The subdivision and development of your land is an excellent way to make a profit on the assets you currently have. As always, there a few matters that need to be considered prior to diving into this potentially lengthy process.
SO… Is your land suitable?
Your ability to subdivide and develop your land depends largely on whether the property is suitable in terms of size, location and zoning.
When your Council is considering a subdivision application they will examine the size of the land, if the property is subject to zoning or planning overlays that may restrict or prohibit subdivisions, and will compare these with their development strategy for the area. They may impose conditions if the subdivision would affect natural resources, environmental areas and biodiversity, land use, heritage and infrastructure. They may refuse the application if it is not within their development strategy. As a first step, speaking with Council will give you an idea of their requirements and if the property is suitable.
WHO PREPARES THE APPLICATION + how is the plan of subdivision created?
As well as speaking with Council, we recommended you also speak with a land surveyor. The role of a surveyor is to dive deeper into the property’s suitability. They will examine the property, determine is suitability, assess the most appropriate way to subdivide the land, create a new plan of subdivision, work with Council and external sub-contractors to ensure all conditions are satisfied to obtain the statement of compliance from Council and to submit the subdivision application to our office for registration.
WHAT’S NEXT… Once the Council have given the tick of approval?
Once all the conditions of the subdivision are satisfied and Council have provided their statement of compliance, we [ie. your legal team] will attend to the registration of the plan of subdivision. As part of this application, we lodge a summary form to the Titles office with copies of the plan of subdivision documents. We will also obtain the lender’s consent to the subdivision if there is an existing mortgage over the property.
WHAT HAPPENS… once the plan of subdivision has registered?
Once the subdivision has registered, new certificates of titles will be issued for the new pieces of land. If there is any common property in the new plan of subdivision [such as a common driveway] an owner’s corporation [as known as a body corporate] will be established and they will own that particular piece of land. You will also need to consider the management and maintenance of that common area.
HOW LONG… will the subdivision process take?
The time frame for the development and subdivision of the land will vary depending on the work to be completed on the property, including whether or not buildings will be constructed. However, you can generally expect that a subdivision process can take between 12-18 months to finalise from start to finish.
WHAT ELSE… might you need to consider?
- HOME DESIGN if you intend to construct houses on the subdivided land as part of the development we recommend speaking with a builder and/or architect to discuss potential home designs. The proposed plan of subdivision may limit your design options.
- FINANCE: the subdivision of land can be a costly exercise. It is a good idea to enquire into the costs involved in the development and discuss these with your accountant, broker/lender and a financial advisor.
Below is a summary of the costs you can expect to pay for a 2-lot subdivision:
(based on construction of two homes valued at $300,000 each)
|Legal Fees||$1,200 – $2,000|
*The above is an estimate only. The final cost is dependent upon the property, the development and the costs set by Council, the surveyor and the external contractors.
- STRUCTURE OF OWNERSHIP: If you are entering into a subdivision project with others, you should also consider how you should own the property [ie. personally or within a trust/company structure], and how contributions, expenses and distributions are managed. Our legal and accounting teams can advise on this based on your individual plans and circumstances.
- SALE OF SUBDIVIDED PROPERTY: If you intend to sell the developed land, you will need to further consider your Capital Gains Tax [CGT] and Goods and Services Tax [GST] obligations. We recommend speaking with your accountant in this regard.
If you are interested in learning more, please do not hesitate to contact one of our friendly property lawyers.
Katherine Taylor – Solicitor
BCriminology (History), LLB