Duplex Valuations

We're considering building a duplex and are trying to gauge where the bank valuation would come in on it given there aren't many comparable sales in the area. Here's what we believe:

• We would build 2x 4 bed 2 bath single storey dwellings as a duplex on a flat 1000m2 block
• A new 3 bed 2 bath townhouse down the road will sell for 335k
• A new 3 bed 2 bath freehold house will sell for 360k, so a 25k premium to the similar townhouse
• A new 4 bed 2 bath freehold house will sell for 400k on a 500m2 block, so very similar to one half of the proposed duplex in specs and land size

My two questions are:

1. Would you expect a duplex to be valued at a discount to a similar house but at a premium to a townhouse (logic being its more private than one and less private than the other) and by how much?
2. Do you think that if you design the duplex to look as much like two separate houses (single storey, minimise connecting walls) rather than a dual storey duplex that looks like one giant house you're likely to get a higher valuation, similar to a freehold equivalent house? We're weighing up a potential value uplift here against the build costs of doing so. The size of the block means it's a legitimate option.

Thanks in advance.

 

I'm not sure how our LVR impacts the bank valuation, unless I'm missing something. Either 79.9% or more like 87.9%, depending on what else we're doing at the time for what it's worth.

 

More info required as per @Rolf Latham
Pending the type of development.
Will they be on separate title? Will the title happen before construction or during/after?
Do they have a common wall

 

Thanks for explaining Rolf, I didn't realise these were considerations.

It would be on two titles likely split after construction with a common likely garage wall only. Is the valuation negatively impacted if there is more connecting wall (i.e. two storey with all the side connected), or by keeping it on one title? Is it better to split the title before construction to make the loan process easier?

 

Perhaps I can rephrase my question as there are clearly a lot of new factors out there for our consideration.

If you were building a standard low spec duplex (2x 4 bed), what would you do to get the highest bank valuation? I'm not talking about straight forward things like location, more land or higher build specs, I mean the little things once you've decided on your block like the LVR, 2 titles vs 1, minimise connecting walls or extra soundproofing in connecting walls.

 

Hey mate, this isn't about the valuation but I thought I'd raise with you that I would not design the common wall based on what valuation you may or may not get. The common wall design is actually very important and will determine whether or not you can Torrens title subdivide (amongst other determinants such as minimum lot sizes required by council, other development controls) and also fire separation under the BCA. Two separate titles is what you want because you can sell each separately.

 

While I don't know the area you are building in, you'd have to assume that 2 separate 4 bed houses on 500m2 each would have the higher valuation over any duplex configuration.

You'd have to look at build costs of 2 dwellings vs a duplex and their end values. But I suspect that may work out better.

1000m2 is a big block for a duplex....unless you in a regional area

 

It depends on whether you are talking bank valuation or end values.

If you are getting titles after construction then a bank will value "in one line" and is likely to value at 20% lower than actual value. The bank give it a discount as finding a purchaser willing to buy 2 houses on one title is a lot smaller than 2 purchasers buying one house on one title.

If you split prior to construction then they will be assessed individually and value higher.

If you block is wide enough then I would minimise the common walls and only have at ground floor if possible to give 2 x house look

 

Why not get rid of the common wall all together? (2 standalone houses, strata titled)

 

Agree two stand alone townhouses will value and sell better. If can subdivide now then discount in one line might go away improving LVR.