sub-division project: What is good

[RE rocks]

I am looking for a property around 700m2 and a lot of times agents say they can't comment and it is STCA.

I called up draftsman and architects and council and they say it has a potential but no guaranatee.

How do i make sure that i am not making a wrond decision.

And if it is right, how much does it cost for plans & permits and other charges. Someone told me $30K. Can someone give me a breakup.

And a real estate agent told me that it cost $250K to have a unit or a townhouse at the rear. Is that a conservative enough figure. Can that be done cheap.

Also what to understand couple of scenarios below:

a) What is better from monetaryt perpsctive
i) to sell the one newly-built ( at the rear)
ii) or the existing one

b) What are the impacts from CGT and ATO perpective

C) if i decide to stay in any of them, will that help.

I would really appreciate some responses. I understand a bit better with an example. So if anyone can come up with facts and data, that'll be great


Regards
Manish

 

[RumpledElf]

$30k is reasonable. 2/3 of that is sewer connection. The rest is fees.

No guarantees something is subdivisible, but if you read the development plan and you've got tonnes of room to move within their figures your chances are really good. You might be able to do dual occupancy without subdividing, which is cheaper.

Depends what you want to do as to which one you sell, you'd have to get them valued and see an accountant. If you live in one for a reasonable time it becomes CGT free on sale. If you go dual occupancy you can't sell them individually but being cheaper overall it makes a better property to hang onto indefinitely as a rental.

We are doing one variant on what you describe - bought a house on a large block. Doing up the old house and have moved into it. Subdividing at a cost of $12k + $4k for septic move. Building new on the new block to rent out at a cost of about $95k. Selling the old house to fund the purchase of a new PPoR. You can't use my figures, I'm in country SA and they probably won't let you build the style of house I've been madly getting quotes on.

 

[csc]

absolutely no guarantees that council wont hit you up for plenty...it can happen.

not only road upgrade, footpath concreting, replacement of drainage etc etc etc...

they hold the cards, you just dish out the money and have little or no choice...

of course it will depend on the circumstances of each development.

ive seen it cost developers 100's of thousands of dollars to get small subdivisions passed by different councils.....

id be doing my homework first and get everything in writing.

proper planning is the key.

good luck.

 

[RE rocks]

More detailed response would be highly appreciated with some facts and figures. Have you had any experience in sub-division in the past

Anyone who has and would like to offer help

 

[RE rocks]

i've done my research and picked up the suburb i would want to do this project. But need to come up with figues help help!!!!

 

[Propertunity]

i've done my research and picked up the suburb i would want to do this project. But need to come up with figues help help!!!!

manish, the problem you have is that you have done some research on the suburb you want only.....with some help from a lot of forumites to point you in a direction....fine. But what you have not researched is the process and costs invloved in doing your proposed development.

In reality, no-one can give you figures for what you want to do. You have to check where easements are on the property, soil tests, drainage issues, zoning issues, council contributions, costs of town planners, engineers, architects, builders, project managers etc etc and these will be different for each and every block you purchase. And there is no guarantee that you will get council approval - which is why the REAs "say they can't comment" - or you would have an action against them.

This is not something a novice should be doing IMHO. Perhaps you should be talking to Metropole (Michael Yardney's outfit) to let them do it for you the first time around, learn from them and then try #2 on your own?

 

[RumpledElf]

I gave figures for my suburb in my zoning, the odds of you finding someone who has done exactly the same thing in your suburb with your exact zoning is very slim, you're not going to get the answer that easily.

 

[BKR]

Hey Manish, don't know about your area but I can give you some figures I have regarding my subdivision in Brisbane. There are still some variables (it can vary alot) but it will give you an idea. I have engaged the surveyors to do all the paperwork as I have no idea whats involved but I will have everything I need for the next one
The story goes something like this: Initial survey drawn from maps, submitted to council, back and forth paperwork on what we want, what council wants. Then letters to all neighbours, left, right and 3 behind and a sign out front for any objections, advise whats happening, etc. Theres $5k.
Next is the council infrastructure charges, these vary from block to block and no-one can tell you how much until council works it out. It covers parkland contributions, sewer/water headworks,etc basically you are creating another block which will use sewer/water so you have to pay. This is billed per extra block you create so if splitting into 3 or 4 expect to pay heaps. Mine was $25k, but I got it at last yrs price, it would have been 38.5k and it goes up each July 1.
Next you have a long list from council on DA conditions.(what you have to do to the place for them to approve it and its your problem how much it costs). Mine looks like this:
Sewer design $1506, construction $4k apprx.
Water design $565, construction $1273
Roofwater design $1890, construction $1k apprx.
Energex/Telstra design $660, construction $2k apprx.
Compliance fees $2k apprx for council to inspect it all.
Plus a few small extras.
You get your design quotes approved, get the proper survey done (another $3k), then the construction can start using the surveyed boundaries. Once done and checked (sealed) you submit to Dept of Natural Resources and Mines ($500) and theres a solicitor in there somewhere for another $700.

