Property subdivision Victoria:Free developers course
This is your one stop free guide to developing in Victoria- planning, zoning, subdividing, building,feasibility and development costs.ts.
PROPERTY SUBDIVISION: DUAL OCCUPANCY + PROPERTY DEVELOPER'S COURSE
This is your one stop free guide to developing in Victoria- planning, zoning, subdividing, building,feasibility and development costs.
We cover the most important components property developers will encounter.
CouncilsAuArchitecture and its Founder has interacted with most councils across Melbourne and some in regional Victoria
PermitsAuArchitecture are planning and building permit specialists . Our founder managed hundreds of planning permits across Victoria.
Site criteriaWhat are the site criteria for a dual occupancy.
Each site has its own unique features which present specific type of development.
ArchitectureAuArchitecture is design studio supported by registered Architects and Building Practioners
You will require council approval if you are planning to build more than one house on your block, or are thinking of a straight out subdivision, or developing the property with townhouses or multi unit development or wanting to sell your backyard.
An experienced town planner will guide you through the maze of planning regulations which might be challenging for someone without planning knowledge or expertise.
AuArchitecture will maximise your return through responsible design and town planning expertise.
AuArchitecture's property developer Founder managed hundreds of planning approvals for architects and real estate developers. He is a Registered Planner and affiliated with the Australian Institute of Architects, The Planning Institute of Australia and the Victorian Planning and Environmental Law Association.
This collective synergy gives us the competitive edge over competitors, who may only be designers or town planners. That synergy will deliver significant efficiencies and advantages for your project.
Victorian Councils expect a better understanding of their planning policies. We write compelling town planning reports to garner Council support and our Founder personally oversees each application- from site potential assessment to permit winning designs and documentation and effective council negotiations.
AuArchitecture is supported by a team of Registered Architects and Building Practitioners who use the latest Building Information Modelling technology.
COMPLIMENTARY DEVELOPMENT ASSESSMENT! WHAT CAN YOU BUILD?
WE OPTIMISE RETURNS THROUGH SMARTER DESIGN AND TOWN PLANNING EXPERTISE
There are 31 councils in the Greater Melbourne region each with its own planning scheme (gazetted policies) with a total of 82 planning schemes across Victoria.
Some councils encourage more development, some more creative design solutions while some may have the highest presence at the Victorian Civil and Administrative Tribunal (VCAT) where applicants (developers) challenge Councils decisions.
Around 14% of Planning Applications received by Councils across Melbourne were either challenged at the VCAT or withdrawn at Council.
We encourage developers to collaborate with Council where possible or practical for a faster decisions. VCAT appeals cost fees and planning lawyers time and a decision could take 4-9 months.
Time to get planning approval from a council depends on the complexity of the design and how much a developer wants to maximise the yield or stretch the envelope. A decision at Council will generally take between 6-9 months and faster for simple applications.
Planning and Zoning
The zoning of your land will determine what type of development is possible on your land.
Most zoning will allow a dual occupancy where two dwellings will occupy a block of land which can then be subdivided.
A Low Density Residential Zone (LDRZ) will specify the minimum lot size if you wish to subdivide. They generally discourage zoning unlike the General Residential or Neighbourhood Residential Zones which allow 2 or more dwellings on the typical suburban block.
Some councils might specify a minimum lot size and have Schedules attached to the zoning which specify the minimum open space, site coverage or minimum front setbacks to name a few variations to the standard requirements.
Below is an example where the site coverage has been reduced to 50% and other variations are noted.
Some properties will have planning overlays which control vegetation removal or design for flooding or erosion or cultural heritage to name a few. Some have Design Development Overlays which control the design or building heights.
Planning can be a maze of policies which needs to be addressed in design and in the planning reports.
Schedule to the Zoning
Design Development Overlay
There are three common types of permits.
Other permits are required for more complex sites.
