Darryl has been very helpful and so has his associate.
However we've spent a lot of time talking to engineers and hydrologists and it looks like the subdivision isn't going to be worth it. Not with all the extra legal and engineering costs.
The rubbish thing is I've taken up Darryl's time now only to come to the decision not to proceed with the appeal. But the figures I've done up and all the potential issues just makes pursuing an appeal a very unattractive option.
Anyway I did up all the details of the issues as I SEE THEM (it's just my perspective of the issues):
(1) Action against council for telling us the land was subdividable not possible due to the council advice service just being general advice as they have claimed, and that subdivision is only fully assessed once an application is made. So they can't be held liable when they haven't done a full assessment and were only giving general advice.
(2) Action against the realestate agent not possible because if they contacted council to find out if the land was subdividable, and they were told it was, just like we were told, then they had reasonable grounds to state that the block was subdividable in the ad.
(3) The engineer Darryl referred us to stated that a three lot subdivision would impact on the neighbours and so too would a 2 lot subdivision. The engineering solution would be to widen the creek. The engineer said this would cost approximately $30 000 and may still get rejected by the courts.
(4) The new hydrologist stated that they would do a 2D model rather than the 1D model like the other hydrologist did. They said that there is a greater than 50% chance that this would be more favourable. They want $6600 for this. Two of these would need to be done, one before widening the creek and one after. However this is included in the $30 000 above approx quote. That quote also includes the $6000 council application fee to widen the creek.
(5) Currently the flood impact from the 1D report is an increase of 150mm of water on neighbouring properties. Even if the 2D report was more favourable the impact would have to be essentially nothing. Otherwise we would need permission from neighbouring properties to do the subdivision and increase the flood risk to their properties. Which we will never get.
(6) It's debatable if the 2D modelling is any better than the 1D modelling. Industry experts even disagree on this point. The original hydrologist said he could have done the 2D modelling however knew the 1D modelling was cheaper for his customers and he said he could tell from that whether or not there would be a flood impact. He says he has seen 2D modelling come back with an even greater impact than the 1D modelling.
(7) The precedent of the other property being approved for subdivision will potentially fall flat in court. It's like arguing that they made a mistake allowing one subdivision through that they shouldn't have, so why don't they make another mistake with ours. Or as the hydrologist heard one judge put it in a similar case "the level to which I was deceived in a previous case has no bearing on this current case".
Total costs we would be looking at for 3 different scenarios:
(SCENARIO 1)
3 lot subdivision:
-Costs so far $440 000
-Cost of appeal $20 000 - $50 000
-Cost of engineering solution $30 000
-Cost of purchasing government land $65 000
-Cost of headworks block 1 $40 000
-Cost of headworks block 2 $40 000
-Cost of moving services (water and electricity that is currently on the council land) $20 000 +
Total cost $655 000 - $685 000
Lot one worth $260 000, lot 2 worth $280 000, lot 3 worth $280 000. Minus $10 000 per block selling costs. = $790 000.
Potential profit: $105 000
Cons: chance of cost blow out in many areas, big chance of ultimate rejection for proposal even after spend $50 000 - $80 000 on legals and engineering reports etc...
Risk $80 000 to profit best case scenario $105 000...
(SCENARIO 2)
2 lot subdivision:
-Costs so far $440 000
-Cost of appeal $20 000 - $50 000
-Cost of engineering solution $30 000
-Cost of headworks block 1 $40 000
Total cost = $530 000 - $560 000
Lot one worth $260 000, lot 2 worth $280 000. Minus $10000 per block selling costs = $520 000
Best case scenario, loss of $10 000 to $40 000.
(SCENARIO 3)
Build a house and keep original house as granny flat:
-Costs so far $440 000
-Cost to build house $70 000
-cost to sell $10 000
Total cost = $520 000
Realestate agent estimates final value at $600 000.
Potential profit of $80 000.
No risk at all. No legal action required (no extra stress).
Pro, can be kept as high yield rental return.
- My figures are approx but they give a pretty good picture.
So we have decided on scenario 3.
