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5 Things to Consider Before Sub-Dividing

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It sounds simple; take one block of land and divide it for greater return on your investment. Easy! Not always. The reality is complex and can be thwart with red tape. To reduce the element of risk, frustration and financial pitfalls, do your homework first.

What’s the Demand?

Consider the area in question. Are people wanting to build on smaller lots? Is land already in demand? Are subdivisions springing up on every street? Is the area suited to first-home buyers or those looking at down-sizing? If so, subdividing is a viable option.

Location Matters

If you’re scouting for a potential development site, consider the previous points as well as the address and surroundings. For example, corner blocks present greater street frontage. Be sure to check with local councils to confirm building requirements – this includes kerbs, fences, etc.

Building within close proximity to services and infrastructure (shopping centres, schools, hospitals, transport), will make your properties more attractive to buyers and renters.

Know Your Land Size

Check all council guidelines. There is a minimum square metre requirement for potential subdivisions. A good start is anything over 700m2. This total may include driveways and easements, or it may not. If your block has a slope it can reduce ‘liveable land space’.

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Each lot must be able to accommodate all council guidelines in order for subdivision to be considered.

Know the Costs

A realistic budget is a must. Does an existing property need to be demolished? Confirm all local council fees as they can vary. Usual charges include survey, legal and subdivision application fees.

If building, factor in water connection and drainage for additional blocks, as well as legal fees charged upon sale (if selling). If building on a slope, factor in additional costs such as retaining walls.

You Don’t Have to Build

Subdividing does not mean you must build. The original block can be divided and sold on as land only. This process is often less risky, can be more profitable, and saves a lot of time and stress. As always, research on the specific area is key.

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