When we initially get approached by potential clients, they have a lot of questions about subdividing & property development.
Now, we believe this is a good thing, because we want clients making INFORMED decisions and not just flipping a coin or guessing when deciding what to do.
It saves you money, time & grief when you actually understand the key elements you need to understand to make a wise decision, and it obviously saves us having upset and angry clients, which we definitely DON’T want! š
So, David Whait (our Managing Director) has taken the time to answer the most common questions he gets asked and we’ve put them all on this page for your benefit.
Yes, some of this stuff might be a bit dry, but trust us when we say it’s ALL important if your goal is to make a wise decision about your development.
So read on, and if you find we have missed a question you’d like the answer to, please let us know and we’ll add it to this page.
Note: If you’d like to discuss your subdividing needs with David, you can call him on 0407 613 055 during normal business hours.
Note: These Q & A are not in any particular order.
How much will my subdivision cost?
Each subdivision cost does vary a little bit from site to site. There are a number of fixed costs involved with each subdivision, for items like your Western Power and Water Corp, surveyor’s fees, settlement agent’s fees, etc. Generally they’re all fairly fixed from one site to the other.
Where you get the greatest variable is in the physical works that need to actually happen on the site, so if we need to remove a garage, or create new parking, depending on what physical works are happening onsite, that’s where you get your variables.
As a general range, subdivisions can vary from as little as $35,000-$40,000, but they can go upwards of $60,000, so it is very much site dependent.
How much will it cost to build?
The cost to build is a very wide ranging price to decide because it’s very design dependent, and how big the building is that you are going to actually create. You can have higher or lower specs within a house, and of course, they do impact on the price, but square meterage of the houses are what really makes the big difference.
If you’re building a house that’s 100 square metres, obviously it’s much, much cheaper than a house that’s 200 square metres, or whether it’s single storey or double storey.
So it’s very, very design dependent on how much building a dwelling will cost.
Should/could you do most of the subdivision yourself?
I’m often asked by potential clients when they call me whether they could do their subdivision themselves, and that really comes down to the individual person because there’s a lot of time involved in doing a subdivision.
Usually the very biggest hurdle is navigating your way through the councils, particularly, and the requirements that they want within a subdivision, because they talk in council speak and in policy terminology, which the general public absolutely cannot work their way through, and therefore, they will really struggle to meet their conditions required of that subdivision.
Second to that is that I have a wide range of contractors that I have access to, that I trust, and that their pricing and the quality of their work is what I require to be done, to achieve the best result for the subdivision, and typically, clients, they might have a friend or have heard of somebody, but have never actually tested out that person and don’t know whether they will deliver the quality of work.
So as a general rule, because I’m doing it time in and time out, I have access to the right people and they know what results that I want delivered for my clients.
How long will it take?
The time to complete a subdivision is quite variable, dependent on the timing of each of the individual processes in which we’re going to conduct it.
The application process with WAPC (WA Planning Commission), from the time we submit the application to getting the determination, is typically 90 days. So if we’re in a position where we’re waiting for that approval to come through before we start any works, then, of course, we’re just extending the timeframe in which that subdivision takes.
Often with clients, we start early, so we would submit the application, and provided that there is nothing in there that we believe might be an issue with WAPC, we would get started pretty quickly and get a lot of the site works underway and completed before we’ve even received the approval, so that we can shorten any delays on the completion.
On completion, we have to go through a number of processes with Western Power and Water Corp, and the councils, and WAPC, to get to a point where we can actually apply for titles.
Typically, you would need to allow yourself a minimum of five months, absolute minimum, and sometimes up to eight months, to get through to a position where you actually have titles.
How much profit will I make?
How much profit you can make out of a subdivision is very dependent on the actual site, what type and size of subdivision you’re doing, and more particularly, what price did you buy the property for?
In recent times in Perth, the market has declined quite steadily over the last few years, so if you were someone who bought a property, say, four or five years ago, you’ve bought in the peak of the market, and you are now in the lowest point of the market.
