Subdivision Costs

Are you thinking about splitting an existing house block to get a 2nd house block for free?………..Well it might be cheap compared with an existing block in the same area, but it won’t be free!

The costs can easily exceed $20,000 for a simple dividing a single block in two.

Below are some indications of costs for a subdivision:

Surveyor – Around $2,500 for a simple subdivision. but can easily double for more difficult sites where a specialist plannner and/or engineer may need to be involved.
Solicitor – Typically around $1000-$1500.
Application Fees – Land Title, Council Planning Permit and other Authority fees can easily add another $2,000.
Infrastructure Charges – A charge fee that Councils, and Water Authorities, charge as your new lot will be placing extra load on existing infrastructure, This can vary considerably depending on both the State and Council area you live in. Figures over $30,000 are not unknown for Inner City Subdivisions.
Installation of Services -Connecting; power, gas, water, stormwater, and the sewer can easily add several thousand to the price. If you are required to have a storm water detention tank then add another $10,000 -$50,000.
Access – A separate footpath crossing can add over $1,500 but if you have a Battleaxe Block it can easily be $3-4,000.

And that’s before you started constructing anything on the block!

Because of the many variables its worth spending some time researching the costs for your area before you go too far.

Final Cost – When Do You Find Out?

Some people think that when they pay an initial deposit, and leave the Builders Sales Office they know how much their house will cost…………..If you are unlucky, and/or don’t know how the system works you could be hit for unexpected costs in the order of tens of thousands of dollars.

These are the times when you find out about costs:

Initial Deposit

Unless you ask at this stage all you will know is the basic house price.

It will pay to spend sometime asking about what any alterations to the plan, brick and roof choices, and upgrades will cost.

Although you will get some information it is unlikely to be complete.

Pre-Contract

When you find out about site costs including:

Any Excavation /Fill
Additional Foundation Costs.
Restricted Site Costs – Generally for Demolish and Rebuild, and Battle Axe projects.
Potential Rock Cost.

You should also get the costs of any structural changes.

If you have got a flat site with good soil the extra costs can be minimal, an additional $5,000 wouldn’t be unusul for a typical site. If you have a difficult site it might be an extra $30,000 or more.

Selection*

The stage when you make all the “little” alterations such as:

Electrical fit out
Heating
Bathroom Fittings
Kitchen Fitings
Etc, Etc.

Be very careful at this stage, if you go for minor upgrades to the standard fit-out it could increase the costs by $1-2,000. Try to duplicate the Display Home and you can increase the base costs by 50%.

For more details why not get the Selection/Pre-Start Guide for only $4.

*Some Builders don’t do the selection of final fittings until the Pre-Start Meeting (after you have signed the Contract)

Contract

You will get an ‘Overall Build Cost” of the build with the site costs, together with all your amendments and upgrades.

A few things to check that might change the cost are:

Provisional Sums-Typically rock or Concrete piers
Prime Cost Items – Unusual items the contractor hasn’t been able to price.
Cost of Service Connections – Normally the contractors price will cover a distance of 5-6m. If you have a larger setback you may be charged separately.

Completion

This is the time when you find out what the total payments to the builder will be.

Unless you have made a number of Post Contact Variations, or the Provisional Sums haven’t been enough for the conditions encountered, it should be very close to the Contract Sum.

6 Months Later

I don’t know about you but I find there are lots of costs when I move into a new house.

For the first couple of weeks I seem to visit Bunnings at least every day for picture hooks, toilet roll holders, door hooks etc. etc.

Some of the bigger costs are:

Additional paths
Clothes hoist
Plants, and turf if you want an instant lawn
Curtains

For more information see What Will it Cost?

For help with Pre-Start/Selection see the anewhouse Guide

Setbacks

When you are buying a block one of the issues that controls what you can put on a block is the Setbacks of the main structure.

Setbacks vary from council to council and can also vary between neighbourhoods in a council area.

To give you an idea here are typical Setbacks:

Street Setbacks

From the front title boundary the minimum setback is typically 5.0m, which is enough to park a car on the driveway.
In low density suburbs larger front setbacks may be required.
For older inner city suburbs the allowable front setback may be much less.(to match existing properties).
Side setbacks for corner blocks are generally less than the front setback, with 2.0m being typical.
Some councils will also have maximum setbacks,such as 1/3rd the total block length.

The following structures are usually permitted to project into setbacks:

Porches, verandahs and pergolas, with a maximum height of 3.6m.
Eaves, fascia, gutters, sunblinds, shade sails, and screens.
Decks, steps, or landings less than 800mm in height.