Town Planning Permit where councils approves the use of the land. For example, council approval to build two homes on a block, or change of use from a home to a doctors surgery and so on. We will prepare a set of drawings- plans, elevations, design response, site description, shadow diagrams at the least together with a comprehensive planning report. The planning application is a process and you learn about the work flow here. Other reports maybe required by your council like an arborist report on the trees, a traffic engineering report on the movement of vehicles, a Bush fire management report on land burdened by a BMO or a Cultural Heritage Management plan if the land is affected by it.
Subdivision Permit where council allows you to subdivide the land. For example in a dual occupancy you will get approval for the two houses to occupy the block and then get approval to legally subdivide the block. The subdivision process requires certain works to be completed. Learn about the subdivision process here.
Building Permit. After the planning permit is granted a more detailed set of drawings are prepared by registered professionals- architecture, engineering, energy report, soil report at the least.. Those drawings and documents are certified by a Building Surveyor. The stamped drawings gives you approval to build. A Builder will require copies of the Building Permit and Town Planning Permit together with the stamped (endorsed) drawings and documents.
Planning permit set of drawings we prepared
Planning Application planning report prepared in house
Dual Occupancy/Project Workflow
Click on the image to see the workflow- from start to Building Permit
A development conducive site will have the correct zoning and Schedules attached to the zoning, be ideally flat with services available in close proximity- sewer, power, storm water discharge point and so on.
Dual Occupancy Sites suitable for property subdivision.
There are a myriad of things to consider when finding a suitable dual occupancy development site suitable for subdivision. Some of these are listed below.
There should be a minimum 3 metre wide driveway access to the rear yard if that is where the dual occupancy home is to be sited or check to see if two crossovers are allowed by your local Council
The site length and area should allow adequate north facing open space for recreation and landscaping
The site should be ideally close to infrastructure, schools, shops and transport
The title should be clear of restrictions ( eg restrictive Section 173 or single dwelling covenant) and preferably without any easements
All the essential services should be available onsite or in close proximity and run in the most advantageous position
The site orientation should be perfect so that the amenities of neighbouring properties are not adversely affected- rear facing north
The zoning of your land and it’s associated Schedule should not be overly restrictive
The planning overlays on your land should not be too restrictive
The site should be fairly level
There should be little or no significant vegetation on the site and on abutting sites within say 5 m of the common boundaries
A soil test should demonstrate the foundations will not require additional strengthening
There should be no encroachments on your title boundary or by your property on adjoining allotments
There should preferably be precedence for similar development in your neighbourhood especially if you are trying to get more than two new homes on the land
There should be no difficult planning overlays burden
Your local Council should encourage development to meet their housing stock forecast.
Why do a Dual Occupancy subdivision? Is it Feasible? Can I build more than two units?
A dual occupancy occurs when a permit is granted by your local Melbourne (and Victorian) Council to build two dwellings on a block of land which can also be subdivided to create two individual lots of land.
A triple occupancy would allow three units on the land making the land cost per unit even less.
Dual Occupancy Benefits
Dual and Triple occupancy property subdivisions are profitable because it maximises the value of the land. More units less land cost per unit.
Two houses generate two rental incomes. Even if you sold say the existing house, chances are it will be free of capital gains tax which might pay off your mortgage, any debts or release cash to be used for other worthwhile ventures.
Very often, after the dual occupancy subdivision is completed, the original home is sold for almost the price one paid for the whole block of land with the house. The second house then becomes the cream. It worked for the author who has developed property with success.
A dual occupancy development can preserve capital, diminish risk, and generate cash flow.
A dual occupancy development increases the value of the land
A dual occupancy or medium density development can be profitable as long as you do your feasibility analysis with care
A dual occupancy releases cash from a backyard you might not be using
The new dual occupancy homes can enjoy generous depreciation benefits- Your accountant or QS can work out the amount which could be as high as $40k per new house over five years
You could move into the new dual occ home with new kitchen, bathroom and more and be CGT free when you sell one or both homes.
