Considerations When Buying An Investment Property To Subdivide

Considerations When Buying An Investment Property To Subdivide

14 Jul 2015 Professionals 0 Comment

In recent years, there has been a growing push by Government to encourage more housing density in established areas of Perth.

For example, the State Government’s ‘Directions 2031 and Beyond” future planning strategy has set a target of creating 47% of additional housing in Perth through Urban Infill.

As a result, a growing number of Councils in Perth are now allowing their residents to subdivide their properties as part of the trend towards higher density living.

This trend has created opportunities for astute investors especially if they can buy properties before they are rezoned.

How many home units you can build on your property will be determined by the zoning of your Local Council.

The Local Council sets the zoning by an R.Code . To undertake higher density housing you must comply with the following kind of R codes.

The State Government has also introduced recent changes to make it easier for property owners to subdivide their property by relaxing a number of these zoning requirements in particular circumstances.

You should check with the Local Council as well as the State Planning Commission on the exact zoning status of the block your own or may be planning to purchase.

In addition, you should also check the special regulations in terms of minimum frontage, boundary and rear setback areas for the unit development. It is also important to ask about any future changes that might impact on the zoning such as the widening of entrance roads.

Another important issue to consider is the additional costs to building a strata style development compared to the standard family home. For example, water, phone and other service connection strata title fees, headwork’s charges together with other costs such as fencing can add several thousand dollars to the cost of the unit development.

Your budget should also include a generous allowance for site works particularly if the block is not level.

The type of home units you build will also impact of the resale value of the property. More homebuyers are seeking properties with two bathrooms and a garage as well as security and these are features which should be included in a higher density unit development to maximise the selling price.

A good tip is to speak to property investors who have recently undertaken a subdivision in the local area you live or plan to buy. Generally, most people are happy to discuss their personal experiences and highlight some of the hidden traps they have encountered along the way.

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