Side and Rear Setbacks to Adjoining Properties

Typical setbacks are:

Side 2.0m, plus 0.6m for every metre of height over 3.6m.
Rear 3.0m, plus 0.6m for every metre of height over 3.6m.

In addition to the encroachments mentioned above encroachments are also usually allowed for; masonry chimney backs, flues, pipes, fuel tanks, water tanks, and heating & cooling equipment.

Don’t want any setback?….see Building on Boundaries

Building Envelope

If you need to fit a large House onto a small block one of the issues you will have to deal with is ‘The Building Envelope”.

What this means is the actual area within your title boundaries that is legally and physically possible to build on.

The building envelope can be affected (reduced) by:

The size and positioning of Easements.
Required Setbacks from roads.
Restrictive Covenants.
Setbacks from adjoining blocks.
Ability to Build on Boundary.
Significant trees.
Existing buildings/structures that can’t / won’t be removed.
Neighbourhood amenities.
Location of driveway crossovers.
Requirement for vehicles to leave the site travelling forward if the block is on a main road.
Nature strip assets such as Fire Hydrants.

So when you are looking at buying a block don’t think you can automatically build on all……. or even 75% of the block.

All councils will have different requirements and may even have varying requirements for different neighbourhoods.

It can be worthwhile talking to the council about permissible Building Envelopes, particularly if you want to build on more than 50% of the block or are on a corner block.

See Blocks for more things to think about when buying a block.

Types of New House Permits

Here is some information on the several sorts of permits that are involved before you start building a house.

Planning Permit

Sometimes called a Development Approval (DA) if you are buying a block on an existing subdivision you should already have Development Approval.

This DA will provide details of the restrictions on what you can build on your block.

If you want to do any of the following you will probably need to apply for a Planning Permit:

Change of use (for example farming to residential).
Subdivision of an existing block.
Substantially altering an existing building.
Changing any conditions of the existing permit.

Building Permit

A Building Permit is an approval that confirms that the proposed work meets the standard of the Building Regulations.

A permit is usually required for works that involve:

Building a New House.
Major alterations to an existing house.
Additions to an existing house (for example a Pergola or Deck).
Demolition of an existing house.

Road Opening Permit

A Road Opening Permit,from the Council Engineering Department is normally required to create or alter the access to a property, install service trenches, and build over a council Easement.

Sewer Build Over Permit

In many areas the sewers are controlled by a Water Authority rather than the council. If you want to build on a Sewer Easement you will require a separate permit from the Water Authority.

Want to know more? …………………….The best thing is to go down to your local council and talk to the staff there.

Once you have finished you will need an Occupancy Permit

See Restrictions for more limitations on how you develop your block

Subdivision – Process

Found a big block and would like to split it into two? ……… or just looking to build another house on your block?……….You are going to need to subdivide the block.

Here is an idea of the process for Victoria (It will be similar in other states but check with your local council to make sure you get the details right)

Stage 1 – Planning Permit

You will need to make a formal application to the Council for a planning permit.

As part of its decision making process Councils time will advertise your proposal to adjoining property owners.

It will also require consent to the issuing of a permit from the Servicing Authorities (water, sewer, gas, telephone, drainage) and the highway authority.

Generally it will take 60-90 days for the Planning Permit but it might be longer if there are objections.

The Planning Permit will outlines conditions that must be met. These can include: Servicing Authorities requirements, such as construction of vehicle crossings, drainage works and contribution towards open space where applicable. The Planning Permit may also request the submission of amended plans.

Stage 2 – Certification

Certification is an administrative step to ensure that the Plan of Subdivision is satisfactory.

The Plan of Subdivision for Certification is referred to the Highways and Servicing Authorities to determine.

Whether Easements are required for their services.
Engineering plans for required works are approved (eg. construction of roads, drainage and services,

Once the Servicing Authorities have consented to the Plan of Subdivision and Engineering plans have been approved the plan can be Certified.

The Certified Plan is valid for five years, if the plan is not registered at the Titles Office within that time, the plan expires.

Stage 3 – Compliance

A Statement of Compliance is required to allow registration of the subdivision at the Titles Office and obtain release of the new titles by the Titles Office.

Compliance requires all the conditions of the Planning Permit being met. This will include construction of any drainage and vehicle crossings, and payment to all Servicing Authorities for water/sewerage/drainage/electricity supply.

Council will only issue the Statement of Compliance after it has received a letter from each Servicing Authority and carried out a final inspection of the site.

Costs

See this post: Subdivision Costs

Also see Battle Axe Block

Living While you Build – Cost

Living costs during the time your new house build can be much more expensive than after you have moved in. Its well worth planning for the additional expense.

Why is it expensive?

