Thinking a Dual Occupancy Development? Learn from experience!
0 Comments
Dual Occupancy by AuArchitecture.com.au from auarchitecture.com.au on Vimeo. A dual occupancy home comprising of two pavillions is sited at the rear of the property. The living and family pavillions are separated by a toddler friendly courtyard which seamlessly integrates into the living area with large bi-fold doors opening onto terraced deck. The open plan living and dining design enjoys high timber lined ceiling with a mezzanine study above the kitchen. From the kitchen,Mum can watch her kids play in the secure courtyard with its green herb wall. A juliette balcony in the Master bedroom suite overlooks the courtyard and living pavillion below. The new home follows the contours of the sloping block in a Melbourne suburb adding value through the dual occupancy subdivision. www.auarchitecture.com.au How to start a dual occupancy subdivision on my propertyWhere do I start my dual occupancy subdivision? How do I dual occupancy and enjoy the benefits? A dual occupancy occurs when a permit is granted by your local Melbourne Council to build two dwellings on a block of land which can then be subdivided to create two individual lots of land. Yoiu can sell one lot or keep and build for additinal rental income. You enjoy sound depreciation benefits if you can hold the new dual occ home. Before you prepare to obtain town planning permission for your dual occupancy or property subdivision you should ascertain a site analysis which will tell you: (a) what is allowed on the land and then (b) the size and built form of the dual occupancy home(s) from which you can do a cost analysis. If you need more detailed advice, please visit us for an obligation free site analysis. _We give you an expert opinion and honestly tell you if you can or cannot subdivide your property obligation free. www.auarchitecture.com.au Dual Occupancy development types. Dual occupancy or for that matter triple occupancy developments could retain the existing house and build one or more new house (s) on the backyard or in the front yard or on the side depending on size, depth, access and how one meets the local planning requirements. Other forms of dual occupancy developments occur when the existing house is demolished to make way for two brand new houses which could be one behind the other called a tandem design or be side by side which is called a duplex style development. In both instances access, site frontage, depth, orientation play a key part in the design. The typical dual occupancy development is the tandem style arrangement where the dual occ home is behind the original home. When the existing house is retained in the dual occupancy development, one’s capital is preserved because the asset purchased, that is the house on the land, is retained. The house has value so think twice before you consider demolition! The only time one should consider demolishing the house in a dual occupancy development is if the house is in very poor order or there has been significant growth in the value of the property. In Australia- and in particular Melbourne and Sydney, there are suburbs where the value of the land outstrips the value of the actual house! In most middle and outer suburbs the houses have great value as it generates rental income and is easier to finance by typical lenders. For example, if the house is retained in the dual occupancy development, banks could lend 80-95% of the value of the property. If the house was demolished, banks tend to lend only 65-70% of the value of the land as the house has been removed. This preservation of capital in the eyes of the lender reduces the risk because if, for any reason, the development does not go ahead, the asset retains its value. Even after the redevelopment, the value of the existing dwelling is by and large retained. The existing dwelling also generates cash flow during the planning process and in some cases even when the development is underway. This cash flow cannot usually be generated from a vacant allotment. Dual Occupancy Benefits Dual occupancy developments are profitable because it maximises the value of the land. Two houses generate two rental incomes. Even if you sold say the existing house chances are it will be free of capital gains tax which might pay off your mortgage, any debts or release cash to be used for other worthwhile ventures. Very often, after the dual occupancy subdivision is completed, the original home is sold for almost the price one paid for the whole block of land with the house. The second house then becomes the cream. Contact us for a detailed report on your property subdivision venture. AuArchitecture. Melbourne We are a lateral thinking architectural design and town planning practice excelling in dual occupancy permits and multi unit property subdivision. Our founder managed hundreds of planning and subdivision permits from councils in greater Melbourne for dual occupancy and multi unit property developments with real success. Dual Occupancy property subdivision costsYour new dual occupancy home can be as modest or as luxurious as you wish.