So roughly $60k for me, probably 70-75k now though and thats a simple subdivision, would hate to come across major problems as it would just blow the budget right out.
I will be doing some of the contruction myself so will save a few thousand there and the sewer/water are designed by council so they should be right. If you have a private design done then the council impose a $900 scrutinise fee per design Yes thats right, they hit you $900 for each water, sewer, roofwater plan to check over it. Massive ripoff but can't get around it. My guy said to use the Water board (council) for the sewer and water as he can't beat their price and the plans are instantly approved by themselves so no problems.

Hope that helps. I will put it all down one day in an excel spreadsheet for everyone once its all done and the real figures are complete. I will do it again but next time I can save heaps by doing alot more myself. As said above, you would be mad to go the first time alone with no experience. I think a small forest was cut down for the paperwork alone

 

[MiQu]

BKR
Wow, didn't realise its so costly to subdivide. I have been looking around for a similar project in BNE. Is this on a subdividable block on 2 lots (ie 809m2 one title)? Would the cost be the same for a block on 2 titles? Thanks.
MiQu

 

[RumpledElf]

BKR's figures seem to include approval for a dwelling as well as a subdivision, so knock those down a wee bit for just a subdivision (not much though).

We're building through a project builder and I'm at the quotes stage, still trying to get cost breakdowns on what is included and what isn't, I suspect the fees to lodge to council to get approval to build the house are one of the many things that isn't included ... bloody government has 5 star energy rating requirements now, I live in a 'cold zone' so *poof* there's another $1-4k (same stuff, different builders, different prices) straight away for subfloor insulation, which of course isn't in the base price. Grrr.

Out here land in this council ranges from $20-80k so its just as well the fees for a simple subdivision are cheaper than it costs for a block of land someone prepared earlier. On the upside, if you're subdividing and building you've got some overlap with what the surveyor does so yay, you save a few $100 on surveying.

I strongly suspect that the closer to civilisation you live the more expensive this process gets. I'm getting very small numbers quoted for some things with the comment 'oh, don't get us to do it, just get some local bloke to do that, should be about $1000'

 

[Gools]

i've done my research and picked up the suburb i would want to do this project. But need to come up with figues help help!!!!

Have you thought that it might be a good idea to tell us the Council area you are looking at? Everyone is just guessing otherwise and giving you information that isn't what you need to be working off.

The tip I will give you is to use something like Google Maps and check to see if there are other divisions in the area on similar blocks. That will give you an indication on what the council thinks.

 

[Ausprop]

don't forget any obligations to register for and remit GST

 

[Sailesh Channan]

We have done many subdivisions for our clients in Brisbane so, unfortunately we cannot supply examples for Melbourne. However, a typical subdivision in Brisbane of a 809sqm lot would cost around $60k.

The construction cost of a 5 bedroom two story 300 sqm house would be around $300k for a full turn key finish.

Unfortunately, at current prices most sites would be nonviable, unless you got a bargain.

 

[Sailesh Channan]

Would the cost be the same for a block on 2 titles? Thanks.
MiQu

A property on two existing lots does not encounter any subdivision costs. You can get the lots back into separate titles through your solicitor at the cost of about $250.00

However, you will still need to consider access to services, etc.

 

[RumpledElf]

Blocks on two titles are *ideal*. There is one for sale in the next street to mine. If it could be had for land value (or better yet, less than land value) on the large combined size, and then sold in the two parcels, there would be a very slim margin of profit there, with absolutely no fees at all to do any splitting except the usual fees for selling. Unfortunately the owner has priced the block as if you can live in the house, at a *generous* land value, so at face value you'd lose on this deal, especially given the cost to demolish the house.

