Corner site subdivision zoning loophole - Como

Hi Guys,

I noticed this R20 site sold in Como for $765K in March 2018, then one block was subdivided and put back on the market for $569K. I understand the subdivided lot has not been sold yet but seems like a handy profit is in the pipeline.

Can anyone shed some light on how this corner site was able to be subdivided at R20?
I know there’s some kind of loophole with some corner sites but am not sure of the details and criteria etc

Doing this from my phone so if links don’t work property address is 101 Ryrie st Como
Links below:

101 Ryrie Avenue, Como, WA 6152

101 Ryrie Avenue, Como WA 6152

Thanks

 

Hi @Beachsnow,

In October 2017 the WAPC made some changes which permitted you to be able to subdivide corner lots (under certain circumstances) to their minimum lot sizes, essentially ignoring the required average lot size.

The policy is https://www.dplh.wa.gov.au/policy-and-legislation/state-planning-framework/development-control-and-operational-policies/development-control-policy-2-2-residential-subdivi

Look under clause 4.2.4.

In the old subdivisions, the minimum lot size used to be 700m2. Today these are typically zoned R20 with an average lot size of 450m2, and so can not generally be subdivided. The effect of the policy changes was that corner lots in these areas can be now be subdivided to the minimum (350m2).

We found that this was particularly effective in areas with high desirability and tightly held homes. Areas like Como, Shelley, Willetton, Hillarys etc. The smaller lot sizes generated a tonne of competition for people competing for the locations. People that got onto this early really cleaned up

Cheers,
Angad

 

Thanks Angad Singh
I noticed one on Nola st in Scarborough. The house sold for the single residential price and the buyers (real estate agents I think) subdivided and made a mint!

Will keep an eye out for sites that match this criteria, although may have missed the boat

Does that only apply to corner sites?

 

There is a couple of other circumstances in which you can get a similar situation Have a read oft the policy and it'll make it a bit clearer. Worth noting the Policy is intended to be read in conjunction with the R-Codes.

Also, that is only one of many little tricks that developers use to turn a profit in a tough market. There are heaps more

 

What was the house number in Nola st?

 

Maybe 1, 3 and 3a?

One side of Nola is R25 (Beachside) and the other side r20 though so I'm not seeing anything out of the ordinary for the street except for 1 (329sqm), 3 (335sqm) and 3A (335sqm). All 3 are nicely above minimum but don't meet average - though there would have been a corner truncation of 16sqm somewhere added in. AND for some reasons these front boundaries are further back than other blocks so they might have ceded some land for some reason?

They were done in 2014/2015 and would have been under the old temporary allowed subdivisions for 2 frontages.

 

Care to share? Please!

 

Hey @House and @Beachsnow and anyone else interested in having a chat about this (and other stuff about property development),

I am arranging a social meetup on Friday 1st Feb, 5pm-8pm at Henry on 8th in Maylands. It's just a casual event where people can chat and connect. There is no fee's, and you can just pay for drinks as you go.

I have invited a few other people who I know are very generous with their knowledge, and hopefully we'll get a few other developers on Property Chat to swing by

Give me till the end of this week and I'll put up a Facebook event and share a link.

Cheers,
Angad

 

It was the corner of Nola and Lewin - Number 2. Originally sold for $940K in Aug 2016 then one lot sold for $655K, not sure about the second lot.

reiwa.com - Lot 2, 2 Lewin Way, Scarborough

 

Sounds good @Angad Singh, I have another friend who would be interested. Let me know the details

 

Hi @Westminster, it was 2 Lewin Way, corner of Nola. Not sure if this rule was applied but a tasty profit regardless

 

So with the new policy of corner lots being the minimum size; ie 350sqm for R20 corner blocks. Can the 5% then also be applied to that 350 sqm? ie could you actually have had a 333.5 sqm block?

 

This would be similar
Property Report for 73 Macdonald Avenue, Padbury WA 6025

Not going to do a full on feasibility as thats out of knowledge at the moment.

But 370sqm across from a park in padbury would sell for 330-340k.

Buy 490k.
30k demo
10k Subdivide (no idea?)
10k Agent fees = 540k

Sell 2 x 370sqm properties for 660k (Being on the conservative side)

Thoughts anyone?

 

Hi @property world,

When you're doing your preliminary feaso I'd work off something more like this:
1)Buy Price ~490k
2) Stamp duty ~15K
3) Demo ~20K
4) Subdivision: ~40K (will attach a screenshot of one I recently did so you get an idea of the breakdown)
5) Holding costs: ~2-5K
6) Selling costs: ~2% of value (~13K).
TOTAL: $583K
Sales Value: $660K
Profit: $77K (~13% Profit on Cost)

This is a good deal, but not an amazing deal. The biggest plus about this is that there is relatively low level of risk and complexity and the area has a good underlying demand for this type of product. Particularly if you are confident in the sales values. The critical thing is that you would want to be picking it up at land value. You can't afford to pay for the house, and then pay to demolish it, and make a profit on these types of deals.

Here is a screenshot of some of the actual expenses in a subdivision:


Hope this helps you understand some of the basic costs involved in a little project like this

Cheers,
Angad

 

I would say no.

I'm sure @Aaron Sice or @Westminster will correct me if I'm wrong.

 

@property world,

The 5% variation to minimum lot size and/or the inclusion of corner truncation are not permitted with these types of subdivisions.

The policy I posted earlier explains the nuances

Cheers,
Angad

 

Thanks Angad i will continue to read through that. Some terms im not that familiar with and trying to understand. Sometimes how they have it written seems as clear as mud at times or i just need to get use to the terms used.

Really appreciate that

 

Hi everyone,

As mentioned before I've set up the Perth Property Developers event.
Please register on Facebook for the event: HERE
Also join the Perth Property Developers Facebook group: HERE

Hopefully see you there

Cheers,
Angad

 

16 Lawson Way, Padbury, WA 6025

• The variation reduces the area of that one lot by no more than five per cent of the minimum lot size specified in Table 1 or elsewhere in the R-Codes.

As i read that you can reduce the minimum lot size for that R-code by 5% ie if it was for say example: Minimum Lot size was 300sqm then 5% would allow 285 sqm?

Am i misunderstanding this snippet from the policy?

 

Hey @property world,

Yep, so that is a general provision that applies if you are seeking to vary average lot size less than 5%. In those instances you can vary the minimum lot size, and also include upto 20m2 of a truncation in your site area calculation.

There is a separate provision when you are seeking to vary average lot size greater than 5% (as is the case with the corner lot subdivisions).

In those instances it states that each lot must achieve the minimum lot size without including any truncations.

I know the way this is written it can sometimes be a bit confusing

Cheers,
Angad