In that situation, it’s actually quite difficult to make a return and any substantial profit.
How much is your fee?
The fee that I charge is based purely on a management process for your subdivision, and I’ll assess each subdivision on its own individual merits at a time before being able to provide you a price.
The one thing to know about my service is that you only pay for a project fee. I do not bring in consultants or contractor invoices, and mark them up, and on-charge them.
So you know from the fee that you’re being charged by me, it’s purely and simply a management service fee and no hidden costs that are coming in through other invoices from suppliers.
What work do I do in exchange for my fee?
The work that I conduct for your project is very much an end-to-end process and management service.
Right from the start of helping you decide how you want to subdivision your site, into how many lots, for example, right through to when your titles are issued, and everything in between, and coordinating all the consultants, and contractors, and settlement agents that are required to get you through to the point of getting your titles issued.
Does my fee include any cost of subdividing?
I’m often asked how much my fee covers of works that actually need to occur on the subdivision itself. The answer is nil!
My fee is purely a project management fee, and is to cover all aspects of actually managing the project, but I don’t bring in any invoices and mark them up, or cover anything within that fee, and hence my pricing for my management fee is very competitive, and you get the ultimate benefit of only paying for that fee.
How many blocks can I create?
The number of lots that you can create on your subdivision is very dependent on two major factors.
One of them is the zoning that’s allocated by the council to your particular lot, and also the size. Then the other factor to consider is whether you actually want to retain the dwelling that is already on the property.
As a general rule, most properties that are being subdivided are either R.25, R.30, or R.40. They’re the typical zonings and they can vary from anywhere from a straightforward retain and build, through to a triplex, and sometimes even a quad site.
So how many blocks you want to create and how you want to subdivide it really are factored by those couple of different scenarios and, really, ultimately, what you’re wanting to achieve with your particular property.
Should I build or just subdivide the land?
I am often asked by people whether they should actually go through the additional expense of constructing a dwelling on the land that they subdivide, or whether they should just subdivide and sell.
The answer to that is very personal and is very much dependent on the particular person’s financial desires or needs and outcomes, and also what their site can deliver, and typically, what location their property is actually in.
So as a developer or a person who owns land, if you want to develop or subdivide, you need to look at the risk of the additional expense that you’re going to go through to actually construct a dwelling, versus whether you just want to unload the land and take the profit from the vacant land.
In the current market, there is a lot of demand for vacant land, and in some instances, little or no profit extra to actually go ahead and construct, so the answer to that question will come down to the individual site and your personal, individual financial needs and goals.
Note: If you’d like to discuss your subdividing needs with David, you can call him on 0407 613 055 during normal business hours.
Should I sell or should I hold?
Clients are often seeking advice from me about whether they should sell or hold what they build or what they subdivide, and the answer to the question is very much personal for each person’s needs, and at the time.
They need to consider tax implications, they need to consider loan implications, and I would recommend that they always seek some separate financial advice from a tax perspective, but also get advice on the actual market at the time, and whether holding or selling meets what the demand and supply is of that type of property on the market.
What tax will I pay?
Everyone always asks about tax, and as you know, the default response is, “I can’t give you financial advice,” and that is exactly my response.
There are two types of tax that you can pay, though. One is capital gains tax (CGT) and the other is GST, and depending on your actual situation, will decide on which one of those taxes that you will pay, and you very much need to seek advice from your accountant as to how you should structure your subdivision financially, and what you’re ultimately going to be dealt with from a tax perspective on completion.
How does GST work with subdividing?
If you decide that you are going to go down the GST route when you are subdividing or developing, there are a couple of ways in which that can happen.
Either you pay full GST on your sales, or you pay GST using the margin scheme.
Most developers will often use the margin scheme, and that enables you to, I guess, minimise the GST that you’re paying, but it is dependent also on how much you paid for your land, which will ultimately determine your GST that is payable.