How much should I pay for a dual occupancy site.
Are you considering buying a development site? What is the development site worth? How much should I pay for it ? Work it out from a simple formula.
Can I subdivide my block?
Can I subdivide the property? Can I build 2 or more houses on the land? Find out what is possible.
Should I demolish the existing house and build two new homes or retain the exiting home? Answers
What are the types of Dual Occupancy developments?
We have shown three common types of dual occupancy in Victoria. Read about them.
What are the costs associated with a property development
These are some of the items you will record or assess in your feasibility report
Land Purchase Price
Finance Application Fee
Civil Storm water Engineer
Project Management fee
Council Application fee
Council Contribution Fee
Holding cost for Land
Interest on Construction loan
Below is Feasibility Report for a Three Townhouse project in the middle ring of Melbourne.
The land cost was $876,000 and the development margin was 14.8%. For a FIRB type project this would not be feasible as additional taxes would apply for a foreign investor. Stamp duty would be an additional 7% over the standard 5.5%.
For a higher return the developer would either have to purchase the land for less or build at a more competitive rate for some cost savings.
Dual Occupancy Types
Dual occupancy developments could be one where you retain the existing house and build one new house in the backyard or in the front yard all depending on land size, depth, access and how one meets the local planning requirements. Or develop differently for a corner site- which could offer great benefits in yield.
Other forms of dual occupancy subdivisions occur when the existing house is demolished to make way for two brand new houses which could be one behind the other called a tandem design or side by side which is called a duplex style property subdivision. In both instances access, site frontage, depth, orientation and streetscape play a key part in the design.
Can I subdivide my home?
Most properties can be subdivided. While its easier to do so on some properties than others, there are challenges which may require structural changes to the existing house or a knock down rebuild would apply. The depth, width and orientation of a property plays a key role in property subdivision.
Get a Free! opinion today. We will give you the options on a desktop basis.
Existing house retained and dual occupancy in backyard
Corner block development
Duplex on 12 m frontage site near Melbourne
A dual occupancy development is the subdivision of one lot into two lots.
In Melbourne, the middle and outer suburban allotments are usually ideal for dual occupancy subdivision development.
Inner city locations will require less land for development while those in the mid to outer rings will require around 300sqm. per lot depending on the zoning and neighbourhood character.
Please complete the firm below for a high level audit of your property. All information is kept confidential.
Feel free to call our Founder - 7 days- on 0448 170 132- 9am to 6pm
What are the costs associated with a property development-subdivision type?
There are a number of costs associated with doing a successful property subdivision. To begin with you need to factor in professional fees, council contributions, cost of land, cost to build, cost to subdivide and more.
So how does the whole work flow?
We detail how your dual occupancy subdivision process works. Read more.
So where do I start in my property subdivision journey?
Finance is your first step in any development. Don't run out of cash so do your homework and work within a cost budget allowing for increases in holding costs. Costs include acquisition, taxes, soft costs and build cost to name a few. Then there are bound to be contingencies and variations. A detailed Construction Cost plan comes in useful. as does a comparison of tenders. Contact us if you need one we offer both these services.
How much should you buy a development site for? Here is a simple formula.
The New Residential Zones in Victoria are complex when it comes to property subdivisions. Understand the council planning requirements for dual occupancies or triple occupancy in the area. Read council’s planning scheme and the schedules which apply. The scheme will let you know the minimum size of land you’ll need for your dual occ and what type of development is permissible. Check for overlays- especially those relating to bush fire where restrictions could occur and heritage, vegetation and others which may apply to the land.
Property Location is paramount for a profitable property subdivision. Infrastructure, availability of services, schools, shops, recreation spaces, employment corridors, views, cultural context and transport add value to your development.
Expert Site assessment is the foundation. Search for land that meets the dual occupancy or triple occupancy criteria. Talk to us. We know which sites work. It’s a complex exercise best left to professionals who will be with you all the way.
