Subdividing property has the potential to increase the value of the land and ultimately increase your return on investment. Whilst the allure of potential profit can cause you to ‘rush in’, it is vital that you understand the requirements, processes and associated costs prior to embarking on the subdivision bandwagon! 

What is ‘Subdividing’?

The process of subdivision involves splitting your existing property/land (or ‘lot’ as it is known technically) into two or more new lots. Subdividing can also be undertaken by adjusting the boundaries between two or more lots, to make some lots smaller or larger. Most subdividing activities require a development approval from your local Council.

What is Involved in the Subdividing Process?

The first step in investigating a potential subdivision process is to obtain advice from a professional town planner. A town planner will be able to inform you of any potential restrictions or limitations with your proposed project. It is important to know about these matters early on in the process, so that you can determine if your project will be commercially viable prior to investing a lot of time and money into it!. . Your town planner can then assist you with any application to your local Council to gain approval. It is important to note that there will be applicable fees for this application and any approval will be subject to certain conditions being met. These conditions must be complied with and again payment of any fees associated with this will need to be made. 

You will also need to engage a certified surveyor to prepare a Survey Plan (eg. a technical plan showing the measurements and other features of the new lots) in the appropriate format. There may also be other plans that will be required to be prepared as part of the conditions imposed by Council. 

Once Council has ‘endorsed’ (a fancy word for signing off) all the documents, they can now be lodged with the Titles Office and once the documents have registered, the lot is created – magic! The new lot(s) that has been created can now be sold to a potential buyer. 

Can I Sell the New Lot to a Buyer Prior to Completing my Subdivision?

Yes – marketing and selling a lot or lots prior to them ‘existing’ is called ‘selling off the plan’. There are specific disclosures that must be given and certain special conditions that must be included in any ‘off the plan’ contract, so it is important that you engage real estate agents and lawyers (like Enterprise Legal) who are experienced with these specific types of contracts. 

Ultimately, it is important to weigh up whether or not you are better off  waiting for the proposed lot to be approved and created, to ensure the contract can go ahead and will not need to be terminated if the project does not ultimately proceed. Of course, this needs to be balanced with the potential benefit of ‘locking in’ a potential buyer in a hot market.  

What Does Subdividing Cost?

A large deciding factor in whether to go ahead with a subdivision project is of course the costs involved! Accordingly, when preparing a project budget, you should factor in the following costs at a minimum: 

1. Surveyor Fees; 

2. Town Planner Fees;

3. Council Fees;

4. Legal Fees;

5. Titles Registration Costs;

6. Holding Costs, such as land tax and Council rates;

7. Agent's Commission; and

8. Marketing Costs.

It is also imperative that you speak with your accountant to discuss any potential tax or other financial considerations in relation to the proposed project.

Need Assistance With Subdividing Your Property?

If you are interested in subdividing your property, contact the specialist Property and Business lawyers at Enterprise Legal to discuss how we can assist you further.

We can assist with all aspects, from providing you with initial advice on the project, through to managing the ultimate sale of the lots.

We work closely with your other professional advisors (and can even recommend trusted town planners etc.) to ensure that the project progresses as smoothly as possible.

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