Again, you should very much seek advice from your accountant how best to deal with tax, including GST, because there are different ways to deal with tax to help get you the greatest outcomes.
Why are the fees so high for Water Corporation?
Because they’re rip-off merchants!
Clients always get a shock when they get their bill from Water Corp about how much their fees are, and unfortunately, those fees are set by the government and Water Corp.
There are typically two parts to the fee. There is a water infrastructure fee and also a waste water infrastructure fee, and typically, that comes up to about $6,500 per additional lot that you’re creating when you’re doing a subdivision.
It seems like a lot of money just for an extra water meter and an extra service, but unfortunately, that’s the hand that we’re dealt by Water Corp and the government, and there’s not a lot that we can do about it. If we want to subdivide and develop, that is just one of the fees that we need to accept and pay.
What insurances should contractors have?
As a person who is subdividing or developing, you’re going to be having a number of contractors enter your property and be on your land at different times throughout your project.
It’s obviously important that you’re confident that their insurance cover is adequate and that they are actually insured.
At iDevelop WA, one of the things that we do is make sure that those contractors and consultants do have the appropriate insurance, to make sure that they’re covered and you’re covered during the time of your project.
I have a mate who’s an electrician/plumber, etc. Can I get him to do the work?
Just about every client asks me if they can use a mate who might be an electrician or a plumber, who is able to come and do some work for the subdivision for mates rates, to try and help them save on some costs.
I often am happy to discuss whether the person that’s their friend is able to do the work to the right quality that we need in the timing that we need, and safely, of course, to get your project finished on time and to the right level that we need.
It’s certainly not my preference that we use contractors that I haven’t had exposure to before and am unaware about what type of quality of service that they’re going to deliver, but I have got an electrician now, that I’m currently using, that actually was a friend of one of my clients and, as it’s turned out, he’s doing an excellent job and I am now using him for many other jobs.
So the answer is not no, but they certainly need to be able to pass a number of quality tests that I will want to make sure that they’re able to do for you, if they’re coming on your site.
I want to do some of the work myself. Is that okay?
Every now and again, I’ll have a client who asks me if they can do some of the work for the subdivision themselves.
Of course, as a general rule, I’m happy for that to happen, but you need to understand that the work needs to be completed to the right level and to compliance by the council.
So if someone says, “I want to pull down my shed,” or, “I want to do some fencing or retaining myself,” generally, I don’t have an issue with that, but understand that that process still needs to be managed to make sure that the work is done correctly.
There would be nothing worse than someone going through and putting in a retaining wall, for example, and we find out the retaining wall is not compliant or it’s in the wrong location and you have to do it all again.
Do you have access to mortgage brokers and settlement agents, etc?
Over the years at iDevelop WA, I’ve worked with a number of different consultants and contractors who I have tried and tested, to make sure that they are going to deliver services that I would be happy with myself, and then, of course, to on-service those to my clients.
I have access to some very, very good consultants, particularly settlement agents and mortgage brokers, for people who do need advice on varying aspects that aren’t my level of expertise, and one of my beliefs is certainly that if there’s an area that I’m not an expert in, for my clients, I want them to have access to experts in that field.
So very much, whoever you need, I am able to point you in the direction of someone who is going to deliver an outstanding service for you.
What work do I need to do, or do you cover everything?
Typically, with any project, I allow to cover off every aspect of the work that’s required to be done, to get you through to titles, whether it be work that I’m coordinating with contractors, or if there is some work, even yourself, that you want to do.
If there is work that you want to do, then, Iām more than happy for you to consider it, but ultimately, I am there from beginning to end, and will make sure that we get you through to successful titles in the shortest possible time, and cover off every single aspect that needs to be done, and if there are any of the work that is within the project that you do want to do yourself, of course, happy for that to occur, but I will be there, right to the very end.
Note: If you’d like to discuss your subdividing needs with David, you can call him on 0407 613 055 during normal business hours.