Sunshine Development Diary In Detail

Rates & other Council fees

Called Brimbank City Council this morning and had a chat with Bernadette who was very helpful.

Basically there is 3 sets of council fees. Rates, environmental and munincipal.

Rates for units and house both use 0.002566 x the total property value. For this development, that would be 0.002566x $1,070,000 which is $2,745. The only way to reduce rates is to reduce the value of the property. Not subdividing will reduce the value but that reduces available equity (I have plans to use this) and the savings would be minimal.

Environmental is for normal and recycled bins and something else I missed. When the development is ready for tenants, you contact environmental services who will come out and do an assessment and see what combination of bins you need. Subdividing makes no difference to this.

Munincial is for council services such as libraries and is also unrelated to subdivision.

So if I understand this properly, not subdividing in this council makes very little difference to annual council fees. Too bad, reducing rates would have been nice.:(

Anyway, great point, thanks Rockstar :)
 
Hi Mindmaster

Contributions for Brimank council is 2%
The size of your 3 buildings seems small ( 35sq ), so i presume they would be approx 15,10 and 10 sq each.
If that is the case i think your resales is optimistic, unless you are on a Corner block.
Demolition should factor in possible asbestos of about 3k.
Planning permit should be 10-11k not 18k
Building permits 10k.
Your current land value of 350k seems low. I would have thought it closer to 400k.
Is your site a corner site? i presume it is. If so did the building cost factor in 3 crossover?

Hope my info helps
 
Update
Gone over the plans which look great (see attached screen shots) and the architect has started preparing the town planning file which will be ready to submit to council in around two weeks.

At this stage all three units will be two single floor 2 bedders with the one double floor 2 bedder which is much roomier than the other units.

Dimensions
The current planned dimensions are

Unit One
61sq/m ground floor
54.5sq/m first floor
2.5 sq/m porch
25.0 sq/m garage
143.0 sq/m total

Unit Two
66sq/m ground floor
2.0 sq/m porch
23.0 sq/m garage
91.0 sq/m total

Unit Three
74sq/m ground floor
1.5 sq/m porch
23.0 sq/m garage
98.5 sq/m total

Leicachamp you were very close with the sizes you gave. I'm impressed.

Tweaks/extras
I plan on holding onto all 3 units for a number of years and and want as much equity as possible so
-brick veneer: Minimal extra costs and much less work and maintenance expense
-nice floor boards and bench tops: this should give a return of 2:1

Need to look into council contribution and make a phone call or two.
 

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Hi Brendon

As an expat (I presume it means not an Aussie resident for tax purpose) I think you dont get capital gains discount at all anymore, so better to ensure you can hold them for sometime....

Can anyone confirm this as I believe the rules changed last year sometime?

good luck :)
 
Brendon,

Looks good.

The plans are pretty hard to view so small but I would suggest

Unit one where the door from the garage goes to verandah perhaps enclosing that and giving direct access into the house. This is a lifestyle thing - nothing worse then having to get from garage to house in the rain.
 
Good point about the garage door.

I zoomed in on that area of the plan and had a careful look. Rain should not be a problem because the path from the verandah to the rear door covered by the overlap from the roof. Not ideal but does a good job.

Was going to ask the builder about adding a door but then saw that that wall already has a large sliding door and two windows so probably not practical.

If you'd like a full copy of the plans, please let me know and I'll PM them to you.

Brendon,

Looks good.

The plans are pretty hard to view so small but I would suggest

Unit one where the door from the garage goes to verandah perhaps enclosing that and giving direct access into the house. This is a lifestyle thing - nothing worse then having to get from garage to house in the rain.
 
Hi Brendon

As an expat (I presume it means not an Aussie resident for tax purpose) I think you dont get capital gains discount at all anymore, so better to ensure you can hold them for sometime....

Can anyone confirm this as I believe the rules changed last year sometime?

good luck :)

Correct, no more 50% GST discount for expats. You can read the details in this thread http://somersoft.com/forums/showthread.php?t=79137

So from my understanding, if you have made good CG, you will be taxed at the highest rate and lose around half your profit to the ATO.

Could be a way to minimise CG through setting up a trust. Need to do a lot of research in this area and get a good accountant. Crazy to give money to the ATO when you can avoid it.
 
Spoke to James who is a town planner at Brimbank

The open space contribution which is a part of subdivision component is 2% of the land value. The council will value the land once the subdivision process has started.

