A Guide to Property Development
01 01
Introduction
02
Preliminary Investigation
03
The People Involved
06 - 07
Summary of Planning Dale Walton - Design Equilibrium
08 - 09
Summary of Land Surveying Craig Stewart - A Line Surveying
10 - 11
Summary of Building Brian Lovel - Brian Lovel Residential Concepts
10 - 11
Summary of Selling Process Grant Lynch - Allens Real Estate
12
The Benefits of Selling “Off the Plan� and The Benefits of Waiting
13
Conclusion and Contact Details
Introduction Welcome to your insider guide to property development. I have compiled this booklet to demystify the world of property development and help you better understand what is involved in the process. Throughout suburban areas of Melbourne and every major centre of Australia, the standard quarter acre block is becoming a thing of the past. Homes that have stood for fifty plus years are being knocked down to make way for units and townhouses. Why? Because the population boom is demanding it and the government is assisting it. Throughout my career, I have helped people achieve massive sale prices for their homes by introducing developers to buy them. But some people wish to realise the full extent that their property can earn. Instead of selling
to developers, I have assisted them in becoming property developers themselves. This guide is written by industry experts to give you a comprehensive summary of what is required to develop your own property. The service I have offered my clients for years now is finally put in writing. I hope it will help clarify a subject that is often talked about but rarely understood.
Grant Lynch Senior Sales Consultant
02
03
Preliminary Investigation The initial stage tends to be a decision to utilise what you have. What you can do with your property is dictated by the type of property you have, the condition it is in and its zoning. For example, if your home is on a 1000 square metre block in the City of Whitehorse, you might be able to put three townhouses on the block, whereas in the City of Manningham, you could squeeze four onto it. So the first step is to get the property assessed. This can be done by a knowledgeable real estate agent or by going straight to a town planner or architect who specialises in developing property in your area. From here you will know what can be done with the property. This will give you an indication of your options. You never know for certain until plans are approved by council, but it will set the wheels in motion. From here you work out if your plans will be financially beneficial and how the best return can be realised. It is at this point that an assessment should be made of risk vs. reward. If the money and effort put into a development is going to realise a significant enough return on what is being done, there will be various options. Consider the following:
The People Involved t
Are you building a new property for yourself?
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Are you building one for you and one for investment/family?
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Are you keeping the existing home and building on the back?
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Are you knocking it down to build a significant project such as apartments?
Whatever your situation, you need to ascertain if the venture is going to be worthwhile. Your real estate agent should be able to put together a list of the property prices vs. costs vs. return and show roughly what kind of return can be realised.
Once you’ve done your research and you want to go ahead, the following three steps get the show on the road: 1. You need a Building Designer, Town Planner or Architect. This is the person who will work with you to design the new property/s, submit all the paperwork to council and get it approved. 2. You need a land surveyor. This is the team who will survey the land for subdivision, do all the measurements and submit new titles to create the new properties. 3. You need a builder. Depending on the type of development and quality/ quantity, the builder will determine the final outcome of your project. You can either go straight to a builder or to a company that will. There are a number of other people that are required in this process but these three are your main team to assist you in developing your property.
In their own words, here are the steps involved by each of the three critical groups in the development stages. This will give you a complete understanding of what is involved in getting your project off the ground.
Summary of Planning DALE WALTON - DESIGN EQUILIBRIUM Stage 1 involves initial client contact. This covers a free onsite inspection to determine suitability for development; discussion of fees; confirmation of contract and deposit received to allow works to commence. Stage 2 involves collating preliminary items such as:
Stage 5 involves the Planning Application. Upon receiving payment of the invoice, the steps are as follows: t
Planning application is submitted to relevant authorities.
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Conduct neighbours viewing of proposal (if required).
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Initial council response of application and conduct their own initial assessment, where they may identify concerns or request further information.
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Amendments are made to the drawings and resubmitted for further assessment.
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A feature survey plan and title re-establishment plan from land surveyor
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An arborist report assessing site and neighbouring trees with four metres of site boundary
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Conducting on site measure and preparing plan of existing dwelling and neighbouring dwellings
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Conducting site information brief to discuss individual requirements and preparing plan of existing dwelling and neighbouring properties
Advertisement of application are on site and via certified mail to neighbouring properties.
