How to conduct due diligence when subdividing land in NSW
Subdividing land is an exciting process that has become increasingly popular on the North Shore, for good reason.
It’s a fantastic option for those looking to maximise land value, build separate living quarters for their kids or sell off the second lot, but it’s a process that requires essential due diligence to ensure the best outcome.
So whether you’re a property developer or someone who wants to make the most of their existing land, what do you need to know when you’re planning a subdivision?
Understanding the basics of subdividing land
Depending on the plot of land you’re wanting to subdivide, there are various possibilities you can consider.
In a simple subdivision, you might divide one block into two, typically for residential purposes, allowing the construction of an additional property either behind or in front of the existing house. Multi-residential subdivisions typically use much larger blocks for development.
In Australia, there are five common types of subdivisions:
1. Freehold subdivision: Dividing an existing block into two or more separate titles, which is the most prevalent type of subdivision across the country.
2. Strata subdivision: Dividing a block vertically to create apartments or units, including shared areas such as driveways and gardens, commonly seen in apartment buildings.
3. Bare land strata subdivision: An undeveloped block divided vertically; essentially a vacant piece of land that has not been built upon yet.
4. Battle-axe subdivision: This is a uniquely shaped block, resembling an axe, that allows for the construction of a new home at the back of the property, accessible through a long driveway up the side.
5. Development subdivision: Where developers purchase a large cleared plot of land to create multiple titles for residential or commercial properties.
Understanding the subdivision available for your land is the first step in conducting proper due diligence. But once you have that figured out, you’ll also need to ask the question: is it even feasible?
Is your subdividing project feasible?
Whether your site is suitable for subdivision depends on various factors, including the site itself and whether the land has any significant features that might limit the potential divisions, like steep sloping, irregular slopes or atypical soil conditions.
What other factors will you need to consider as part of your due diligence?
1. Are there particular regulatory or legal restrictions? If your property is subject to such restrictions, like heritage conservation areas or environmental protection regulations, even significant trees, then your options for subdividing will be quite limited. In addition, even if your subdivision is approved, if a significant tree is to remain on the land and/or if the significant tree is on a neighbouring property, there will be limitations to where the home may be located and the size of the home, which will in turn affect the feasibility of the project.
2. If you’re developing, is there market demand for your proposal? Insufficient demand might make the lots unlikely to sell or rent, making it a difficult or unviable choice.
3. Have you considered cost versus profit? If your projected costs of land acquisition, development, infrastructure upgrades and other expenses outweigh the potential profits or financial gains from the subdivision, you might need to consider a different approach or plan.
4. What existing infrastructure is on site? If essential utilities such as water, electricity, or sewage systems wouldn’t be able to support the increased demand from the subdivision and the necessary upgrades or connections would be financially unfeasible, your project might’ve hit a roadblock.
5. How does the local community feel? If they’re strongly opposed to the plan, with concerns like increased population density, traffic congestion or negative environmental impacts, it could lead to prolonged legal battles or project delays.
What regulations do you need to consider?
As with any architectural project, there are certain regulations and legislations that need to be adhered to in a subdivision project.
On the North Shore, relevant legislations include:
- The Environmental Planning and Assessment Act 1979, which will provide guidelines around the zoning and environmental assessment processes for your proposed build.
- The Subdivision Act 1989, which oversees the process involved in creating new titles and lots, including surveying, lodging and registration of new titles.
- Heritage and Conservation Laws, like the Heritage Act 1977, which will mainly pertain to subdivision on existing properties or lots that are heritage-listed or located in a conservation area.
On top of these legislations, there are also the Local Environmental Plans (LEPs) and Development Control Plans (DCPs) to consider and adhere to as well.
But don’t let it overwhelm you. When you have the support of highly experienced architects like our team at Playoust Churcher who know these legislations back-to-front and inside-out, the whole process runs much more smoothly.
What about development applications and council approval?
After you’ve navigated your way through the feasibility process, you’ll then need to submit a DA (Development Application) to obtain council approval before your subdivision can progress.
Throughout our work on projects like multi-residential developments, SEPP housing and estate planning, we’ve finessed the application process down to a fine art. Here’s a brief overview of the steps you’ll need to take:
- Research your local council’s planning policies and regulations.
- Consult with the council or a planner before submitting the application.
- Prepare a comprehensive application with all required documents.
- Lodge the application with the council, paying the necessary fees.
- The council will then assess the application against their guidelines.
- The council gives you an outcome of approval, conditional approval, or refusal.
- You’ll then need to obtain council compliance and construction certificates before starting construction.
- Finally, once you’ve finished the build, you’ll need to undergo one last inspection for an occupation certificate.
Due diligence can be difficult, but we're here to help
It might seem like a lot to consider, and it is… but when you work with our architects, you’ll find the whole process far more streamlined and simple than you might otherwise.
We’re well-versed across the entire due diligence process, from feasibility assessments to DA submission and even construction management.
All you need to do is sit back and enjoy the ride towards your finished product, whatever that might be!
If you’ve got plans for a subdivision but aren’t sure whether it’s possible, contact us today to start the discussion.