For aspiring property tycoons and retiring Australians, subdivision is an ideal way to take advantage of rising land prices, but it can also prove a minefield for those who don’t know the rules.
Backyard developers need to do solid research covering all the costs, and tricks and traps of the application process.
Jacon Parry, of SCM Projects in Brisbane, says that as a general rule, subdivisions only start to make economic sense if the land is 800sqm or larger. The shape of the plot and street position can also be important.
“Depending on the zoning, blocks typically require at least a 15m width to build a unit that is saleable,” he says.
He emphasises that corner blocks are highly desirable as they allow you to build rear units without a driveway through the property, which swallows up valuable space.
“We are working on a project at the moment where a corner block of 737sqm is able to fit three new townhouses thanks to the direct access to a side street,” he says.
“On corner blocks, setbacks are also typically more helpful, allowing you to build within 1.5m of the rear boundary compared to six metres for a block in the middle of the street.”
Successful subdivisions start by speaking with the engineering staff at the local council about services; especially water, storm drainage and sewerage.
“You absolutely need to find out where your services are; this is the critical factor which makes or breaks a subdivision financially,” Parry says.
“Units will need to be connected to the main and if the service runs through your neighbour’s land, they may want financial compensation – or could even refuse access.
“In Brisbane, a new water main or sewer connection at the front of your block can cost as little as $1,500, but access from the other side of the street could run into the tens of thousands of dollars.”
Another big factor in the success of your project will be the price you receive for the new units.
In the inner and middle rings of Sydney, Melbourne and Perth, two-bedroom units tend to deliver the best return, but in Brisbane, Parry says two-storey townhouses with three-bedrooms and a garage sell best.
“That means a building at least six metres wide, allowing you to design a good lounge – dining area and three bedrooms up stairs.”
Ideally, new units should also provide a private outdoor area and be at least one metre from the new internal boundary.
The success of a subdivision will also boil down to how good you are at turning the best laid plans into reality.
Parry says aspiring developers should consider hiring a professional to ensure the project goes off without a hitch.
“You need an expert to assess a project right from the start who knows the tricks to working with the council to get an application through – and the pitfalls to avoid so you make real money from a subdivision.”