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Council receives any objections from interested parties or comments/consent from all service authorities.
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Cbtaining and checking certificate of title for dimensions and any restrictions
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Council may wish to conduct a consultation meeting between applicant and objectors.
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Checking zones, overlays and requirements to determine whether town planning is required
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Council considers the application and prepares report and recommendation for sign off.
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Determining location of sewer and storm water mains to easements
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Permit issued, Refusal or Notice of Decision issued by council.
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Obtaining information on existing council storm water drains, legal points of discharge etc.
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Contacting the water authority if the site is affected by an official flood level.
Appeals Tribunal (applicants have 60 days and objectors have 28 days to appeal the decision at VCAT).
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Drawings amended to reflect permit conditions and resubmitted for certification; certification of drawings.
Stage 3 involves the design process. A brief meeting is held to discuss individual design requirements. Then first sketches are prepared from this meeting in accordance with guidelines and site constraints, followed by additional sketches until the client is completely satisfied and signs off on the design. Next the ‘Build over easement permits’ (12 month expiry) are obtained from the water authority and local council to ensure the design is suitable to other authorities prior to commencing the next stage. Stage 4 involves computer drawings and associated information. Final drawings are converted into CAD TP format. If town planning is required, this involves preparing a written response, photos, covenant declaration etc. Any alternations are then made to the final drawings as per the client’s feedback (may incur costs). Next, the client endorses the application material and covenant form and pays the invoice.
Stage 6 involves builders working drawings and associated computations. This includes the following steps: t
Fee proposal is prepared for working drawings to commence, based on the endorsed planning permit.
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Soil report is prepared.
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Final CAD (Computer Aided Drafting) builder’s working drawings are prepared and are signed off by client.
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Drawings are sent to engineers for them to prepare structural and drainage computations and drawings.
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All material is handed over to the client upon payment of fees.
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All documentation submitted to preferred building surveyor for the issue of relevant building permit.
Planning
Summary of Land Surveying CRAIG STEWART - A LINE SURVEYING Stage 1: Preliminaries. This covers the following:
Stage 3: Certification. This covers the following:
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Determines the type of Subdivision.
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A title search is conducted and the certificate is checked for dimensions and whether any restrictions apply.
Title survey conducted to determine exact boundaries for works and subdivision.
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Preliminary plan of subdivision prepared for certification referral purposes.
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Obtain and check planning certificate for zones, overlays and requirements.
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Council sends proposal to referral authorities for their conditions and approval.
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Obtain and check service plans for requirements.
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Licenced Land Surveyor prepares a preliminary cost estimate.
All relevant planning conditions completed prior to certification.
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Council receives consent from all service authorities and certifies plan of subdivision (valid for five years without compliance before expiry).
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Stage 4: Compliance. This covers the following:
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All relevant planning conditions completed prior to certification.
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Council receives consent from all service authorities and issues ‘Statement of Compliance’ letter to be lodged with the Land Registry.
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Documents obtained (Certified Plan; Compliance; Survey Field Notes; and Report and Tracings).
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Solicitor lodges all relevant documents with the Land Registry.
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Subdivision registered for separate titles after approvals.
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Mortgagees consent etc.
Stage 2: Planning. This involves the following: t
Feature survey conducted to locate and take levels of the existing site and adjoining properties.
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Preliminary plan of subdivision prepared for planning purposes and contracts.
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Planning application arranged.
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Report prepared for planning application.
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Application submitted and considered by council.
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Council may seek further information then forward proposal to referral authorities for conditions and approval.
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Advertisement of application are on site and via certified mail to neighbouring properties.
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Council will receive any objections from interested parties or comments/consent from all service authorities.
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Council considers the application and prepares report and recommendation for sign off.
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Permit issued (valid for two years).
Please Note: Building Design: Building designers may require a title survey of property; and feature survey of site and adjoining house locations to be carried out for their design purposes. Council: Council may prefer the ‘Development’ (design) application to proceed the subdivision ‘Use’ application. In this instance your land surveyor should be consulted to carry out the ‘Development’ application.
