Subdivide and build equity
- Admin
- Oct 27, 2020
- 3 min read
Subdivision process and Subdivision costs
The 4 steps:
• A planning permit for the subdivision is granted under the provisions of the local governments Planning Scheme ( the planning “rules”)
• Council certifies the plan of subdivision, which approves the subdivision under the Subdivision Act.
• The Applicant must meet the Planning Permit conditions installing the services like sewer, water, power etc. On completion Council issues a Statement of Compliance
• Your conveyancer or representative can lodge the documents with Land Victoria which allows new lots to be issued for each lot created under the subdivision.
Many successful people have built wealth through property subdivision. Swarup, our Founder, turned his first home into a dual occ subdivision.
He invested the profit into two other projects. You can do the same and start your development career- part time or full time!
To be honest, subdivision will test your nerves and relationships. It is a slow process and if you are heavily geared my advice is not to enter this market!
It is not as simple as just carving out an extra lot from the original block of land. You will need patience and funds to cover the costs related to the subdivision.
By the time the lots are registered and ready for sale, the process could take 9 months and more.
First Steps:
Scenario 1- build a second dwelling on the land (most likely the backyard) called a dual occupancy
Scenario 2 – Demolish the existing house, if there is one and build a side by side duplex type dual occupancy or three or more townhouses
Scenario 3- large land- subdivide into smaller parcels
In most councils the two Scenarios 1 and 2 will require a planning (development) application be lodged with your local Victorian Council showing the house/townhouse plans and general compliance with the Planning requirements under Clause 55. and relevant clauses of the relevant Planning Scheme.
After approval of the Development Application you can subdivide into the number of lots with or without a common driveway ( eg in a duplex or a corner lot).
However to formally subdivide and register the lots for a legal sale you must satisfy the subdivision permit conditions. The plans must be lodged with the Titles Office for formal registration of title.They usually relate to connecting the services to the lots- eg sewer, storm water, water, power, NBN, telecoms etc. You should budget for $15,000 + per lot.
In Scenario 3, you can do a Strata type subdivision which incurs less building works than a Torrens titled lot which requires wider public roads, footpaths, and so on. A Torrens titled subdivision could cost $60,000 per lot in a large site.
In all three scenarios, each lot must be connected to the essential services like sewer, water, power, NBN, etc. unless the relevant authorities allow a deferment under a legal S173 agreement which will be recorded on the title.
The process to subdivide.
There are several ways to subdivide land. They depend on the size of the block and your local council rules,
In a typical suburban block in Victoria- and Greater Melbourne for that matter, your local council may not allow a straight-out subdivision unless the proposed lot size meets than the minimum land size.
The development application will contain the plans and elevations of the proposed house ( in the backyard) or townhouses and an accompanying planning report.
In some instances, other consultant’s reports may be required if there I vegetation to be protected, traffic engineering or a Bushfire Management where relevant.
The design of the house(s) has to satisfy Council’s planning scheme “regulations” including satisfying those of Rescode or Clause 55.
Rescode has some 28 clauses to satisfy- starting from neighbourhood character to parking, private open space, overshadowing neighbouring lots, overlooking, energy efficiency, safety, site coverage, setback from boundaries to name a few.
You can apply for the development application and the subdivision at the same time which will reduce the Application fee.
Fees are around $1540 for developments which cost less than $1.07million and Subdivision application is discounted by 50% to around $700.
Developments in the Melbourne Metropolitan area costing above the threshold of $1.07million attract a State government levy (MPL) .
We can provide all the services to get the subdivision approved.
A development cost of say $2 million in the regional Victoria could attract a Council Application fee of around $3000 and subdivision fees of around $1280.
Once approved Council will issue a Planning Permit with conditions.
In some instances, Council may waiver certain works required under the Permit Conditions by way of Section 173 Agreement which passes on to the new title.
The Council is then responsible for three of the “approvals” you will need, namely: -
1. Issue of the Subdivision Planning Permit (usually contains several conditions from Council and the Authorities to be satisfied);
2. Plan Certification of the Final Survey Plan showing exact boundaries & measurements, and
3. Issue of the Statement of Compliance (issued when all conditions in the Planning Permit in 1 above are satisfied).
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