We give you the lowdown on what is sub-dividable
Subdividing an investment property to build an additional property or sell off the land is a good way to maximise your investment. A granny flat development is a prime example of this. But first you need to understand how to find properties that you can subdivide for profit.
Properties with 700sqm land size
Check with your local council first, as each one has different guidelines, but as a general rule of thumb, the minimum overall land size of the property should be 700sqm.
Properties with driveway room
All local councils insist that there must be enough space between the boundary line and the edge of the house to build a driveway. Depending on your council, this can range from between 2.5 and 3.5 metres, including landscaping.
Subdividing level, corner block properties
The easiest and most cost efficient properties to subdivide are corner blocks on level or gently sloping land, as steeply sloping land could affect what you’re allowed to build. Most councils state that each dwelling must have a minimum land area of 300 sqm on a level block, or 400sqm on a sloping block. Sloping blocks also require digging and retaining walls, which will eat into your profit. A corner block makes it easy to divide into two lots, each one with its own street access.
Understand NSW zoning rules
Check with the local council that the property you’re about to buy can be subdivided, and that your intended subdivision complies with the zoning rules. To build a second dwelling or multiple dwellings, the land will need to be zoned for medium density, so you need to check for this.
In New South Wales, most properties are zoned as follows:
R1: General residential
R2 : Low density residential
R3: Medium density residential
R4: High density residential
R5: Large lot (rural) residential
B4: Mixed use
Some councils may approve a duplex or additional second dwelling on a block of land zoned R2, if the frontage is right. It’s a good idea to talk with a local surveyor before purchasing a property.
Remember that you’ll pay capital gains tax (CGT) on the sale of subdivided land, whether you sell it right away or sell it later along with the principal premises.
The key to selecting the right investment property is research and understanding the market. To learn more about the property market, continue reading our blog, or download our free ebook about selling property.
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Disclaimer: Please note that all information contained in this blog is purely general and should be regarded as advice only. We recommend that you always seek professional advice before making property decisions.
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