Sub Dividing in Adelaide

Sub Dividing in Adelaide
Posted Today at 11:26 AM by MPHT
Good morning all,
I am seeking information/advise/help/links/procedures re the subdividing process in Adelaide. Also any help with associated costs as a generalisation as appreciate varying councils would be different.
We are looking more inner suburbs - Richmond; Marleston etc.
Thanking you.
 
I don't have my figures at hand at the moment but as a rough guide I would allow for $20k per Torrens Title division.

To get a sub division done you need to have development approval from the council which means you need to lodge building plans suitable to fit on the new lots before you can divide it.

Are you looking at doing it yourself or getting someone to do it for you?
It gets pretty technical so for your first one you might want to get some assistance with. We use Fyfe a bit.

Gools
 
That's interesting Gools. So if I want to subdivide a block and sell off the individual lots without any intention of building myself - staying within council guidelines of size, frontage and other guidelines for the new lots - I would still have to get an architect to draw up theoretical plans of a house for each of the new blocks?
 
Steve, that's my understanding of the requirements.
To get the sub division done you need to put in a DA (development application). Once approved, you are then free to sell off the allotments once the sub division is approved on condition the titles are issued for each allotment.

Painfully slow process and can't be done with the dwelling still standing unfortunately. It would be much cheaper to do if you could still have the rental income coming in for the 6 months!!

Gools
 
Steve, that's my understanding of the requirements.
To get the sub division done you need to put in a DA (development application). Once approved, you are then free to sell off the allotments once the sub division is approved on condition the titles are issued for each allotment.

Painfully slow process and can't be done with the dwelling still standing unfortunately. It would be much cheaper to do if you could still have the rental income coming in for the 6 months!!

Gools

Thanks for that Gools, I never put two and two together but it makes sense. :)

Here's an excerpt from a land sub division application approval notice from a council which illustrates what you're talking about:

No work can commence on this development unless a Development Approval has been obtained. If one or more consents have been granted on this Notification Form, you must not start any site works or building work or change the use of the land until you have also received notification of a Development Approval.
 
So if we work on an average size block (most are a very similar size) erring on the side of caution and see what a builder can build, pay for some prelim drawings to place into council to attain their reaction in that council area as a exercise?
Gools a question please – I have had a look at the web site for Fyfe, what would be a $ guide for their input, and would there be a step by step guide I could follow with relation to the entire exercise…. So I can get my head around what steps are required to venture where we have not ventured before.
We do own property, but have always just bought established…
 
Found my paperwork from earlier in the year so I can give you some more accurate figures.

Fyfe's proffesional fees were less than $800inc. I think we got a bit of a discount so I don't want to say an exact figure. I think the fee is pretty reasonable for the peace of mind and for accuracy sake.

Here's an approx run down of division costs.
  • Dev Assesment Commision $6000
  • Survey Fees $2350
  • Conveyancing Fees $1250
  • Registrar Generals Office $1300
  • SA Water $8750
  • Mortgagees Fees $450
  • Professional Fees $xxx

It's not cheap and as I said above to Steve, the hidden cost is holding the block without a dwelling on it bringing in rent. You can't settle a sale of the blocks or start building until the titles are issued which means you can be paying a full mortgage without any income on it for 6 months plus.

Get your timing right with the market and it can be really rewarding though......

Gools

p.s. Regarding the first part of your last post, yes, the easiest way to have plans for the division is to get a poor* old builder to draw them for you for free. (*Not poor at all, the price you pay for building with them puts paid to any profitability issues they may have :( )
 
Thank you, what a great reply...
I will go through the steps on paper to work out the costings.
Ideally we would like to live in one property and sell off the other or possibly keep to rent out.
 
It's not cheap and as I said above to Steve, the hidden cost is holding the block without a dwelling on it bringing in rent. You can't settle a sale of the blocks or start building until the titles are issued which means you can be paying a full mortgage without any income on it for 6 months plus.

Are you sure this is correct? Admittedly I am new to this, but the information I have received is that you need to have the titles issued before you can sell the properties, but that you can start building as soon as you have planning and building approval from the council (i.e. without subdivision approval).

The caveat to this is that council may not be keen to give planning approval without corresponding subdivision, particularily if you plan to build the new dwellings across existing title boundaries. Of course, if you choose to start building before you have subdivision approval, the other factor to consider is that you may be stuck with a number of dwellings on one title if for some reason your subdivision isn't approved :eek:
 
Are you sure this is correct? Admittedly I am new to this, but the information I have received is that you need to have the titles issued before you can sell the properties, but that you can start building as soon as you have planning and building approval from the council (i.e. without subdivision approval).

I think I left a little bit of info out of my previous post by the looks. By "you can't start building" I should have put you can't get finance to start the building process until titles are issued". I believe you can start building as soon as you have the building/planning approval but in reality the titles will be issued well before most builders in Adelaide will be ready to actually start construction (Seems like >6 months at present before they start on site).

If you're financing the build yourself it certainly would make the process more streamlined but I don't think it would make it any quicker.

Gools
 
I should have put you can't get finance to start the building process until titles are issued"

Damn, your reply prompted me to phone to my bank for clarification and you are (at least partially) correct.

As background, my bank has confirmed that I can finance this project as a residential project even though I am building 6 residences (this is because they are on two titles, giving three per title - wow, my maths is good :D). They had also confirmed that they would be able to provide me with a construction loan for the requisite amount, up to a maximum of 80% of the final value of the six properties.

