For those living on large blocks of land, subdividing can look like a very attractive prospect. In theory, you can sell off your existing land in smaller parcels, and make a considerable profit in the process.
In practice, of course, it can be quite different. The process is not as simple as getting out the boundary markers and selling a new plot, with profits headed directly to you. There is a large amount of red tape to go through, and you’ll want to be prepared. Below, we’ve got some basic information on the issues involved in subdivision.
First things first: You need to be living in an area where you’re allowed to subdivide. You will need to check with your local council and see if they allow it within their jurisdiction, and also whether you are living with a zoning area where subdivision is permitted.
Many people dislike the idea of using professionals during the subdivision process, often due to concerns that their fees will cut too heavily into their profits. However, while professionals will cost you money, they can also save you time and funds in the future.
Typically, you will need to meet with some or all of the following people as part of the process:
- real estate agent
- building designer
- property lawyer
Make sure that you meet with the relevant people before lodging your application with the council, as they will be able to advise you on a range of potential issues before they arise. You may otherwise find yourself left in the lurch if they come up after the application has been lodged and you haven’t done your preparation work first.
SUPPLY AND DEMAND
As with any market, supply and demand is of key importance to your financial success or failure. Before you begin the process of subdivision, it’s worth investigating whether the area you’re living in is a good candidate for it. Research your local area to see whether other subdivisions have taken place, and if so, how recently.
Importantly, you will also need to keep a close eye on the sales of housing within your area. If your suburb is currently experiencing a lull in sales, now may not be the time to go ahead with the process. There’s no point in subdividing if you’re not going to be able to sell, or if you’re not going to cover the costs of your own home loan.
One area that can become an issue is that of utilities. The subdivided land must have access to the same utilities as the original propertyâ€”water, electricity and gas. Selecting an energy supplier will be up to the future residents, of course, but the basic work needs to have already been done.
This is not typically difficult to arrange, but two areas that can become a problem are storm water and sewage. Access to the mains will not necessarily be located on your property, and you may need to consult with your neighbours to work out arrangements. There is not usually an obligation on their behalf to agree to provide you with access. While the council may sometimes have power to force co-operation, there’s no guarantee that this will be the case either. Also, it’s far better to do it on positive terms than on negative ones.
Subdividing can be an excellent way of profiting from unused land, but it’s not the get-rich-quick scheme that you may have thought it would be. The process will typically take at least a few months, and possibly longer if any issues arise. Still, if done correctly, there’s certainly money to be made in the process.