Owners of large lots may think that they could increase their profit by subdividing their lots. This may be logically sound since a subdivided lot may potentially give more profit. Depending on current market conditions, the total value of a large parcel of land may increase if it is subdivided into smaller parcels and selling them to one or more buyers. In this case, the subdivided parts of the land can become more valuable than the whole property. However, simply dividing a lot and selling each smaller parcels to different property buyers is not enough to ensure that the original owner will get a lot of profit. There are many considerations in subdividing a large property. If these are not addressed, the lot owner may end up losing the profit that he had hoped for.
Bureaucracy and Red Tape.
There is a lot of bureaucratic red tape involved in undertaking a land subdivision project. Large property owners who try to subdivide their properties on their own may be biting off more than they could chew since there are a lot of legal processes that are involved in a subdivision project. These owners should consult a solicitor or a land surveyor to determine if subdividing is permitted and feasible in that specific area. Although it will mean additional cost, hiring an expert will be worthwhile since he or she will know who to talk to during the entire project.
Restrictions, Legislations and Policies.
One important consideration in undertaking a subdivision project is to understand all the restrictions, legislation and policies that may hinder it. Local town planning councils have their own legislation and policies that would indicate which areas within the town are permitted for subdividing. If the land is not located within these zones, then the local council will prevent any subdivision project for that particular land. A neighbourhood with a lot of subdivided properties is a good indication that the local council approves subdivision projects.
Land titles and deeds will also have their own restrictions that may hinder any planned subdivision project. Land owners should consult with a solicitor to evaluate any restrictions, legislations and policies that would prevent the land from being subdivided. Although it is possible to bypass some restrictions for a while, it will cost the owner in the long run especially if the local council would order the owner to pay fines for not following local legislations.
A lot owner who wishes to undertake a subdivision project should hire a professional land surveyor to help with the ins and outs of the application process. An expert in subdivision projects may be additional cost, however he will be helpful in the due diligence process that will be required in starting a subdivision project. The due diligence involves the following:
First, the split properties must conform to the local council’s minimum lot size requirement which includes restriction to the width of the lot and the total overall area of each subdivided lots.
Second, the subdivision project must be within the zone identified or allotted for subdividing.
Infrastructure and Services.
One consideration in undertaking a subdivision project is allocating the subdivided lots with the same amenities and services available in the area which includes electricity, water, sewage, and storm water drainage. Out of these four, the sewage and storm water drainage are the hardest to allocate. Since sewage and storm water drainage are gravity dependent, planning its allocation will be harder for lots that are sloping since the lots that are downhill may become problematic in the future. There may also be problems when the access to sewage and storm water drainage is located at a non-cooperative neighbouring lot.
Owners who plan to subdivide their lots should consider the cost and amount of time that will be involved in their undertaking. Subdividing properties is an expensive venture. Aside from the cost of providing the subdivided lots with access to basic amenities and services; land owners must also pay for fees that will be charged by property consultants, land surveyors, local council, land office, engineers and solicitors.
The subdividing process may also get delayed due to the following conditions:
any legal hearing associated with the property title such as heritage issues and property encroachment
any work done to the property such as riff-raff needed to comply with local council’s legislations and policies
convincing local council to grant permit to subdivide
preparation of all legal documents
The subdivision owner should accept the fact that it may take some time for him or her to get the money back from a subdivision project.
In conclusion, subdividing a large parcel of land may be a profit-making venture. However, subdivision owners must realize that the profit that will be gained is purely speculative and that this type of undertaking has a lot of hurdles and pitfalls.
Total Surveying Solutions is a professional land surveying company with much experience in subdivisions and land development. If you do decide to look into subdividing your property, feel free to contact us and we can give you the advice that you need.