All Topics / Help Needed! / subdivision

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  • Profile photo of josejose
    Join Date: 2015
    Post Count: 1

    Hi Friends,
    I bought a property at Frankston,wants to subdivide and plans to build 2units on back keeping existing size is 1100m2,having access 3 meter to the backyard.I am very new to this subdivision.Could anyone can help me the steps and relatively how much does it cost and how long take to complete the process?I have been to council regarding any covenants and there is none at the moment.So altogether 3 titles(keeping the existing one).Is there ant other costs involved in 3 developments?and bank aspects-will it going to be commercial lending?
    Any recommendation for town planner and land surveryer.
    Many Thanks

    • This topic was modified 5 years, 2 months ago by Profile photo of jose jose.
    Profile photo of ryanyoungunryanyoungun
    Join Date: 2015
    Post Count: 1

    mick hales from millar and merrigan can help you

    i have done a subdivision. great team

    Profile photo of PimobpiPimobpi
    Join Date: 2013
    Post Count: 60

    Hi Jose,

    Welcome, I am sure you’ll gain heaps of knowledge here – although, you’ll have to educate yourself further & educate yourself from many other sources if you want to carry out a successful development project.

    You do not necessarily have to go with Commercial lending for a 3 lot subdivision. I know that NAB offer Residential loans for 3 or less lots. I am not sure about the other major banks but suspect that it is Commercial lending for 3 or more lots. There are many other lenders than just the major 4 banks, ask your lender (for the Frankston property) whether they would setup a residential loan or not.

    Also, it’s not just the covernants that you have to ask the council about. Has anyone else subdivided in close proximity to your property? On July 2014, the reformed residential zones came into effect across Victoria. All residentially zoned land is now included in one of the reformed residential zones and the previous Residential 1, Residential 2 and Residential 3 Zones have been removed from the planning system. Please investigate this and have a chat with the council for them to explain what zone you are in – What this means is that what was done in the past regarding subdivision in your area may not necessarily be what can be done now.

    If a 3 lot subdivision is possible on your block, the costs will vary but I’d say that a Planning permit may cost you anywhere from 5K – 10K. Engineering 5K, Subdivision into 3 lots 7.5K. Contribution fees may be 2% – 5% of your land value/purchase price. Power & water Levies 6K total. There are other costs like land tax, holding costs, council fees etc to consider.

    You will also need advice regarding whether you are carrying out a business enterprise or not (even if your intention is not to carry out a business enterprise). If the ATO deem that you are carrying out a business then GST & income tax may be applicable after resale. You will need legal advice on this.

    I’d start with the council as all of the above information becomes irrelevant if subdivision is not possible. If all OK, I’d speak to an accountant about your ideas, then to a lawyer. Then seriously look at what you believe would be the right design/buildings on your block & why you think that. Maybe 2 lots are more profitable for you than 3. You’ll need help from a Draftsman or Architect to gain Planning approval. Then get quotes on how much it will cost to build the units & whether it is worth your while to finance it. You would need to look at whether building is something that you want to go through & whether it is bringing you closer to your goals or whether selling the block with the Planning permit would be a better option. Then look at gaining your finances.

    I am sure that are some other forum members that will disagree with my above order and that’s OK. I have found that being a “Developer” is NOT about subdividing land into as many lots as possible and it is NOT about building cheaper dwellings to match your budget. Maybe that was OK in the past as circumstances were very different then but that approach is very dangerous now. What I have found is that you need to study the area really well and look at providing the area with exactly what is required to be most profitable for you & to be most beneficial for the location. (I would think about this before even buying the block, it would be my reason for buying it or not). Once you buy & have this information, act to gain a Planning permit then I would ask myself one simple question. Does providing this product fit into my budget? If the answer is “YES” then go for it. If the answer is “NO”, sell the block with the plans for someone else to provide the product instead. What does not work for you may work for other developers and vice-versa. I think that doing it any other way ends up with either providing an inferior product or ends up with over capitalizing in the area – Both of these situations should be avoided as both will eat into profits & both could even create losses for you.

    Cheers & good luck.

    Profile photo of Corey BattCorey Batt
    Join Date: 2012
    Post Count: 1,010

    Lending wise a 3 on 1 development is nice and simple with the right lenders – can be put through as a residential loan. It is worth noting however that unless titles are issued prior to completion, the development will be valued as OOT (on one title) which will be lower than the end product on 3 individual titles which can affect LVR’s until completed.

    Corey Batt | Precision Funding
    Email Me | Phone Me

    Investment Focused Finance Strategist - servicing Australia-wide

    Profile photo of Tom@SadhanaConstructions[email protected]
    Join Date: 2015
    Post Count: 18

    It’s not the cheapest option but I suggest you get in touch with a project manager who deals with subdivisions. It will cost you a chunk, not sure how much, but potentially could save you a whole lot more or even save your deal if you get into strife.

    Subdivisions are not the simplest projects for the uninitiated and having a good team on hand is imperative to your success. Councils being what they are there are a lot of hurdles. I’m not sure where you’re located but some of the bigger builders even offer this now such as Dale Alcock (I’m not sure if he’s only in Perth?).

    And most banks will finance a 3 unit development as a residential deal.

    [email protected] | Sadhana Constructions
    Email Me | Phone Me

    Perth builders of developments and bespoke homes

    Profile photo of #Planning Permit#Planning Permit
    Join Date: 2014
    Post Count: 64

    I have obtained several planning permits approved by Frankston City Council. What you should know is that even though the planning scheme says otherwise, FCC will require each dwelling to be provided with 40sqm open space in one parcel even if zoned GRZ1 with no variation to the Schedule. This can create issues and reduce footprint. In a VCAT decision even though the Member agreed 25sqm was adequate Council would not budge! A lot depends on the planner you get at FCC. Your site appears large enough but will depend on site width, depth and orientation. Check there are no large trees on adjoing lots as their Tree Protection zones will come into play.

    #Planning Permit | AuArchitecture
    Email Me | Phone Me

    Property Subdivision expert with 250 planning permits approved by Melbourne Councils

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