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Understanding your development options

GREEN TITLE V BUILD STRATA V SURVEY STRATA

If you own a larger lot and are considering subdividing and developing, or if you are looking to purchase a lot to develop, you should have a sound understanding of the three different ‘titles’ available and the advantages and disadvantages of each.

The type of title you choose for your development can have significant implications for you during the finance approval and development process, as well as for any future owners if you decide to sell one or more of the developed properties. This resource outlines the general considerations for each type of title to give you a basic understanding of each and to help you to identify which is most suitable for your proposed development.

GREEN TITLE

A Green Title lot or property is the most desirable from a purchaser’s point of view but is the most expensive from a development perspective. It can be difficult to achieve, particularly for battle-axe schemes as no common property is permitted and all lots must have direct access to services which can significantly increase development costs. However, Green Titles may prove rewarding for developers in the long run as they may achieve a premium when the time comes to sell.

Best suited for: Single lot developments in larger residential estates or infill subdivisions

Cost per lot: From $6,350 per lot (for two lots) upwards of $7,450 per lot (for six lot subdivisions). Cost will vary depending on vacant lots or if issued with an existing building (as at 1 July 2012)

ADVANTAGES

  • Totally freehold land and owners have complete freedom to develop the lot/property as they wish
  • Broadly considered as the best type of title
  • New titles can be created without first having to build on the lots
  • Titles can be created long before a development is completed
  • Common property is not permitted
  • A Green Title lot may be easier to sell • In some instances, purchasers may pay more for a Green Title lot
  • Can be done at any time before, during or after construction

DISADVANTAGES

  • Most expensive way to subdivide
  • Can be more difficult to achieve, especially for battleaxe schemes
  • Each owner has no control over what other owners do on their lots
  • The WA Planning Commission must approve all Green Title subdivision applications which may be less flexible than local Council approvals
  • Lots cannot share services as each lot must have direct access to services which can significantly increase costs
  • Any proposed vacant lots must be clear of all buildings before Titles can be issued
  • Any proposed lots with an existing building must comply with all conditions before the new Title can be obtained
  • Minimum building setback distances between buildings and proposed boundaries may be more difficult to achieve

BUILD STRATA TITLES

Build Strata Titles (commonly referred to as ‘Strata Titles’) are the quickest, easiest and cheapest way for developers to have titles issued but they can only be issued once the entire development is 100% complete and are more onerous for the individual lot owners. Any upfront advantages may be sacrificed when the time comes to sell the property/s, due to the tighter constraints associated with ownership of properties with a Build Strata Title.

Best suited for: Developments of between two and six properties, including multi-tiered developments

Cost per lot: From $2,100 per lot (for two lots) upwards of $4,150 per lot (for six lot subdivisions. Add an addition $100 per storey, per lot (as at 1 July 2012)

ADVANTAGES

  • Easiest way to subdivide
  • Cheapest way to subdivide (in terms of surveyor costs)
  • Quickest way to subdivide
  • Strong level of control over what the other lot owners can do with their buildings
  • Includes multi-tiered buildings (where one lot sits vertically above the other)
  • The WA Planning Commission is not involved unless there is more than six units
  • Process does not need to commence until buildings are at ‘roof on’ stage

DISADVANTAGES

  • No vacant lots are allowed • Once titles are issued, any changes to the buildings requires the approval of ALL strata lot owners
  • Must have the finance to build before obtaining the new titles
  • You cannot obtain titles until the ENTIRE development is complete including fencing, landscaping , paving, letterboxes and all final details
  • Each owner has less freedom to make changes to their building
  • Once titles are issued, any changes may result in the Strata Plan at the Titles Office being inaccurate which may need to be updated, resulting in extra costs for owners

SURVEY STRATA

Survey Strata Titles are more flexible than Building Survey Titles (as they can apply to vacant or built properties, or a combination of the two) and can be obtained at any stage in the development process. Survey Strata owners have more freedom with what they can do to their properties, compared to Build Strata, but this form of Strata is more expensive for the developer.

Best suited for: Developments of two or more properties, excluding multi-tiered buildings

Cost per lot: From $6,350 per lot (for two lots) upwards of $7,450 per lot (for six lot subdivisions). Cost vary depending on vacant lots or if issued with an existing building (as at 1 July 2012)

ADVANTAGES

  • Vacant lots are allowed
  • Process takes longer than Build Strata
  • Can include vacant lots, lots with old or new buildings OR a combination of the two
  • Once titles are issued, any changes to the buildings DOES NOT require the approval or consent of any other lot owners
  • Titles can be created without having to build first
  • If the process is started early enough, titles can be issued long before a new development is completed on site
  • Each strata owner has more freedom to make changes to their building
  • Once the new titles are issued, a Survey Strata Plan never needs updating no matter what changes the individual strata owners make to their buildings
  • Can be done at any time before, during or after construction

DISADVANTAGES

  • Excludes multi-tiered buildings (where one lot sits vertically above the other)
  • Can be more difficult to achieve, particularly with a battle-axe scheme
  • More expensive way to subdivide (in terms of surveyor costs)
  • Each strata lot owner has no control over what the other lot owner(s) do with their lots
  • WA Planning Commission must approve all Survey Strata applications and there is usually less flexibility compared to dealing with local Councils
  • All proposed vacant lots must be clear of ALL buildings and have all services supplied before a new title can be obtained
  • Any proposed lots with an existing building must comply with all conditions before a new title can be obtained

The tables above outline the general considerations for each of the three types of titles, but it is important to recognise there are many intricacies, exceptions and complex variations for each and it is strongly recommended you consult with an expert before making a final decision. It is important to know what type of title you wish to pursue before you purchase a block, apply for finance or commence the development process. Investor Assist has a group of expert Property Investment Specialists who are highly experienced in the subdivision process and can provide expert advice to assist you to determine what title option is best suited to your development. To find out more, contact Investor Assist on (08) 9200 7200 or email info@investorassist.com.au

 

DISCLAIMER: This information is of a general nature only and does not constitute professional advice. We strongly recommend that you seek your own professional advice in relation to your particular circumstance. Investor Assist Pty Ltd Builders Registration No. 13818.