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Home Loan Variable: 5.84% (5.91%*) • Home Loan Fixed: 5.48% (6.24%*) • Fixed: 5.48% (6.24%*) • Variable: 5.84% (5.91%*) • Investment IO: 5.78% (6.81%*) • Investment PI: 5.58% (6.62%*)

What to consider when subdividing

If the subdivision of land is in your investment plan, there are many rules, regulations and financial options/variables to consider.

Bear in mind that subdivision compliance, processes and costs vary on a state by state and regional basis.

Check with your local council and construction company/developer before taking the leap.  

Subdivision scenarios 

Initially, creating a range of subdivision scenarios you could encounter is important. As such, independent approvals company Council Approval Group asks you to consider the following compliance rules and questions:

Site area – Will the council allow you to subdivide that land to achieve the same number of lots that you envisaged?

Zoning – What would be the best subdivision design so that the maximum possible developable land area can be realised?

Aboriginal heritage – One of the new lots purchased supports a relic that is protected as an Aboriginal heritage item under local and state heritage laws. Will you still be able to create this lot? 

Access options – You have included your proposed driveway in the development application (DA) plans to the council. However, the council says that the land will be too steep to provide for suitable and safe access.

Are there alternate locations where you could place the access? This needs to be conveyed in the application.

Site coverage and landscaped area – You have purchased your land on the understanding that you have enough land area to create five allotments.

However, the council refuses your DA because there is not enough land area for each new lot to achieve maximum site coverage and minimum landscaped area requirements. Can you get around these planning laws, and if so, how will you approach this?

Creating land titles – You finally achieve DA approval for your subdivision, only to discover an overwhelming list of conditions that must be addressed before you can receive your construction certificate and move forward towards registering your titles?

What is the process of subdivision?

The subdivision process generally includes submitting a development application, if required; obtaining a construction certificate, if needed by development consent; and submitting a subdivision certificate application form with supporting documentation. Local government sites can help streamline this process and provide checklists.

Creating your subdivision plan

A subdivision plan is produced after an initial survey of your property or land. Importantly, the plan outlines existing boundaries and marks new boundaries.

When a subdivision plan is registered, the plan becomes the title diagram for the new folios of the register. 

Only a licensed surveyor can prepare a plan of subdivision or consolidation. 

How equity release can help

Equity release is a way to unlock the value of your property and turn it into cash. 

You can do this via various policies that allow you to access, or ‘release’, the equity (cash) tied up in your home.

These policies apply if you’re aged 55 or older. The major benefit is you don’t need to have fully paid off your mortgage to be eligible.

Consult your financial planner, bank or lending institution for more details.

Costs involved and financial flexibility

Getting the right property development finance from traditional banks and other major lenders can be difficult, as they’re limited in what funding they can offer for the undeveloped property and vacant land. 

This includes restrictions on what costs they can finance, leaving a developer with a potential funding shortfall.

You must also consider council approvals when building. These entail planning permits and statements of compliance. This can take between 12 and 18 months to complete if the process runs smoothly.

The costs associated with land subdivision are substantial. Plans, permits, consultancy fees and application fees can total $40,000 for a simple backyard subdivision – let alone a complex multi-unit development.

Additionally, there are costs for onsite works. These include drainage, electricity, fencing, water and driveways – which you’ll need to cover whether you’re planning to build or sell undeveloped land.

Flexibility with funding is needed to allow for unexpected delays with permissions, site preparation costs and the sale process.

(Source: government and commercial sites)

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