Subdivision Feasibility BEFORE Settlement?

Hi everyone

I have been reading with keen interest the recent posts by Stacey Survey with regards to the first steps to be undertaken when planning a subdivision, costs involved, professionals that are essential to your development 'team'... all great stuff, thanks again Ashley!

While I am aware that the information provided relates specifically to Melbourne / VIC, it would seem that, as a general rule of thumb, the info can be used as a rough guide / road map for other states / areas / councils (obviously essential though to undertake own due diligence re: council requirements etc). Am I right in this assumption??

Something that I did notice was that the general tone / wording of the documents were such that it was assumed that you need to be already in possession of the land / block. But what if one you're not???

How do you go about doing your due diligence on a block before going all in? Are you able to have a clause similar to "subject to pest & building / finance / etc" after making an offer on a property ... "subject to subdivision feasibility inspection" or something similar??

My wife and I are looking at this strategy as our future direction, and are yet to make any offers on properties. And as we have not undergone the process before, we are still unsure about the methods that can be used to minimise exposure to risk.

At this stage we have a general idea about what we should be looking for in potential properties, and are thinking that we will talk with some contacts we have (local builders / project managers, building designers, conveyance / solicitor) and contacting other relevant professionals (surveyors, private town planners) to pick their brains about things that we should be looking out for that will either rule a property out or make it a good prospect (in council's eyes).

After we have done this and are confident that a particular property is one we want to make an offer on, are their conditions that we can use to cover ourselves should there be some unforeseen reason why the property will be no good for what we want to do?

Thanks in advance, and looking forward to your replies!

Daniel
 
I've done two subdivisions and in both cases I've been to council to discuss if the property is able to be subdivided in principle and then just took the plunge and bought it. Both times it's worked out.

I thought about making offers subject to subdivision approval but decided not to. If someone is selling a site that I've identified as having development potential the last thing I want to be doing is letting them know about it.

And you cant get approval without the owners knowledge.

Be interested to hear if there are any other ways of going about it.

RC
 
You can have a due diligence clause in your contract, I have a great one for my conveyancing clients, so should a good property lawyer down your way.

In Qld the biggest single cost is normally infrastructure contributions, 26K in Brisbane City Council area, about the same in others. TP fees are $2200 plus GST, Council app fees are the same, average survey fees would be 3500, public notification, $700.

post approval you need to look at any clearing required, house demolishing etc, water and sewerage hook up, be careful if you do battleaxes as you may have to provide fire hydrant and power and comes to the end of the accessway. There will also be a council plan sealing fee $485, paying someone to lodge documents and proof of service connection if you don't want to do so yourself

NSW and QLD have extensive state based legislation that forms the basis for council planning laws but then there is a great range of variables that each council can change also.

IDEO on here is a NSW based TP, he should pick up this thread soon and put in his 2 cents worth.

hope that helps
 
Once you are up to speed on what density/zoning requirements are for your state you get a feel for what criteria you need.
Then you can quite quickly judge which blocks you can develop. Dimensions, density zoning, slope, easements, sewer and other council restrictions all have to be ticked off before you can work out if the block is suitable for you. Then there is finance - ie it is easier to get finance for 3 dwellings than 4.

I have tried to do a "Subject to Due Diligence of 7 days' on a property but the Vendor said no. This was in a risky project with a sewer line far into the project (the Highgate one in my sig)
 
I have negotiated extended due diligence periods, to my satisfaction (like 2 to 3 month due diligence periods). This gives you time to confirm exactly what you want to do with the block, get plans drawn up, discuss them with council, get engineering reports, building estimates etc before you go unconditional. I would normally allow another 30 working days to settle once unconditional.

It gets easier once you have done a few to understand what is likely to work and what won't.

Another way to go is to get an option on the property. This can be difficult however if there is an agent involved as it is in their interest to get a guaranteed sale, rather than a 6-12 month option.

Typically for either extended settlement or an option, you may have to pay a higher price for the property and really depends on the circumstances of the vendor.

Cheers,
Matt
 
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I'm just waiting in a Council for a meeting, but I'll mark this as one of my threads and get you a proper reply.
 
Ok, well that went well :D

The main thing to keep in mind is that different councils have different standards - even for the same zone. One Council may have a 450sqm minimum size for a lot, the other a 900sqm minimum.

The NSW legislation website lists the Local Environmental Plans for each Local Government Area (unless it is a deemed instrument like Gosford with its highly outdated Planning Scheme that predates current legislation). Once you have established what zone the property is, which Council should be able to tell you/be able to be accessed through Council websites it is a matter of working through the LEP to establish the minimum lot size for the zone, and basically seeing if the numbers at a basic level stack up.

If they do I always recommend getting a Section 149 certificate from Council. This will list most restrictions/easements etc on the land, allowing you to see whether there are any additional constraints on the site.

If you want, you can also organise a pre-DA for the site with Council. This allows you to set out your plans for the land, but these can be quite expensive. You may be best served by a simple discussion with a duty planner at Council.

You can never get a 100% assurance from Council for a subdivision, as it needs to go through a merit approval process under Section 79C of the Environmental Planning and Assessment Act, which opens it up for public comment. However, if you meet the minimum lot size requirements and there are no significant site constraints you can reasonably assume approval.
 
Hi Daniel,

Some fantastic feedback above from your fellow NSW developers and good advice there.

In response to your question on the information I posted, I suppose it is worded as if the developer had purchased the property already. This isn't necessarily the case.

Our town planning colleagues at Pillar + Post in Melbourne http://pillarandpost.com.au/ offer full Property Development Assessments to clients, often prior to purchase. These will include all the information you need to be able to form a decision on if you'd pursue a development or not. There is so much information available online, the site doesn't need to be visited before beginning the subdivision.

I'm sure with some research you will able to be find a planning consultant up your way who will be able to offer a similar service.

Cheers,
Ashley
 
Thanks very much to all who have replied, very valuable information from all.

Not having gone through the process before, we are cautious and I suppose just wanting to minimise the risks where possible. But after reading what you have all replied, the "subject to subdivision feasibility" condition may be overkill / not necessary / detrimental to end purchase price?? (depending on the deal...)

What I also picked up is that we should be able to do a lot of our own research and get ourselves to a point where we are about 80-90% confident that a subdivision proposal will get the nod from council?? Please tell me if I am wrong!

Like most things, I assume that it is going to come down to having a red hot crack and learning as we go, as there is no substitute for experience... but if we can reduce our headaches along the way that would be tops!
 
Correct, but also knowing not just that the council will approve it, but that it has the right profit margin and you can finance the development.
 
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