This fee comes under the Subdivision Act which empowers councils to charge up to 5% land value. Brimbank use a sliding scale with a higher cost for more units. 2% is the cost for a 3 unit development.

So assuming a land value of $350k, the cost of the contribution will be $7k. Have to check to see if this has already been factored into the subdivion costs.

Thanks Anson He and Leicachamp for bring that up.
 
Thanks for the link Mindmaster, wish i had been keeping up with that thread, missed the window to post on the Treasury website. Oh well watch this space I guess...
 
Just had word from the developers that the council's open space contribution has already been taken into account in the $18,000 Subdivision stuff. They even allowed for $9500 when a land value of $350,000 only cost $7000 :D

Been reading Brimbank's Information sheet for building and development complaince and past planning committie agenda reports very kindly provided by a fellow forumite.

Great reading with details on previous applications, their designs/plans, objections raised, the points council checked, the changes demanded by council and more.

Two interesting points from this reading
1 - no one is legally entitled to a view so the loss of a view is not a planning consideration
2 - perceived loss of value or the loss of tenants is not a planning consideration
 
Brendon,

Oscar is pretty in depth with his feasability so I'm not surprised he included the open space contribution.

Past minutes are really good to read aren't they! You get a good feel for what the council like and what petty objections neighbours come up with - that are overruled.
 
Just had word from the developers that the council's open space contribution has already been taken into account in the $18,000 Subdivision stuff. They even allowed for $9500 when a land value of $350,000 only cost $7000 :D

Been reading Brimbank's Information sheet for building and development complaince and past planning committie agenda reports very kindly provided by a fellow forumite.

Great reading with details on previous applications, their designs/plans, objections raised, the points council checked, the changes demanded by council and more.

Two interesting points from this reading
1 - no one is legally entitled to a view so the loss of a view is not a planning consideration
2 - perceived loss of value or the loss of tenants is not a planning consideration

I am asking an obvious question - but how do you get access to past minutes - online/visit to council etc?

Thanks,
 
Just had word from the developers that the council's open space contribution has already been taken into account in the $18,000 Subdivision stuff. They even allowed for $9500 when a land value of $350,000 only cost $7000 :D

Not sure of the age of the parent title, but it is still worthwhile to check if that the Public Open Space contribution was paid during the original subdivision as...

'A public open space contribution may be made only once for any of the land to be subdivided (Cl. 52.01)'.
 
Feedback from Council

Planning permit application was submitted to Brimbank council on the 10th and a letter with feedbck/changes/requirements was received last week. At this stage council only has 3 minor requirements/objections

Garage to Carport
The rear of the garage for unit 3 (at the back of the block) is on the easement so a carport can be built, not a garage. Not a big problem. Bascially it will still be a garage with no rear wall. The fence behind the garage is 1.9m so the garage/carport will still be enclosed and secure.

Forward access for cars parked at Unit 3
Council likes cars to be able to leave facing forwards not reversing which is does not work for unit 3. A traffic engineer will survey the drive, confirm there is no issue and their report will be submitted to council which should fix this problem. From my understanding (from the developer;)) forward access is not a legal requirement, just a preference.

Bedroom 2 on Unit 1
The edge of the bedroom projects too far forward into the private space of unit 2. Making the bedroom 600mm smaller will solve this.

So overall very good. These problems can be fixed without any drama or big value losing changes. The response time as also very fast. I was expecting to wait months not weeks :D
 

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The costs
$18,000 Town Planning Permit
$13,000 Building Permits
$18,000 Subdivision stuff
$420,000 Build costs
$10,000 Demolition (free doors and windows anyone???)
$20,000 holding costs
$15,000 contingency
$350,000 land value
$860,000 very roughly in total

End value
$380,000 Unit One
$360,000 Unit Two
$330,000 Unit Three
$1 070,000 Total

If say you are going to sell them, rather than keep, you would have to pay GST and therefore the figures/return on the project may not be that good. Can I get your opinion?
 
If say you are going to sell them, rather than keep, you would have to pay GST and therefore the figures/return on the project may not be that good. Can I get your opinion?

I'm a non resident for tax purposes and there is no trust/structure to this development so if I was to sell, the return be laughable. GST and CGT would both give the expected $150-200k profit/increase in equity a hammering.

The plan is to hold this development which will be CF neutral or a little positive at 6% interest and use the equity to go on with the next development that will have a trust / structure to minimise tax gouges and allow hold some sell some strategy. There are a few assumptions involved (big ones) but so far so good.

Will need some serious consultation with accountants/lawyers to get there.
 
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