As demand for land increases due to population growth or residents wanting to live closer to the city’s center, the subdivision has grown popular.
Types of subdivision
There are five main types of subdivisions you should be aware of.
- Strata subdivision – Divides a property into separate apartments, units, or villas into familiar lots and property. Strata island title is based on the vertical land division and is often managed by a strata manager.
- Bare land strata – This is the same as the strata subdivision, except there are no buildings on the land yet.
- Battle-axe – As the name suggests, this subdivision has a similar shape to an ax due to the new house being constructed at the rear of the existing house while having driveway access from the side.
- Fee simple subdivision – The property is subdivided into separate properties for sale with their own land titles.
- Development subdivision – A large piece of land which may or may not contain existing properties is usually cleared to make room for a large division into individual titled lots for residential or commercial purposes.
Questions to ask before you choose this strategy
- Can my property be developed?You’ll need to check with your local council to find out the current zoning information for the property, as well as the rules and regulations regarding subdivision.Once you have that information, you’ll want to discuss your plans with a surveyor or planning consultant to see if it’s worth pursuing subdivision any further.
- Can the existing house stay?For small subdivisions, it’s often less of a risk if you can keep the existing home on the property. This will give you additional cash flow during the development phase.
- Will subdivision result in capital growth?Is there a demand for housing in your area? Are buyers looking for smaller units/apartments? Will there be capital growth in the next one or two years? Research the market to make sure you don’t subdivide the property for a loss.
Once you’ve done your research and have found suitable people to work with, it’s a good idea to get a fixed-price contract in place to prevent and additional costs if things don’t go to plan.