If you intend moving into this new dream dual occupancy home with its new kitchen and dream master bedroom with a superb ensuite and a juliette balcony to enjoy views then your costs are going to be in the high $1800sqm plus- depending on number of floors. If its a dual occupancy you just want build to sell then a range between $1400-$1500 should work for middle of the range double storey dual occupancy home. Dual Occupancy success Avery basic single level investment dual occupancy could cost to build as low as $1000 a sqm and if its in Toorak you would like marble bathrooms and luxurious kitchen which will set you upwards of $2500 sqm. Of course all these numbers are just numbers to play with for now. To get a better idea, let usdesign and draw the construction drawings for your builder to price. Your builder will add extras as per your specifications. Site costs, subdivision costs (cost of driveways, services, connections,fees etc) can be in the $15,000 mark and more depending on number of units and location and run of services. Your professional fees for the architect or designer, land surveyor,building surveyor,structural and drainage engineer,energy and soil reports, landscape consultant will be upwards of $10,000 depending on level of detail and site challenges. I recently heard of companies charging upwards of $25,000 per unit! One went as high as $70,000. Ask us for a turnkey fee package for your dual occupancy home which will be well thought out, well designed and detailed. But before you go all the way to cost, find out if you can actually dual occupancy your home. We can help you with a free opinion. Welcome to the world of property development. And the best way to build wealth is on the backyard you own but don’t use as much. Dual occupancy your backyard to build a property portfolio or to pay down your mortgage or earn rental income or to invest in other dual and triple occupancy properties ready for subdivision. We find sites and obtain all the planning and building permits. AuArchitecture– invest in our experience. New Residential Zones- did not go to plan The previous Planning Minister put forth new planning zones in good faith. In the residential areas they are the Neighbourhood Residential Zone (NRZ) ,the General Residential Zone (GRZ)and the Residential Growth Zone (RGZ) . Other residential zones include those applicable for Towns and Low Density . Unfortunately some recent VCAT decisions put a spanner in the works as far as the transition provisions would apply in the new zones. A loophole in the Act denied those transistion rights to an Applicant if one made any design changes after the new zone came into efect and before a decision had been made by the Council.This was even more problematic if the zone changed to the restrictive Neighbourhood Residential Zone. What that meant was quite a lawyers picnic and the jury is still sort of out on that. This is what is happening: You applied for a four unit property subdivision development on your property while the zone was the old Residential Zone (R1Z) which allowed more than two units- typically a dual occupancy (or 2 new lots) on your land. Then midway after your town planning submission the zone changed from R1Z to the NRZ, whose Schedule allowed a maximum of two lots or a dual occupancy or duplex development. ( Note: some councils are averse to duplex style dual occupancy. They prefer the garages are out of sight which usually occurs in a duplex style dual occ ( unless of course you have two street frontages). After the Town Planning Application subnission for four townhouses the standard Council Request for Further Information (RFI) required you to amend the four unit design. No matter how insignificant that request was- like a small change in the roof pitch or a window be relocated- the moment you made any such design change, your protection from any transition provisions lapsed and you now fell out of the generosity of the R1Z and into the restrictive NRZ where a maximum of two units would be allowed under the new Schedule to you new NRZ! . The Schedule specifies minimum lot sizes, open space requirements, site coverage and number of units allowed on the land. The alternative was to study the RFI in depth and only make changes which do not change the design and built form and layout in any way. The penalty would then be a Council refusal for the four unit Application for failing to respond to the design changes it requested in the RFI. The good news is by not making those small design changes you still remained under the old R1Z. You then appeal therefusal decision at VCAT under the R1Z. Now you can make all the design changes under the protection of VCAT! And you appeal the four unit application at VCAT under the old R1Z and not the two unit as it currently stood under the NRZ. Sounds silly; the new zones were supposed to lighten the load on VCAT but the opposite is occurring. By the way, check the Schedule to the NRZ- it might not restrict you to a two lot subdivision! Some councils allow up to four unit property subdivisions as long as you respect Neighbourhood Character ( the N word)- the jury is till out on that dirty N word! which is so subjective. The Planning and Environment Amendment (Recognising Objectors) Act 2015 (amending Act)