Size of land is important. If it’s a duplex site, you may need a minimum of 16-25 metres frontage in mid to outer suburban rings and less in the inner areas controlled by City of Melbourne, Yarra to name two. Site width for two crossovers is not encouraged by several councils who prefer to see all garages and car parking hidden from the street view.
Check the title, Title Plan and Planning Certificates. Check the planning certificate to see if it is in a bushfire or flood zone or affected by CHMP. You can still develop in these areas but it will add to your build costs. Check the title for covenants or Section 173 agreements. I have seen some which burden future development.
Building Cost Budget. This is very important as the builder will look at the land from a different perspective. We can assist you with the building permit process and a cost budget or detailed construction plan.
Run your development feasibility to ensure the project will be viable. Run one in the reverse format to work out what is the maximum amount you should pay for a site. Of course this will not apply if you are subdividing your own home or land, that is, doing a dual occupancy in your own backyard. What should I include in my feasibility report. See examples.
Feasibility study is critical both in terms of site yield and the economics. Can you subdivide and what can you build. Ask us for a complimentary opinion today. You might be paying too much for the land or selling prices might be lower than you thought. What data should you input into a thorough feasibility report? Learn about them.
You will need to find recent comparable sale prices from which you can base your end value estimate on this. Talk to agents about the current rental market and what rent could be expected to calculate the projected yield on completion. Most importantly, you need to have a good understanding of the build costs. We advise to do a Cost Budget to set your goals and control any overspending. Over capitalising or getting emotionally bound to a development could cost you in the end.
Long Settlement terms help. If buying a development site, a long settlement period helps and obtain pre-consent from the vendor to lodge a Town Planning Application pre settlement.
Town Planning and Building Permits. Once you have all the approvals, you can then go back to your lender to obtain your unconditional construction loan. As soon as this is in place, the builder can start.
Construction. The build phase for a dual occupancy should be around four months upwards and usually around eight months for a double storey to Certificate of Occupancy stage. Once the building works are completed, an occupation certificate will be issued. Creating separate titles through subdivision can start earlier.
Don’t forget to order a depreciation schedule; this is simple, just email the plans and builders tender and any other cost details to your quantity surveyor. Depreciation can be very attractive as long as you hold the property.It could run as high as $39,000 per house over 5 years!
Build Equity through the property subdivision. You can apply for the subdivision titles once council issues the certificate of Compliance. You can register the subdivision (after your lender has signed off on it). There is no need to register immediately if you are planning to hold and not planning to refinance as you may find costs such as rates may be a little less if the dual occs are kept on one title. Your Land surveyor can advise your options and the process. Learn more about the process here....
You may decide to “flick” one of the lots with its own title to a builder or developer who is cashed up to start building now rather than waiting for the 6-12 month period it usually takes to come to this planning approval stage. Its a great feeling to know you may have built equity and value through your town planning and subdivision permits. Talk to us to get started- we know the process and how it works- from design to town planning and construction. Start the ball rolling!
Welcome to the world of property development and successful subdivision!
Planning permit applications under the Planning and Environment Act 1987 and certification applications under the Subdivision Act 1988 are processed and assessed by the Statutory Planning unit at your local Council.
Typically and simplistically the subdivision process involves:
Apply for a planning approval for subdivision. When the permit is granted it will contain conditions which must be satisfied.
Council also certifies the plan of subdivision, which legally approves the subdivision under the Subdivision Act 1988
Thereafter the Applicant must meet the Permit conditions (eg installing the required services like sewer, power etc or building crossover if required under the Permit). On completion Statement of Compliance is issued.
A registered surveyor draws up the subdivision plan which is certified by Council.
Your conveyancer or representative can then lodge the certified Plan of Subdivision and Compliance Certificate with Land Victoria, which allows new titles to be issued for each lot created under the subdivision. Read on for More information.