Surveying
Summary of Building BRIAN LOVEL/GRANT LYNCH - BRIAN LOVEL RESIDENTIAL CONCEPTS The initial construction process starts as soon as the plans are completed and an initial quote can be prepared for the construction of the property/properties. Once a general price is agreed to, a soil test can be done. This will confirm the depth of the piers or slab that has to be formed. Then when the building permit has been finalised a final costing can be prepared. This is when we sit down with the client to price any specific changes that will want to be done to the standard builders range. When the pricing/design stage is finished, an initial deposit is paid and then construction commences. The first stage is to clear and prep the site, then the cutting and excavating can happen if required. Once the site is ready, trenches need to be dug for the plumbing to be laid ready for the subfloor/slab. Once the slab is poured and cured or stumps installed, the framing and second stage commences. Second stage is when the property starts to take shape. This brings us to what is known as ‘lock up’. Lock up is when the securing of the property in case someone tries to break in. This is the bricks/cladding, roof, facia, windows and external doors.
After lock up, the house goes from a building site to looking like a house. Insulation, electrical ducting all happen and then we are ready for plaster. Fourth stage is then the finishing off of the property, cabinetry, flooring, doors, first stage painting etc. At each stage, payments are made for the work undertaken and the majority has been spent at this point. From here, the property has the finishing touches and the fifth stage is the fit off of door hardware, carpet, etc. A date will be worked out for handover during this process and the Certificate of Occupancy would be ordered through the council. This is the final check that the works undertaken comply with the original plans. Once the Certificate of Occupancy is done, handover or the sixth stage of payments is done. This is when the appliances, hot water service and any ‘chattels’ are finished off. Handover then happens when the property is now finished and the home is ready for habitation. Enjoy!
Building & Selling
Summary of Selling Process GRANT LYNCH - ALLENS REAL ESTATE If your goal is to realise the maximum profit, selling your properties is the best way to attain this. If you wish to just sell the project with ‘plans and permits’- meaning you just obtain the planning permit and sell the property - this can be done as soon as the planning permit is approved. Builders often prefer this option as it saves them time with going to council. In essence, they don’t have to spend time and effort in planning: they just build. The next option is to sell the land as separate properties. This does take a bit longer, but it means you have two or more separate properties to sell, which can increase your profit dramatically. This can be done as soon as the Section
173 agreement is completed. But properties are unable to settle until the subdivision has gone through and new titles have been issued by the Victorian titles office. This can take between one and six months depending on how complicated it is and how quickly your surveyor gets it through. Your next option is to build the project. When you have started building, you can either ‘sell off the plan’ or wait until the project is finished and sell the finished product.
The Benefits of Selling Off the Plan Buyers love buying off the plan because they save considerably on stamp duty. You can also put your own personal touch on the property because sometimes the builder will involve the purchaser when selecting the materials, colours and fit out. As the developer, selling off the plan can save you considerable money in finance repayments for borrowing the money to do the project. In fact, depending on the size of your project, some banks require a certain amount of sales of the development before granting the finance.
Contact
The Benefits of Waiting Selling early can sometimes mean missing out on any capital growth that the property may have. By selling six months before the end of construction, the market may rise by 10% but you are locked in at the original purchase price. Buyers get a better sense of the finished project and make an emotional connection with the home, increasing the amount of money they will spend. Not having sold gives you full control of the property without having to reference to a buyer or to make changes to the project as wanted.
Conclusion I hope this guide has provided you with answers to your questions about planning, building and selling your property development. If you would like more details or to speak to an expert about your ideas, please don’t hesitate to contact Dale, Brian, Craig or myself and we’ll help make your project a success.
Grant Lynch Senior Sales Consultant Allens Real Estate 0425 779 468
Dale Walton Designer Design Equilibrium 9878 6118
Craig Stewart Surveyor A-Line Surveying 9870 6443
Brian Lovell Builder Brian Lovell Residential Concepts 0418 347 332