Did you want to learn about the cost to subdivide land? If so, you’re in the right place. We’ll explain it more below. But first…
Here at Little Fish, we have some sayings. These are our catchphrases that we hold dear. We use them a lot. With our clients. We use them with each other. With our contractors.
Why do we use them? Because we believe in them. We believe in our work. Every day, we live and breathe property development. Day in, day out. It’s our bread and butter.
And one saying tends to come up more often. And that’s “knowledge is power, but it’s also money”.
In this field, knowledge is the key to unlocking wealth. And we like to share our knowledge, like in this article.
So, you may be wondering about the cost to subdivide land. And yes, there is a cost. However, like any investment, developing property comes with potential risk and reward.
The key is mitigating the risk and profiting more than you spend.
Let’s explain some more about how much it costs to subdivide land.
There are a lot of moving parts that need to be considered. Variables, and more variables.
Also, a lot of these will be specific to each site. And each project is different and requires a different approach.
There isn’t a blanket, set and forget list of costs for each subdivision.
In this article, we’ll break down some of these costs. We’ll also detail some different scenarios.
The aim is to get you heading in the right direction.
Some Assumptions First
For our explanation of the cost to subdivide land, we’ll be working on some assumptions.
One that is located in an inner Melbourne suburb.
This is because this is where we work, so it’s what we know. That said, you can apply these principles anywhere.
Typically, we would also complete the subdivision process in parallel with the construction of the project.
But for the purpose of this exercise, we’ll do it differently. We will also assume that we are going to subdivide the land before construction.
Again, this isn’t something that we would recommend or do unless you had valid reasons and no other option.
Now, the cost of the particular services we’ll explain is quite fluid. They can change. All the time. This depends on the market and other variables as well.
So, take the costs in this article as estimates or a rough sketch. One thing you need to do in property development is always have a financial buffer.
This is a high risk, high reward venture.
However, all the costs can change. They can go up or down relative to your connections and network.
The project itself can have variable costs, too. The figures can also vary based on the location and other aspects of the project.
Our goal is to get you heading in the right direction. You should walk away from this article, understanding what costs you potentially can expect to incur.
But, to stress again – these are subject to change, constantly.
How Much Does it Cost to Subdivide Land?
The initial cost will include your land surveyor. Your land surveyor will complete your site surveys. These include a re-establishment survey and a levels survey.
This will set you back approx. $2,800.
Also, after these surveys are done, the surveyor provides them to your draftsperson. They will use them to complete the relevant town planning drawings.
This will cost approx. $12,000.
In parallel with the town planning process, you would connect with a town planner. This contractor will work closely with the drafty (industry slang).
They will complete your town planning report. They will also manage your application through the local council.
This will cost approx. $4,000.
Additionally, your application with the local council will incur an application fee.
This is approx. $1,500.
As you can see, all the costs are adding up already. The price to subdivide land isn’t cheap but it can be profitable!
An important note is that development finance won’t cover these costs. You need to have some working capital upfront for these costs.
The sum of all these costs is approx. $20,300. Remember that this is a rough estimate. You’ll want to budget a few thousand over in case the prices fluctuate.
Next Steps in the Process and Relevant Costs
Let’s explain some more about the cost to subdivide land.
Now, you can expect to incur the overhead costs quite early in the process.
Once you have town planning approval, you can begin the next steps. The council will issue you a planning permit and will endorse your plans.
Your surveyor will then lodge your plan of subdivision (POSD) application on your behalf.
From there, the council will issue you a statement of compliance. This is basically a list of items you need to complete. You need to complete the items on this list for a successful subdivision.
Here in Victoria, there is an online web tool that helps with this. It is called “Surveying and Planning Through Electronic Applications.” It is known as SPEAR for short.
This is a free service provided by the Department of Environment, Land, Water and Planning. DELWP for short.
It essentially makes lodging and processing your POSD faster, easier and painless. It’s also excellent for applicants.
It also helps out the council and other relevant authorities.
Once your application is uploaded to SPEAR, this will be your home base.
It will generate a list of everything you need to complete the application. Once complete, you will receive your Statement of Compliance from the council.
Now, each list will vary depending on the municipality. Don’t assume your next project in a different area will generate the same list.
Some Generic Conditions Listed
In addition, you need to consider some of the following in your plans. There are costs associated with this too. Here’s a helpful list.
- Power (electricity) – $6,000
- NBN (National Broadband Network) – $2,000
- Water – $7,000
- New cross over – $3,000
Total approx. $18,000.
As you can see, you need quite a bit of working capital for a subdivision process.
This is not a small sum but remember it could/should set you up for some serious profit.
How Much Does it Cost to Subdivide Land Victoria – Another Consideration
This is another consideration we absolutely need to mention. If you are planning to build three or more townhouses/units, you also need to know this.
This is called an open space contribution, which is worked out as 5% of the land value.
In a side by side dual occupancy design, it’s not relevant. But if you are building three or more, you need to factor this in.
For example, for Land with a value of $800,000, you are looking at $40000.
That’s a decent whack, isn’t it? So be mindful of this fee.
Let’s Add it Up
Town planner $4,000
Application Fees $1,500
Power $ 6,000
New cross over $3,000
Answering the Question
So, to answer the question about how much it costs to subdivide land.
Remember, this article is working on the assumption of a dual occupancy development. That’s two townhouses.
For more dwellings, you’re looking at more. We explained this above.
For a total figure, you want to budget for. Let’s say $40,000-$50,000 as an example. This is to be safe.
In this game, you need a buffer – always.
Furthermore, things can take longer, and extra days cost extra money. We also like to say that every day has a dollar value attached.
So, don’t take the above list and budget down to the last cent. If you do this, we can assure you that your project will hit a hurdle. And you need money to sort hurdles out.
Always make decisions based on the information you have. But, also always have a contingency.
You want to make sure that your project stacks up. This includes contingency funds. If you don’t have this buffer?
Well, you should think twice about whether it makes sense to proceed.
A Note About Other States
As we mentioned above, these examples are Victoria specific.
Other states will have additional costs and could also cost more or less.
We didn’t want to explain about other states because we stick to what we know.
We work in Melbourne, so we’ve explained the costs for inner suburbs in Melbourne.
However, this guide should give you the bare bones of other states.
But remember, knowledge is power. It’s also money. So, if you are in another state, we encourage you to get researching and learn as much as possible.
Don’t Want the Risks Associated with The Cost to Subdivide Land?
Now, we understand if you don’t want to operate too close to the line. Financially, this is a considerable risk.
One of the most significant risks you can take as a developer.
For instance, you’ve seen empty lots with half-built homes. These are usually abandoned because the developer didn’t have a buffer.
In addition to knowledge, you need contingency and flexibility. You want to cross the finish line and pocket the profit.
If you aren’t confident, then consider some professional help.
At Little Fish, this is precisely part of our service.
We have managed countless subdivisions. There aren’t that many curve balls that we won’t be prepared for.
Subdivisions and property developments are a high-stakes game. They should be treated with the appropriate amount of caution and hesitation.
So, if you’re keen on a consultation or general chat about how we can help you, give us a call.
Ring 1300 799 277 for a no-obligation discussion.