My problem though, is that the bank have told me that prior to subdivision, the value of the six completed residences will only be 80 - 90% of what their final value once subdivision has occurred, because the six residences share a single title (or in my case two titles). So, prior to subdivision, they will only finance 80% of the reduced valuation. Meaning they will only finance 64% - 72% (0.8*0.8 to 0.9*0.8) of the final value of the property. This is a problem, as I don't have enough equity in the project at this level to fund the construction. So, the net result of this is that I will need to draw equity from elsewhere or wait for subdivision. Not happy!

I do have a couple of other IPs that I've owned for about 18 months which I could have revalued, but I suspect their values may not have gone up much. If so, I may need to wait for subdivision go through, which means at least a three month delay. The bank are looking at exactly when they would consider the property "subdivided" and have suggested that DAC and council approval may be sufficient, so hopefully this will only put me back a few months. The proposed subdivision is completely compliant with all local council guidelines, so (cross fingers) it should go through DAC with a minimum of fuss.

All in all, very frustrating :mad:
 
So they will actually finance pre-subdivision, just at lower LVR?

We had a minor argument with the bank the other day about signing the permission slip to subdivide - they want all this extra Stuff and it all has to be original, which is irritating as it all has to go via post now not email or fax. I thought they'd be happy just to let us subdivide since it costs them nothing and they gain a finger in an extra block of land without even having to write a mortgage.

I have this fear that the little form they need to sign is going to disappear into the bowels of the bank for MONTHS and I'll get the building DA before I get the title. They just have to sign as an interested party to allow the new title to be created, not give us finance or anything.

Is it usually this difficult to get the bank to let you subdivide a block?
 
So they will actually finance pre-subdivision, just at lower LVR?

Well, they have told me they will. I have been dealing with the same "Relationship Manager" (where do they come up with these names) for a number of years and have always found her information to be reliable, so I have not reason to believe they wont. Having said that, I haven't formally applied for construction finance, so we will see.

We had a minor argument with the bank the other day about signing the permission slip to subdivide - they want all this extra Stuff and it all has to be original, which is irritating as it all has to go via post now not email or fax. I thought they'd be happy just to let us subdivide since it costs them nothing and they gain a finger in an extra block of land without even having to write a mortgage.

I have this fear that the little form they need to sign is going to disappear into the bowels of the bank for MONTHS and I'll get the building DA before I get the title. They just have to sign as an interested party to allow the new title to be created, not give us finance or anything.

Is it usually this difficult to get the bank to let you subdivide a block?

My bank also have the mortgage on the land that I am developing and they certainly haven't mentioned the need for me to get permission from them to subdivide. All they seem to care about is LVR's and whether it meets the criteria to be a residential construction loan. But again, I am still going through this process, so I can't answer this definitively. Will keep you posted.
 
Yeah, I'm at the very very very very last step of the process. Everything approved, fees all paid, shiny survey pegs in all the corners (or close enough since the boundaries were all 20cm off and my house is actually on next door's block), SA water lurking in the bushes to install a meter when I'm not looking - all that remains is to whack one tiny little form in at the lands and titles office and then I have my magic lot 100 (nice round number eh? :cool: ). I just need that one extra signature on the damn form!

I haven't even approached the bank for a construction loan yet, just chosen a floorplan and got a tentative green light from a mortgage broker. The builder can go a fair way without the new title.
 
The bank can lend on the build costs without subdivision having gone through but it is at a reduced LVR as they're basing this on the value of the unsubdivided allotment + build cost. Once you have new titles in your hand then each new block thats been created will be valued individually hence providing you an opportunity to tap into some newfound equity. For example:

Before Subdivision:
Land worth $200,000
2 new homes to be built worth $200,000
Total= $400,000
80% LVR = $320,000

After Titles Issued:
Land Worth 2 x $150,000
2 new homes to be built worth $200,000
Total=$500,000
80% LVR = $400,000

So from a development point of view its more cost effective and less money down if you can sit tight and wait for the new titles. Some banks will however release construction funds as soon as you have Deposited Plans (more often than not they will require the physical title) as thats pretty well a gaurantee that you will get new titles issued shortly...just a stamp on a piece of paper really.

I don't think the bank will actually release any construction funds unless you provide them with a copy of the council approval for your building however as thats part of the builders pack you need to provide the bank when going for construction finance.

I believe there is more flexibility in the commercial finance world however.
 
Your Surveyor can provide you with costings but ours at the moment is approx. $22K for a single subdivision (torrens title) - this includes conveyancing and surveyors fees etc.

1 into 3 (torrens title) is $38K

Community titled a few thousand cheaper...always go torrens wherever possible in my opinion...peoples perception of a torrens titled home is worth more than community...
 
I'm just getting my popcorn ready, this will be really interesting. From what I could gather from one of RE's posts yesterday construction has been delayed somewhat and the start date could well be after the initially quoted finish date so it'll be interesting to hear what's happening.... :p

The building industry has a lot to answer for but the North Tce toothless tigers are too weak to ask the right questions.

It's Mrs RumpledElf by the way. :D

Gools
 
Hi, the bank generally likes to see a fait accompli kind of deal. So the initial subdivision costs have to be drawn from somewhere. Once DA is granted, the house plans would all be more or less fixed already and the building price agreed upon.

The builders know the steps. They issue you with a 'bank pack' that you can take to the lenders.

The banks are quite generous in accepting a quoted end value though they use their valuers.

If 70-80% borrowing on end value cannot complete the job, I would really think that there is no profit in it.

Especially if it's more than 2 houses or if the old house could be retained.

Excluding interest costs, it cost me about $8000 and then I had to pay water,and demolition which came to just under $20000 in all.

After that, it was drawn down as and when the builder bills came in.

Obviously, I had to pay the interest costs and as my project took 3 years to complete, at the end of which the interest really built up [up to nearly 10K a month], you suddenly understand what is meant by deep pockets!

Good luck, it's an education all round.

KY
 
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