approval from the local council. They have their own regulations, which means dealing with different rules and individual challenges.
Getting council approval can be a slow process and there’s no guarantee you’ll get one either.
To avoid wasting time researching a property that may or may not make the grade, it pays to familiarise yourself with the council’s requirements first if you’re planning to subdivide.
In the Willoughby Council area, as an example, we have many large sized properties that create a lot of interest with vendors as well as buyers. In some cases, Council will allow subdividing a large block into two providing each block is a minimum of 650 m3 and extra for the driveway to the back block or shared driveway. And a 15 meter frontage as a minimum. Under this area but over 900 m3 an owner may build two detached homes on a 15+ meter wide frontage and apply for subdivision after 5 years. Check with council as different areas have different guidelines.
Essentially, in order for a property to be approved for subdivision, it needs to conform to the local towns planning council’s minimum lot size. The first requirement pertains to width, the second to overall area. A third requirement is zoning. Subdivisions in some types of zoning are not allowed.
The exact details of each requirement are easily accessible via each council’s town planning scheme. These days, they are readily available on most council’s websites except for a few areas in Australia.
Top tips for finding properties with subdivision potential
While there are no hard and fast rules when it comes to picking the property that you can subdivide, there are a few tricks you can use to narrow down your research.
1. Look for properties that have at least 700sqm in land size
As local councils have their individual guidelines on the minimum land size required to subdivide, make sure you check with them first. In general, properties larger than 700sqm are allowed.
2. Check that the property allows ample room for a driveway
Councils generally insist that there should be enough space between the edge of the house and boundary line to build a driveway. Therefore, you’re not just looking for a block that is big enough, but one that has adequate space for a driveway. Depending on the local council, this can range from 2.5m to 3.5m including landscaping.
3. Look for level or gently sloping land
As a rule of thumb, flat land is easier and cheaper to subdivide than a sloping block. That’s because a steep slope could restrict what you could build there. This would also factor in with the council’s minimum size requirement. They may, for example want a minimum land area of 300sqm per dwelling on a level block and/or a minimum of 400sqm if it’s a sloping block, to ensure the property has enough usable land. A sloping block also requires you to dig and build retaining walls which could eat into your profit.
4. Look for corner block properties
Corner blocks are good for subdivision and development as you could easily divide into two lots – each with its own street frontage and access. Bear in mind that if the block has kerb and guttering only on one side, the council can request you complete the kerb on both sides as a condition of the subdivision consent. Fifty metres of kerb and guttering can cost up to $30,000, and this may blow out your profits.
5. Check out the structure of the property
If you’re planning to subdivide within an existing dwelling, make sure that it’s well-built and has solid bones to keep your construction costs down.
6. Understand the zoning rules
Check with the council that the property you’re about to buy complies with the zoning rules. If you’re planning to build medium density housing like a townhouse or duplex, ensure that the property is zoned for this structure.
7. Build a relationship with your estate agent – Us of course
Nothing beats building a strong relationship with an agent who understands your requirements and whom you trust. Finding your perfect property may not happen quickly but you will vastly improve your chances.
* This article was sourced from real-estate.com.au and Simon de Crespigny, Principal at Macartney Real Estate.