Some of you I am sure have had discussions with investors and or developers who have said they have completed a subdivision within 6 months and I am sure you have also had the same discussion with others who have suggested the time frame to be more likely 18 months. So why the differences in responses?
The main reason we see this variance is due to the way in which a property is subdivided. The most common type of subdivision in Perth is a Survey Strata development. This is where individual land parcels sit on a title, it is defined by the survey marks and doesn’t show buildings.
In order to do this type of development you would need to get approval via the Western Australian Planning Commission. This development generally would mean that you would have some common property- either a driveway or a shared service such as sewer.
On completion of this development you will be issued a new title which you would then go to the bank and refinance against (if you don’t have the cash) to construct if that is what you are wanting to do. So the actual subdivision, creating the new titles itself will range from 9- 12 months and then obviously you will still need to construct so potentially another 6 months depending on the size, location and builder. Hence the 18 month process.
Those that report a 6 month subdivision will generally go through the built strata process. This is when you receive new titles upon completion of a build and the building is what will make up the boundaries of the properties. In this process you will need to get approval via the local Council on your build plans. Upon approval and issuing of permits you can go straight to site and start construction. Once construction is complete (6 months approx, again dependent on size, location and builder) and the Council have been out to view and ensure that you have built in accordance with your application new titles will be issued.
With investors time is money! So if this is the case why does approx 80% of developers go down the Survey strata subdivision process? Well the answer is, as lending has tightened and due to the Royal commission into our banking system most financial institutions will not lend for you to construct more than one dwelling on one title unless you have adequate equity or cash you can put into the deal. The reason being if something was to happen to you and or the builder in order for the financer to recoup funds they will need to then sell multiple properties on one title, which can be difficult and risky and also means that potentially there could be a shortfall of funds.
So alternatively, what they prefer is someone to complete a survey strata subdivision. Create their new individual titles then construct on these.
For investors who have cash or who own their property outright the built strata process is generally their preference due to reduced time frame. However, for those who don’t have that luxury please understand that your development will most likely take a minimum of 18 months.
*** If you require assistance with a survey strata subdivision or built strata subdivision contact our team at- Info@multiplypg.com.au