The Act amends the Planning and Environment Act 1987 (PE Act) to require responsible authorities and the Victorian Civil and Administrative Tribunal (VCAT) to consider the number of objectors to a permit application in considering whether a proposed use or development may have a significant social effect. What is being amended? Sections 60 and 84B(2) of the PE Act are being amended to insert an additional decision-making consideration that responsible authorities and VCAT must have regard to. Section 60(1) sets out the matters that a responsible authority must consider before deciding on an application. These matters include the planning scheme, the objectives of the Act, all objections and any significant environmental, economic and social effects of the proposal. Section 84B sets out the matters that VCAT must take into account in determining an application for review. These include matters the responsible authority is required to consider under section 60 as well as a number of specified planning considerations. When do the amendments commence? They commence operation on 12 October 2015. Do transitional provisions apply? No, so if a responsible authority has not decided an application, or VCAT has not determined an application for review, before the commencement date, the new decision-making consideration applies. So what does this mean for Property Subdivision in simple terms? Keep the number of objectors low through compassionate and sensitive design! And if you don't you will end up with many objectors and you start all over again with a new Planning Application. Thats more lost productivity. Cost to subdivide in MelbourneA Dual occupancy on your home or an investment property will incur at the least the following expenditure:
Benefits of a Dual OccupancyHOW TO BUILD EQUITY THROUGH A DUAL OCCUPANCY OR TOWNHOUSE SUBDIVISION IN MELBOURNE.
A dual occupancy development is a great way to build a property portfolio. Whether you are a first home buyer (or investor) or a couple entering retirement. The dual occ will provide two rental incomes or give you an opportunity to subdivide and sell to cash up or you may wish to build and enjoy your custom designed new home. A well selected site could even be cash positive letting you move on to the the next property development. Soon you will be from zero to planning a passive income for life. There are pitfalls and matters you should seek expert help on. Read on to see how you too can be a successful dual occupancy investor. What is a dual occupancy? A dual occupancy occurs when your local Melbourne or Victorian Council approves a Town Planning Application for two dwellings to occupy one lot of land. A dual occupancy is profitable when a property subdivision occurs and when that one block of land is subdivided to create two or more sparate blocks with each lot having its own title. It is the subdivision which releases equity. Some Councils may have minimum lot sizes. What are the benefits of a dual occupancy? A dual occupancy can be one house behind another- a tandem dual occ- or one beside another-a duplex- or one above the other or if facing a wide street frontage detached houses with the same street frontage. If the existing home is worth keeping try and save it rather than demolish only to replace one house with another. Banks like the retentioin as it provides more security. A dual occupancy provides two rental incomes or a dual occ subdivided site can be sold to cash in on some equity or you can build the dual occ and move into a new home. If you sell the backyard you still continue living in the home you got accustomed to. If moving into the new dual occupancy in the backyard there are tax benefits you should discuss with an accountant. If you rent the new house there may be depreciation benefits which can be substantial. The benefits are strong. Is dual occupancy always possible? Dual occupancy development is generally allowed on all residential land under the new reformed zones across Victoria. But watch out for the minimum lot sizes your local Victorian Council may impose as that may prevent a subdivision from ocurring. A dual occupancy can only occur if there are no restrictions on a property title which prevents more than one dwelling occupying the land. A dual occupancy is allowed in the new Neighbourhood Residential Zone (NRZ) as well as the General Residential Zone ( GRZ). Each Council may have a Schedule applied to its residential zone where the number of dwellings or minimum lot sizes is specified. If the number of dwellings is not specified, then only two dwellings is allowed in a NRZ. Under the GRZ a slightly higher density is allowed while under the Residential Growth Zone (RGZ) the density is intensified. However the Schedules to these two Zones will specify the intensity of the density allowed including the maximum height permitted. We show you how you can do a dual occupancy or triple occupancy development in Victoria successfully later on this page and explain the dual occupancy development process brick by brick. In the meantime you may wish to take a crash course on how to develop a dual occupancy in Melbourne and learn about the planning process, site challenges and project costs you might incur. For our Asian readers please click here for a simplified chinese transalation. WHERE AND HOW DO I START MY DUAL OCCUPANCY Want to know how to do it or where to start? You can either use an experienced manager like us to guide you through the critical site and development analysis and then all the planning and building permit process which follows. A good manager will call for building tenders or have a go yourself; it will depend on the resources or skills you have available, and crucially the large amount of time to negotiate with the multiple government departments, the knowledge and experience to solve problems and some gritty patience to work through the day to day issues which may crop up. Start the ball rolling today. Why Dual Occupancy?Why do a Dual Occupancy subdivision?
