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Perth - Amalgamation and Subdivision

Discussion in 'Development' started by Clayton Sharp, 7th Jan, 2016.

  1. Clayton Sharp

    Clayton Sharp Member

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    I have a PPOR in Leeming WA with a block size of 820m2. The house next door is up for sale and I am wondering if it is worthwhile looking at for a development. The block next door is 680m2. Both are zoned R20.

    Would it be possible to split the block next door into 2 of minimum lot size (350m2) by shifting my fence a little to get the extra 20m2 required to get it up to 700m2? I assume I would need to amalgamate the 2 blocks into one, then subdivide to achieve this?
     
  2. thatbum

    thatbum Well-Known Member

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    You generally need to meet the average size requirements to subdivide (450sqm for R20).
     
  3. LifesGood

    LifesGood Home Building & Development Consultant Business Member

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    If you amalgamated the two I assume you could then look at splitting them into 3 depending on the specific frontage requirements etc...or perhaps you can look into what concessions you might be able to get to see if you can squeeze 4? @Aaron Sice will be your man on this one. He's a creative bugger. ;)
     
  4. Clayton Sharp

    Clayton Sharp Member

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    Yeh, hence the question about amalgamating. If I join the 2 blocks together I get 820+680 = 1500m2. Then subdivide to get 2 lots @ 350 and 1 lot (the PPOR) @ 800.

    Average would be 500m2. Frontage shouldnt be a problem as both blocks have 20m each.
     
  5. thatbum

    thatbum Well-Known Member

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    Oh ok I get you now. Seems doable so far.

    But knowing the values in Leeming, I'd be surprised if it was a good idea in terms of financial feasibility.
     
  6. Clayton Sharp

    Clayton Sharp Member

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    Yeh thats a seperate question. :(
     
  7. soggy

    soggy Well-Known Member

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    You'll get 3 no problem as you described. Could possibly go under the minimum 350sqm lot size by 5% for at least 1 lot, if you didn't want to bother moving fences.
     
  8. Big Daddy

    Big Daddy Well-Known Member

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    Might need to speak to @Terry_w. Once you amalgamate the land it would be covered by PPOR exemption. When you split off the other 2 blocks then you are subject to CGT and stamp duty if you ever sell.
     
  9. Clayton Sharp

    Clayton Sharp Member

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    Didn't even think of that. That would be sweet!

    How much would it add to the cost to have the 2 lots amalgamated and then subdivided again? Can it all be done at once or is it 2 seperate processes?
     
  10. soggy

    soggy Well-Known Member

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    I haven't done an amalgamation before, so not sure if it can be done in the same application. If it's 2 separate, you're up for double the WAPC and surveyor fees.

    Also be aware how you want to subdivide the lots. Where's the sewer line? It may cost too much to green title all 3 lots. If you went survey strata, you could potentially be losing green title for your main house.
     
  11. MTR

    MTR Well-Known Member Premium Member

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    Finance needs to be considered?? banks need to be advised and approval given when subdividing etc.

    I would start will total cost of land and what you would build in this area, and what end values would be.

    A basic feasibility study to work out whether it will stack up and what $ you need to fund this deal.

    Marisa:)
     
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  12. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    Do you have to amalgamate and then subdivide? If you own both could you skip straight to creating the new titles? Seems silly to change then change, especially if they need a certain condition met for the amalgamation then something different for the end subdivision.

    I've never done it myself, but seems very clunky to do it twice. But would not surprise me either :)
     
  13. Clayton Sharp

    Clayton Sharp Member

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    Doing it all in one step would obviously be the most desirable way, but i'm not sure how it works.

    My quick calcs are as follows:

    Current PPOR MV $750000
    Purchase Price $600000
    Purchase Costs $30000
    Subdivision & Demo costs $75000
    TOTAL COSTS $14445000

    End Value:
    PPOR $750000
    New Lot 1 (350m2) $400000
    New Lot 2 (350m2) $400000
    TOTAL END VALUE $15500000

    PROFIT $105000
    Does this look correct?
     
  14. Gingerbeer

    Gingerbeer Active Member

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    Looks like you are missing holding and selling costs.
     
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  15. Aaron Sice

    Aaron Sice Well-Known Member

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    What qualifiers apply to allow for 5%? I cant see any. Just because it's there doesn't mean the application is automatic.
     
  16. Aaron Sice

    Aaron Sice Well-Known Member

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    Process happens concurrently.
     
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  17. HD_ACE

    HD_ACE Game-Changer Premium Member

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    Possible- Yes. profitable- No.
    All should be done in the one hit to save time and money.
     
  18. Westminster

    Westminster Tigress at Tiger Developments Business Member

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    I agree it's possible but it's a very small profit which could disappear is the current and foreseeable market.
    I can see the lure of the idea but once you take tax and the holding costs it is for very little money.