If you are planning to build the project it might be a better to satisfy Council Subdivision Permit conditions during or after construction. These conditions are generally the provision of the essential services like connections to sewer, storm water discharge, electricity, NBN etc. Once these works are completed to Council's satisfaction, it will issue a Certificate of Compliance.
You can then register the lots and sell each unit with its own land title.
However, if you do not plan to build but want to sell the subdivided lots (eg your backyard) you will need to satisfy council conditions before you can legally register the new lots. A purchaser will want a clear title for the backyard. Some councils might agree to defer these works to a later date (like for example after you collected a deposit from the purchaser). In order to defer the works, you will need to enter into an Agreement with Council which is called a Section 173 agreement where legal costs will apply.
A registered surveyor will draw up the subdivision plan and together with a Certificate of compliance your lawyer can submit the documents with the Fees to the Land Titles Office who will issue the title for each registered lot.
Australia Post will be involved with creating the lot address like nos 3 and 3A Subdivision Road.
Building Permit & Subdivision
We have documented, managed and been involved with the building stages for dual occupancy homes, townhouse projects, apartments, retail and commercial, health, education to name a few disciplines.
We provide and co ordinate other consultants as required for your Building Permit which follows the Planning approval for your project. :
Architectural Documentation- full set of drawings and specifications are provided by AuArchitecture
Structural Engineer Documentation
Civil Engineer Documentation
Electrical layout and hydraulics documentation
Land Surveyor for subdivision
Marketing Render- optional
Management of consultants and administration
Tender evaluation- optional
The Building stage for a residential project like a dual occupancy can be broken into the following stages:
Learn about the seven stages of construction for your dual occupancy.
We can recommend a builder if you require one.
We can recommend all the external consultants- from surveyor to engineers and arborist if you need one.
Property value after subdivision?
Gross Income from sale of 3 units
20% developer's margin $180,000 (say)
Selling/legal fees say $45,000
Building and soft cost $630,000
Subdivision cost $45,000
Others costs, say $30,000
Total development costs $930,000
Cost of property with a potential 3 lot subdivision is then $510,000 ($1,440,000 less $930,000)
We have not taken into consideration any contribution to be paid to council and holding costs.
Using this same formula you can work out how much is a dual occupancy site worth where you retain the existing house and build one new dual occupancy home in the backyard. Of course make sure you are allowed to subdivide the land into two lots as some Victorian Councils are or have put in place minimum lot sizes!
Allow for some renovations, contribution may not apply for two lot subdivisions and you may be satisfied with a smaller development margin.
AuArchitecture focuses on residential developments- from individual homes to multi unit subdivisions.
The practice is led by Swarup who is supported by a HIA Platinum Builder who looks after construction documentation, award winning Architects, Registered Building Practitioners, BIM technicians, cost estimator and we are associated with a builder with 50 years of experience. We offer a range of services from Architecture, Town Planning to Construction Cost Analysis. Read about our services.
Architecture of the site and feasibility makes the development project. Build or Build over Easement. Its your land but you need consent to develop on it! Covenant- that dirty word for property developers. Mostly not harmful but beware of fine print. D is the darling for designers and developers. Do it once and well.Easements- can contain services bigger than Ben Hur ! or carry none Feasibility- do the numbers- construction cost plan, holding charges, net return all play a role in the property subdivision Go for it otherwise you will always be on the fence and 10 years later regret Heritage overlays need checking- can you demolish or is it just an ineffective overlay Interest rates- too good to be true. I was paying 18% + in those scary days of development Joinery helps sell a property- don't crimp! Knowledge is power- when applied Levels on a sloping block adds to build cost Mezzanine finance is the start of trouble? Its also for Marketing Native vegetation needs careful handling Opportunity is around the corner- can you see it or did you drive past it ten times? Property,profit,performance,planning,permit the list is exhaustive Quest for knowledge Residential development- safe for first time developers Success leads to more development Time control Under develop- no one wins Valuation- drive past or well researched makes all the difference Work together with council, builder, client and consultants then its a Win Win Win X Factor in Design wins Y is Yield and that matters to developers and subdivision Zero to Hero- do it well and you are on the rise.