A dual occupancy development can liquidate the hidden asset in your backyard. You can just do the subdivision and sell the new lot to pay down your mortgage if you have one or invest in anything worthwhile. Or you can build the new dual occupancy home. Enjoy the move into the brand new home with its dream kitchen and either sell the original home probably CGT free. You also have the option of renting it for that extra income- a great way to release equity for semi or retired persons. How do I dual occupancy and enjoy the benefits of the property subdivision? A dual occupancy occurs when a permit is granted by your local Melbourne Council to build two dwellings on a block of land which can also be subdivided to create two individual lots of land. A triple occupancy would allow three units on the land making the land cost per unit even less. Read more. Dual Occupancy development types. Dual occupancy developments could retain the existing house and build one new house in the backyard or in the front yard depending on size, depth, access and how one meets the local planning requirements. Other forms of dual occupancy subdivisions occur when the existing house is demolished to make way for two brand new houses which could be one behind the other called a tandem design or side by side which is called a duplex style property subdivision. In both instances access, site frontage, depth, orientation and stretscape play a key part in the design. Should I demolish the existing home? The typical dual occupancy subdivision is the tandem style arrangement. When the existing house is retained in the dual occupancy development, one’s capital is preserved because the asset purchased, that is the value of the house on the land, is retained. The house has value so think twice before you consider demolition! The only time one should consider demolishing the house in a dual occupancy development is if the house is in very poor order or there has been significant growth in the value of the property. In Australia- and in particular Melbourne and Sydney, there are suburbs where the value of the land outstrips the value of the actual house! In most middle and outer suburbs the houses have great value as it generates rental income and is easier to finance by typical lenders. For example, if the house is retained in the dual occupancy development, banks could lend 80-95% of the value of the property. If the house was demolished, banks tend to lend only 65-70% of the value of the land as the house has been removed. This preservation of capital in the eyes of the lender reduces the risk because if, for any reason, the development does not go ahead, the asset retains its value. Even after the redevelopment, the value of the existing dwelling is by and large retained. The existing dwelling also generates cash flow during the planning process and in some cases even when the development is underway. This cash flow cannot usually be generated from a vacant allotment. Can I subdivide my home? Most properties can be subdivided. While its easier to do so on some properties in others there are challenges which may require structural changes to the existing house. The depth, width and orientation of a property plays a key role in property subdivision. Dual Occupancy Benefits Dual occupancy property subdivisions are profitable because it maximises the value of the land. Two houses generate two rental incomes. Even if you sold say the existing house, chances are it will be free of capital gains tax which might pay off your mortgage, any debts or release cash to be used for other worthwhile ventures. Very often, after the dual occupancy subdivision is completed, the original home is sold for almost the price one paid for the whole block of land with the house. The second house then becomes the cream. Dual Occupancy Sites suitable for property subdivision. There are a myriad of things to consider when finding a suitable dual occupancy development site suitable for subdivision. Some of these are listed below. There should be a 3m wide driveway access to the rear yard if that is where the dual occupancy home is to be sited or check to see if two crossovers are allowed by your local Council The site length and area should allow adequate north facing open space for recreation and landscaping The site should be close to infrastructure, schools, shops and transport The title should be clear of restrictions and preferably without any easements All the essential services should be available onsite or in close proximity and run in the most advantageous position The site orientation should be perfect so that the amenities of neighbouring properties are not adversely affected The zoning of your land and it’s associated Schedule should not be restrictive The planning overlays on your land should not be too restrictive The site should be fairly level There should be little or no significant vegetation on the site and on abutting sites within say 5 m of the common boundaries A soil test should demonstrate the foundations will not require additional strengthening There should be no encroachments on your title boundary or by your property on adjoining allotments There should preferably be precedence for similar development in your neighbourhood especially if you are trying to get more than two new homes on the land There should be no planning overlays burden Your local Council should encourage development to