Ask Margaret: The key to purchasing land

Hello Margaret,

I am currently seeking (with my partner and my parents) to purchase land and put two dwellings onto it. The land we are looking at is greater than two acres with the houses approximately 200 square meters +. we are thinking sub diving but We are unsure of how to best address this and the processes involved as so many people tell you different things. Are you please able to provide us with an insight into the best was to approach this?

Kind regards,

Ian

Hi Ian,

Your first port of call will be to the local governing body, the council, to find out their individual policy on subdivision.  It's useful to note here that, while all local councils subscribe to their state's planning rules, each one will have different local rules surrounding what you can and cannot subdivide.  These rules will relate to the original zoning of the block, minimum lot sizes allowed, and a  whole host of other things.  For example, in some areas, apparently residential land may actually have a rural or semi- rural zoning, and this would mean that you may not be able to further subdivide at all, while in others you may be able to make this 2 acre block into two x one acre blocks, or even more. If the current zoning allows the subdivision you are after, you can commence, if it does not then you need to seek the council's advice around your chances of having that original zoning amended to allow the subdivision you want.

A frank and open discussion with the local council should give you a good idea of what the current zoning is and their attitude to the plans you have for the land.

Once you know what you are allowed to do, it's my advice that you contact a local town planner for phase two. A town planner will be able to clearly advise you on whether your ideas for this subdivision will progress smoothly through council, whether you face objections which may be overcome, or whether the entire idea is so far out of what is allowed that you have no hope. It's a worthwhile expense to have this feasibility study done as it could save you not only a lot of money, but time in satisfying the lengthy progress of seeking subdivision approval, only to find that your proposal is rejected.

If the planner agrees that you have a hope then they will also oversee the obtaining of the required surveys, site and engineering plans. Remember that the town planner's fees will be on top of the fees that you pay each of these independent contractors. I have found that town planners usually know the rules intimately, and many have previously worked for council, so they are in the best position to develop a proposal with the greatest chances of success.

I want to point out that the costs of subdividing are rarely accurately able to be forecast - in other words, whatever you think you will pay for all of this is likely to be so far below what you will actually end up paying that you will be surprised and possibly a little stressed out by the resulting project cost. These potential costs include, but are not limited to: drainage and sewerage, connection of services, access driveways if they are needed, cutting and levelling to prepare the site for building, potential retaining walls, connection of services, drafting fees, application fees, surveys and reports, environmental studies, permit fees, council contributions... the list goes on.  You will need to fund all of these costs yourself, and it's likely that such fees cannot be included in any bank loan you plan to get for the construction.

My advice is to prepare a complete list of all possible costs with the guidance of the town planner, and then add at least 20% to the bottom line. You should also include what you believe to be the total costs of building the houses - and don't go by the advertised prices of houses built by the major project home builders.  My recent experience with this saw a property with an advertised price of $290,000, which purportedly included site costs, end up at a final price of $450,000, and this did not include much in the way of upgrades to the tile allowances and basic provisions - in my opinion project home building is a total rort that you only discover after you have signed the contract. If you can get a good understanding around what the homes will cost you to build, and add this to your projections on the subdivision costs, you'll then know if all the headaches of subdividing are actually worth it in the end.

Being forewarned is being forearmed, so it's well worth your time to spend a great deal of time figuring all this out before committing to the deal.

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