Divide and Conquer – The Age, by Karin Derkley
Help is at hand for those interested in dual occupancy and want to subdivide.
With an overgrown jungle of a garden and an old garage riddled with asbestos, Gabie Kreuer knew she’d have to spend a lot of money to put her Mount Waverley backyard in order. Her two-bedroom clinker-brick 1950s house was perfect for her own needs, but the 754-square-metre block had become a headache to maintain.
Aware through a former boyfriend of the concept of dual-occupancy developments, Ms Kreuer felt her block would suit the purpose.
After investigating what was involved in subdividing the block herself, she engaged Sell Your Backyard, one of a growing number of specialist backyard subdivision companies, to carry out the work of getting the permit and subdividing the land. ”I realised it was a fairly complex process, and I just didn’t have the money to cover all the costs involved,” she says.
The company made her an offer, designed a two-storey dwelling that met council’s requirements, dealt with the considerable paperwork of getting the permit, knocked down the old garage in Ms Kreuer’s former backyard and built the town house. It took about two years but eventually she had the money in hand to fund her renovations and put a nice dent in her mortgage.
Carving up and selling off the backyard has become an increasingly common scenario in Melbourne. And it’s not just happening in suburbs such as Mount Waverley with its big blocks. Inner urban areas such as Brunswick and Northcote are also seeing backyard developments in sometimes impossibly tiny spaces.
Lyn Wallace recently had backyard subdivision company Backyard Buyers subdivide a portion of her 370-square-metre house block in Northcote. The subdivided block is a little more than 70 square metres, but Backyard Buyers chief executive Kathy vant Foort is confident she will be able to sell it for a tidy profit.
Her confidence seems to be well placed. Next door, a town house on a similar-sized subdivided block recently sold for $450,000.
Ms Wallace says she hasn’t lost much in the subdivision. ”What was there was an ugly old garage that was going to need a lot of work anyway,” she says. ”Now I’ve got a very nice courtyard, with good-quality fencing and garden beds planted with climbers.”
Another such company, Property Subdivision, has designed a dwelling on a footprint 6.5 metres by 7.1 metres in a Brunswick backyard. The two-storey town house will have total living area of 81 square metres, as well as a vertical garden wall, solar panels, water harvesting and wind turbine.
But such developments are no get-rich-quick scheme. As with Ms Kreuer, subdivision of the Northcote property took two years to get through council. And the owner will not see the money that will help her live comfortably in retirement until Ms vant Foort finds a buyer for the subdivided land.
Every council has its own rules and regulations regarding backyard subdivision. Many stipulate a minimum land size and require a percentage of land to be private open space. A subdivided block generally needs car access alongside the existing house and at least one car spot for each two-bedroom dwelling (two for three bedrooms).
Ms vant Foort says an ideal property for subdivision has the existing dwelling near the front boundary and plenty of side space. Ross Voci of Property Subdivision says corner blocks make for easier car access and have the added advantage of giving the new dwelling a street frontage.
For blocks that are less than ideal, subdivision companies have expertise in working out ways of dealing with the regulations.
There was no option for a side drive on Ms Wallace’s property, for instance, but Ms vant Foort was able to argue that the lane behind the property provided adequate access to the single-car garage in the new town house.
Mr Voci managed to convince Moreland Council to accept bicycle parking in lieu of car parking in another tiny backyard subdivision in Brunswick.
Sell Your Backyard’s Michael Frizziero says his town planning experience means he can tell in a matter of minutes whether a property will get a green light from council for subdivision.
It’s also about what the market is prepared to bear, Ms vant Foort points out. ”I’ve had to knock back clients who weren’t prepared to give up enough of the block to make it worthwhile,” she says.
For Mr Frizziero and Ms vant Foort, who bear the costs of carrying out the subdivision, the six-month to two-year time gap between when they make an offer and when they sell the development means they win if the market pushes the sale price well above the offer, and lose if the market turns down (Property Subdivision charges a fixed price for the subdivision). The client risks nothing, they insist.
”If I can’t find a buyer at a price I’m happy will cover my costs and give me a profit, then I will walk away and Lyn still has the subdivided property and a planning permit and design worth $50,000, and she gets to keep all the profit from the sale,” Ms vant Foort says.
The biggest risk to the client is that they agree to sell their backyard for lower than market price. Greville Pabst of WPB Property Group says that possibility makes it crucial to get advice from an independent valuer.
It also pays to shop around – especially as more backyard-subdivision companies are emerging. Ms Kreuer says the first offer for her land was half what Sell Your Backyard quoted. ”The first offered me just $70,000, which was hardly worth my while, I thought.”
What effect does subdividing have on the value of the existing property? Carving off a piece of land will naturally reduce the value of what’s left, Mr Pabst says. But the correlation is not straightforward. What you’ve done is change the market for the front property. ‘
‘It will no longer appeal to families looking for a big house and big yard to match, for instance, but it could appeal more to people who like that location and that style of house but don’t care for a big yard with all the maintenance that requires.”
Nelson Alexander estate agent Michael Fry says there is plenty of demand for houses without backyards, especially in inner suburbs. ”Some people like the area and they like the period style of the homes there,” he says.
”So they are happy to do without a backyard – but they will expect a discount.”
However, both Mr Frizziero and Ms vant Foort say the value of existing houses can be increased by a well-designed subdivision. ”In the process of subdividing we fix up the front house as well as build the new property at the back,” Mr Frizziero says. ”You can’t have a beautiful unit at the back and a run-down weatherboard with a jungle garden at the front.”
Ms vant Foort says: ”Some places start as nightmares and when you finish them they look so good. We fix up the driveway, do landscaping, fencing, paint existing fences. What you’re creating is a nice, neat, clean usable block.”
For Ms Kreuer the experience has been a positive one. She says she barely notices the new town house in her backyard, is happy with the new garage and fencing provided by the sub-dividers and is ecstatic with the renovations she has been able to carry out with the money she received from the sale of an unloved backyard.
Article at The Age: http://www.domain.com.au/news/divide-and-conquer-20120504-1y2d3/