Well you will have either a mortgage or rent on where you live now, You will also be paying the mortgage on your new block, plus the mortgage on the stage payments on the house construction.

In the last couple of months of build you could be paying close to twice the monthly cost of the final mortgage. If the build is delayed things can really go pear shaped with regard to debt.

There is the opportunity in a standard building contract to have a liquidated damages amount which can help control the risk. In our last building contract this was set at $250/week (which would pay the rent on the place we were living in) if the build took over a year.

If you are unmarried and still living at home, or can move back with family for the time of the build, that can really help. For the rest of us its a case of making sure that we budget for the additional costs and putting some cash aside.

It’s worth remembering that if you have selected the right size of house you should be able to afford more than the basic mortgage on your new house so that you can stand possible future interest rate rises.

Just make sure that when you move the credit card isn’t maxed out. There are usually lots of costs up after the move such as blinds, curtains, additional furniture and gardens. All things needed, to finish off your house.

If you think all this as a major obstacle, then perhaps building isn’t the way to go. Buying an established house or finding a house/land deal with a standard real estate contract deal of 10% deposit and the balance at settlement may be better options.

For more posts about decisions like this see Starting Off

$500 Down For A New House ….A Good Idea?

With the house builders doing it tough you see all sorts of offers.

On the radio the other day I heard an advert saying “$500 down and you could be on the way to a new house and land package.”

If you feel tempted here are a few thoughts:

Deals like this mean you are borrowing more than 90% of the price of the house. This is a high risk mortgage so the provider will be charging extra interest and insurances which mean the overall cost will be higher.
When you buy a new house there are a lot of extras you need to budget for curtains, blind, furniture, gardens, the list goes on (See What Will It Cost?). Its not going to be easy in your new house if you have a huge mortgage, and your credit card maxed out on furniture and fittings.
Have you got a reserve of money in case you or your partner looses a job, gets pregnant, or becomes ill.
If property prices go down and things go wrong you may find that you owe more than the house is worth, This is known as Negative Equity!

I would be very reluctant to commit to a new house unless:

I could put down a minimum deposit of 10%.
Had the equivalent of at least 3 months wages saved for emergencies.
Spoken to a bank or other lender to see what they would be prepared to lend us, and knew it would cost less than 1/3 our combined incomes.

Do you think I am being too careful?

Budget has more posts about finding a house the right size for you.

What Sort of Plan?

Buying Land…….There are several sorts of Plans/ Surveys of your Block to think about before you can start building a house.

Here is a guide to the various plans based on the same block:

Title Plan

Title Plans are the legal document that describes the land. Initially they are usually the only plan that is available They are limited to:

Showing the dimensions and bearings of the boundaries.
Showing the locations of Easement.

The drawing below is a typical title plan

Feature Survey

The Feature Survey is an accurate representation of the block prepared by a surveyor. Typically the information shown is:

Boundaries.
Site Contours.
Locations of trees.
Any other above ground features such as driveway crossovers and manholes.

If you buy direct from a project builder they will normally arrange the feature survey. If you want to get quotes from several builders it can be worth getting a feature survey done first.

Geo-Technical Plan

The Geo-Technical Plan is more in the form of a sketch than an accurate representation of the site. The main purpose is to indicate the approximate location of boreholes. Other information that may be included is:

Indication of location of trees as these may affect the Geotechnical Recomendations.
Any rock outcrops.
Direction of fall.
Ponds / swampy areas.

See Blocks for more information on buying land.

Waffle Pod Raft Slab

A ‘Waffle Pod’ slab is now probably the most common Concrete ‘Raft’ House base. Its generally taken over from the Conventional Raft Foundation.

It’s an example of composite construction with polystyrene pods forming voids in the underside of the concrete ‘Waffle’.

This photo shows the pods, with the reinforcement placed over them, prior to placing the concrete.

Advantages

Cost
No trenches resulting in:
- Simpler excavation; and
- Flat site means site is easier to keep dry than trenches that collect water.
Waffle Pods bring house further out of ground. In an area that is wet the higher the better.
Better insulation from the ground meaning the floor will warm up quickly from cold. (especially if you go for in slab heating)

Disadvantages

More susceptible to bad workmanship – If the pods move during placing of the concrete.
More susceptible to bad drainage which can lead to soil heave if building on reactive clay
Lower thermal mass so less suited to passive solar design.
Thinner slab (typically 75mm rather than 100mm) means may not be as resistant to point loads such as jacking a car. Some people specify 100mm thickness for garage floor.
A thicker overall slab may be needed if you want Floor Drains (To allow for the dropped floor in those rooms)

Problem Sites

If your block has difficult ground conditions its still possible to use a waffle pod slab with:

Also see Subdivision Process