I'm surrounded by subdivisible houses. But there's so much subdivision going on everyone is pricing the post-subdivision land into the wishing price. Two dual-street frontage ones are for sale on the next street (with for-sale signs at the back on my street). Another one a few streets away, 4000sqm block (two titles) with a crappy house on it, asking price is as if it was 6 separate blocks all divided up with a freakin STREET already built to service the blocks (you need frontage here, similar subdivisions have been approved subject to building their own street and power and water supply at the developer's cost, which is horribly expensive). Another on 4000sqm with potential for 3 blocks only because of a stupidly huge easement and bad zoning requiring 10m larger frontage, again priced as if it was 3 blocks and the house was already demolished.

People are greedy and forget that subdivision is expensive, they just think 'oh I have a double sized block on one title, house is worth $X, block would be worth $Y, I'll sell for $X+Y'. Good luck getting your bargain.

 

[BKR]

Hi MiQu, this is a 1012m2 block (16.7m x 60.5m) on 1 title in Boondall on brisbanes northside. It has to be split as a battleaxe with the front house having 412m2 and the back as 600m2, thats the only configuration council want in my area and there are a few in my street have been done this way.
The front block has the driveway down the side which changes to the easement with the subdivision and allows all the services to the back block (water, power and phone).

As sailesh said a block on 2 titles wouldn't cost much to revert back but you would still have to consider the services to the new block as well as where they are for the original house.

RumpledElf, these figures are just the subdivision as a vacant block, they don't include any house designs. When I started looking into splitting I talked to several surveyors and they all said around $70k in Brisbane, not Pine Rivers, Ipswich or Logan, just good old Brisbane City Council making a killing. I really couldn't see how it could cost this much but at least I was ready for it and now I finally have the figures it turns out they were right.

These figures are for brissy but manish did want some figures, any figures, and this might help ask some q's that they didn't think of, so hope it helps.

 

[RumpledElf]

@ $70k for just the sub!

That's actually more than I paid for my last 3 houses, and more than the block we'll be splitting off will be worth!

*adds another reason to the list of not moving to QLD* lol

 

[aaarghhh]

@ $70k for just the sub!

That's actually more than I paid for my last 3 houses, and more than the block we'll be splitting off will be worth!

*adds another reason to the list of not moving to QLD* lol

QLD also rains a lot.

 

[MiQu]

Thanks for the figures and info in BNE BKR and Sailesh. Looks like some vendors have priced their property postsubdiv (prob not realising the cost), like in your area RumpledElf... No wonder some "bargains" are still on the market!

 

[RumpledElf]

You really do need to crunch the figures.

http://www.realestate.com.au/cgi-bin/rsearch?a=o&id=104118300

Here's a hard example of a 'bargain'. You'd need to know the area to do your DD, as in any area, but it falls down in every aspect. This house has been for sale at the same price ($135k) for about 2 years. Note that vacant land up to about 2 acres WITHOUT a cottage requiring demolition costs about $60-70k, just across the road from this one in a new estate of 1-2 acre blocks, so it isn't even priced at land value.

Ad says:

* 3 bedroom cottage on 4378m2 block of land. Over 1 acre
* New bathroom.
* 6m x 9m garage
* Bore to 100' approx with good quality water
* Zoned Home Industry.
* Suitable for subdivision with necessary consents

Ad means:

* heavily water damaged illegally extended cottage that requires demolition ASAP on 4378m2 block of land. Over 1 acre but has a wide easement on it that severely limits what you can do with the land
* pink 80s bathroom with a lot of broken tiles
* 6m x 9m garage full of rubbish
* Bore to 100' approx with good quality water - who cares, its vacant land!
* Zoned Home Industry, which means there are totally different restrictions for frontage and area compared to the majority of the town.
* Suitable for subdivision with necessary consents, but only into 3 new titles (zoned Home Industry, min 25m frontage), one of which will be mostly easement and will be virtually impossible to sell. Max price you will get for each new title will be $50,000 at a cost of about $10,000 per title.

So you spend $135k + stamp duty + legals + demolition/site clearing + $30,000 to get $150,000 less agent's selling fees and legals.

Oh wait. That's a LOSS. And not a small loss. You'd only make a gain on this one if you were also building 3 houses and landscaping them and selling them yourself, or if the guy actually dropped the price down to something sensible. You could get it to 6 blocks not 3 if you had dual street frontage over a very large drain at the rear of the property and build little bridges for 3 driveways, but I can't see council going for that.

You can see how he got to $135k asking price though - 3 blocks, $50k each, that's $150k. $150k is more than $135k. Why won't a developer buy my block?