7 Tips for Subdividing Your Property to Make a Profit

When you think of a subdivision, you may think of large-scale property developers purchasing land to split into dozens of blocks. But subdivision doesn’t have to be on such a large scale. Ordinary Australian homeowners with sizeable blocks can make a profit by subdividing land too.

If you own property and are looking for a creative way to add value to your investment portfolio, you might be a candidate for subdivision. Here are seven tips for subdividing your property to make a profit.

#1 Check for restrictions

Before you start making plans to subdivide your property, you’ll need to consult with a property conveyancer. Your property conveyancer will be able to check that the property you own is free from restrictions that may prevent you from subdividing. These restrictions come in the form of restrictive covenants, which would have been included in the Section 32 you received when you purchased the property.

Although such restrictive covenants can potentially be changed to allow for subdivision, the process is lengthy and costly and may come to nothing. If you are buying land to subdivide, always check for covenants first.

Your property could also be subject to zoning restrictions – the area your property is located in may prohibit subdivision. Your zone will also have regulations on how small you can subdivide and whether you need to provide certain services to the block, such as electricity and sewerage before you resell. You can find this information by calling your local planning or development office.

Don’t forget, illegal subdivisions do sometimes happen. When they do, they can end up destroying your property’s value, so be vigilant when checking your zoning restrictions.

Evaluate the market

Before you put any money into subdividing your property, make sure there is a buyer’s market in your area. In some areas, such as inner-city suburbs, a subdivided property will likely be snapped up, but a subdivided lot in a small country town may have no value to buyers. So, you should be confident that there is a stable market for the new lots you are creating (remember, you will likely be selling your lots a few months or years out from now). After all, if you can’t sell the subdivided lots, you’ll just be throwing money away.

It’s also a smart idea to research the market and other properties in your area to decide how big or small the land parcels should be. Doing this can help you determine whether or not your project makes sense.

If you’re unsure throughout this process, consult with a property conveyancer who can provide expert advice on land value and the rate it may appreciate. It’s wise to research your area and start your project only if you can provide a product that the market is interested in.

Choose the right size

Properties that have at least 700sqm in land space give you enough room to vary your plans. The exact minimum plot sizes for subdivisions differ between councils, but most properties sitting on plots larger than 700sqm will be eligible.

Check that the property allows for ample driveway space

In general, councils will insist that there be enough space between the exterior of the house and the boundary line to build a driveway. This means that your plot needs to be larger than the minimum size required by your local council. Bear in mind that a driveway is anywhere between 2.5m and 3.5m long.

Don’t buy a steep block

Flatland is cheaper and easier to subdivide than a steeply sloping block. In general, a sloping block is much more challenging to build on because extra materials and equipment are required.

You should also pay attention to the shape of the block, which may affect the minimum plot size required by the local council. For example, some councils might stipulate a minimum plot size of 300sqm per dwelling on a level block but a minimum of 400sqm on a sloping block.

Look for corner block properties

If you are purchasing land specifically to subdivide, buy a corner block if you can find one. Corner blocks are suitable for subdivision and development because they can be easily divided into two lots, each with its own street frontage and access.

Some councils require that each lot have its own kerb, so by purchasing a corner block, you are saving yourself the money it would cost to build extra kerbs.

Subdividing your home’s block

Subdivision doesn’t just occur from investors specifically seeking new properties to split. If you already live on a large block, you may have the space to subdivide your land, keeping your house intact. Some people choose to subdivide if they have little use for so much land or to sell to family or friends. Whatever your reason for subdividing, you will need to follow the same rules and legislations as investors, so be sure to get a property conveyancer on board as soon as you can.

Are you thinking of subdividing your property?

For more information about Jim’s Property Conveyancing in Melbourne, or here for information about Jim’s Property Conveyancing in Brisbane. Or for expert advice on property conveyancing services in Australia, please get in touch with our friendly and experienced staff on 13 15 46.