meet their housing stock forecast Summary A dual occupancy development is the subdivision of one lot into two lots. In Melbourne the middle and outer suburban allotments are usually ideal for dual occupancy subdivision development. Iner city locations will require less land for development while those in the mid to outer rings will require around 300sqm per lot depending on the zoning and neighbourhood character. A dual occupancy development can preserve capital, diminish risk, and generate cash flow. A dual occupancy development increases the value of the land A dual occupancy or medium density development can be profitable as long as you do your feasibilityanalysis with care A dual occupancy releases cash from a backyard you might not be using Get the best advice first to achieve the best results and to avoid future disappointment. So where do I start in my property subdivision journey? Here is a general check list: Finance is your first step in any development. Don't run out of cash so do your homework and work within a cost budget How much should you buy a development site for? Here is a simple formula. The New Residential Zones in Victoria are complex when it comes to property subdivisions. Understand the council planning requirements for dual occupancies or triple occupancy in the area. Read council’s planning scheme and the schedules which apply. The scheme will let you know the minimum size of land you’ll need for your dual occ and what type of development is permissible. Check for overlays- especially those relating to bushfire where restrictions could occur. Property Location is paramount for a profitable property subdivision. Infrastructure, availability of services, schools, shops, recreation spaces, employment coridors, views, cultural context and transport add value to your development Site assessment is the foundation. Search for land that meets the dual occupancy or triple occupancy criteria. Talk to us. We know which sites work. It’s a complex exercise best left to professionals who will be with you all the way. GET YOUR FREE SITE ASSESSMENT TODAY Size of land is important. If it’s a duplex site, you may need a minimum of 16-25 metres frontage in mid to outer suburban rings and less in the inner areas controlled by City of Melbourne, Yarra to name two. Check the title, Title Plan and Planning Certificates. Check the planning certificate to see if it is in a bushfire or flood zone. You can still develop in these areas but it will add to your build costs. Check the title for covenants or agreements. Building Cost Budget. This is very important as the builder will look at the land from a different perspective. We can assist you with the building process too and a cost budget to measure your progress is a great idea. Run your development feasibility to ensure the project will be viable. Run one in the reverse format to work out what is the maximum amount you should pay for a site. Of course this will not apply if you are subdividing your own home or land or doing a dual occupancy in your own backyard. You will need to find recent comparable sale prices from which you can base your end value estimate on this. Talk to agents about the current rental market and what rent could be expected to calculate the projected yield on completion. Most importantly, you need to have a good understanding of the build costs. We advise to do a Cost Budget to set your goals and control any overspending. Over capitalising or getting emotionally bound to a development could cost you in the end. Long Settlement terms help. If buying a development site, a long settlement period helps and obtain pre-consent from the vendor to lodge a Town Planning Application pre settlement. Town Planning and Building Permits. Once you have all the approvals, you can then go back to your lender to obtain your unconditional construction loan. As soon as this is in place, the builder can start. Construction. The build phase for a dual occupancy should be around four months upwards and usually around eight months for a double storey to Certificate of Occupancy stage. Once the building works are completed, an occupation certificate will be issued. Don’t forget to order a depreciation schedule; this is simple, just email the plans and builders tender and any other cost details to your quantity surveyor. Depreciations can be very attrtactive as long as you hold the property. Build Equity through the property subdivision. You can now apply for the subdivision certificate and once council issues this, you can register the subdivision (after your lender has signed off on it). There is no need to register immediately if you are planning to hold and not planning to refinance as you may find costs such as rates may be a little less if the dual occs are kept on one title. You may decide to “flick” one of the lots with its own title to a builder or developer who is cashed up to start building now rather than waiting for the 6-12 month period it usually takes to come to this stage. So you have built equity and value through your subdivision, Welcome to the world of property development and successful subdivision! What are the costs associated with a property subdivision? There are a number of costs associated with doiung a successful property subdivision. To begin with you need to factor in professional fees, council contributions, cost of land, coist to build, cost to subdivide and more. |
Author
|