Should I demolish the existing home?
The typical dual occupancy subdivision is the tandem style arrangement. When the existing house is retained in the dual occupancy development, one’s capital is preserved because the asset purchased, that is the value of the house on the land, is retained.
The house has value so think twice before you consider demolition! You should consider demolishing the house in a dual occupancy development if the house is in very poor order or is not suitable for your needs, is very outdated and will cost a fair amount to bring it to today's market expectation, is in an area experiencing significant demand for particular home style and amenities or there has been significant growth in the value of the land. This is where the Knock Down and Rebuild works!
In Australia- and in particular Melbourne and Sydney, there are suburbs where the value of the land outstrips the value of the actual house!
In most middle and outer suburbs the houses have great value as it generates rental income and is easier to finance by typical lenders.
For example, if the house is retained in the dual occupancy development, banks could lend 80-95% of the value of the property. If the house was demolished, banks tend to lend only 65-70% of the value of the land as the house has been removed. This preservation of capital in the eyes of the lender reduces their risk because if, for any reason, the development does not go ahead, the asset retains its value.
Even after the redevelopment, the value of the existing dwelling is by and large retained especially if you already held it for a few years and property growth continues.
The existing dwelling also generates cash flow during the planning process and in some cases even when the development is underway. This cash flow cannot usually be generated from a vacant allotment.
Left side is single storey rear unit Right is the double story front unit
The case studies.
1. Dual occupancy/dual income/inter gen home
The client's 298sqm lot with a 7 m wide frontage is on a street where other narrow sites are occupied by 100 year old, terrace style homes .
The owners of some of these properties have extended upwards - in some instances boundary to boundary.
On the northern and right side of the property is an extended double storey Victorian home while to its left is a 1970 single storey home.
The design takes advantage of the neighbourhood character. Hence, for the front unit with reverse living, we have responded with double storey structure built to the boundary to the right and on the left setback as per Rescode.
The rear unit is single storey- ideal for older persons while causing no adverse shadowing on the neighbour to the south.
This flexible home can be a dual occ each with 2 bedrooms plus open study or a large four bedroom plus study home or a dual income home. It has the flexibility of being a semi retirees income stream from the front unit while occupying the rear single storey unit which has all the features of wellness architecture- north facing living room windows, cross ventilation and more.
Build cost $500,000
Rent from 2 units : $700 / week /unit
Anticipated Sale from two units $1800,000 (based on current sale prices in area).
2 Tandem Dual Occupancy
Our Founder turned his first home into highly successful dual occupancy development. That led to other developments including a challenging dual key beach home which-he owner built. Getting a Building permit for a water front home on an environmentally sensitive land was a 2 year battle with council's planning, engineering, traffic and flora and fauna officers. He eventually presented his side of the story to the full Planning department including the Council's General Manager. Armed with real facts- including exhaustive geotech reports- he convinced Council a Permit should be issued and it was!
He also approached the State Government's planning department and had his second home in a prestige area rezoned for a four storey apartment.
The tandem dual occ project was in a blue chip area surrounded by homes with tennis courts and pools. The neighbours and council were in unison- oppose the development. The Application was not supported by the planning officer. He presented his side of the story to the full council and won a permit.
The property was burdened by a heritage listed tree!
He subdivided the land then built the second home. The profits paid off the mortgage and had enough for a deposit on the next property.
Start the Ball rolling! Can you subdivide the land? What could you build on it? Is it worth doing the development?
We offer high level advice on a complimentary basis. Please complete the form below and our Founder will respond personally or call Swarup on 0448 170 132- 7 days