Subdividing a property can be an effective way to make money out of property, so long as you go about it the right way. We look at everything you need to know about subdividing your own property or one you intend to buy.
What is subdivision?
Subdividing happens when you take an existing block of land and turn it into two or more. Each block has its own title.
There are three main types of subdivision:
- battleaxe blocks, where a new block of land is carved out of the rear of the existing one
- side-by-side, where two homes have street frontage (and the dwellings may even be joined together as a duplex)
- multi-unit, which consists of multiple dwellings.
Can you subdivide your own property?
Whether or not you can subdivide a property will depend on your local council rules. Each council has its own restrictions on minimum block size. They also set their own regulations on factors such as building restrictions, easements and allowable land use.
If you’re looking to subdivide a property, you should first make sure it meets these requirements.
That said, just because you can subdivide a property that doesn’t necessarily mean it makes financial sense to do so. Given the costs associated with getting a subdivision approved, as well as the cost of building on the land, we find it generally makes more sense for land closer to the CBD.
Anything within, say, a 15km of the Perth CBD is generally at a premium and therefore a good candidate for subdivision.
At just 10km from the CBD, Bassendean fits the bill for subdivision perfectly. Depending on the land zoning, our local council will consider subdivisions for blocks over 900 square metres.
The benefits of subdividing
The obvious reason to subdivide your land is that it can lead to a nice financial windfall.
Say, for example, you have a block of land that’s 1,000 square metres. You may be able to turn this into two blocks, each one 500 square metres.
While this will reduce the value of the land on which your existing property is located, in the right area, it won’t reduce it by as much as the new block is worth. You’ll have the option of selling it as a vacant lot so that someone can build their own home. Alternatively, you’ll have the option of building another home on the block and either selling or renting that new home.
The disadvantages of subdivision
A potential decline in your existing property’s value is the obvious downside of subdividing your property. However, there may be others if you don’t get it right.
Some buyers covet a large parcel of land and the privacy, options and space it brings. So subdividing off your land, particularly if you have a large home on it, could reduce the market for your existing property.
You may find that your lifestyle is compromised by the loss of space. If you sell the block of land vacant, your neighbour may build a dwelling that makes your home less private or your property less attractive. One way around this may be to sell your land with approved plans in place.
If you decide to build on the new block, you face the risks associated with building a new home as well as the stress that can sometimes entail. You’ll also be living next to a building site during the construction.
For these reasons, it’s important that you plan in advance and think through the process thoroughly.
How to subdivide real estate in WA
Before you consider subdividing your council will be able to let you know of the rules and regulations that apply to your lot. They’ll also eventually approve any subdivision plans. However, in the interim, you may need to carry out a detailed survey, as well as a soil report. You’ll also have to submit a full planning report to council, pay an application fee and, if it’s approved, properly notify your neighbours before lodging your new title.
On top of this, if your land isn’t yet able to be subdivided you may need to apply to have it rezoned.
This means subdividing can be a lengthy process. It can also be a reasonably costly one. Council fees alone can run into the tens of thousands of dollars. Then there’s the survey, soil report and more. Because of this, it’s important you get it right.
Want more?
We offer expert advice in Perth subdivisions, including helping buyers find properties that can be subdivided. We can also advise on how to make the most of your existing property through subdividing, including rezoning.
If you’d like to know more, get in touch.
[Sources/references]
https://www.propertyresourceshop.com/strategy-subdivision-costs-wa/
https://reiwa.com.au/information/builders-and-renovators/subdividing-know-the-facts/
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