Long time no Blog
We have both been a little busy with stuff so haven't really had a chance to do posts on what has been going on with our first small time development. Time-wise things are going pretty well for a couple of first timers, a couple of months over but only because of one sticking point. And of course we we have run into a couple more costs. Here is a run down of what's gone on.Planning Permit
Since the last post we have made it through planning and received our permit without any modifications to the proposal. The draftsman who drew up our plans said if we got our proposal through with the reduced front setback (the standard is 3m but we had a 2m setback), he wanted to know how we did it. The answer...we gave the planner who was assessing the application as many reasons to grant our permit as possible.Planners make decisions based on policy, and in Victoria this is in the Planning Scheme. A planner cannot read our minds so we had to tell them how our proposal met all the relevant objectives in the planning scheme. We thought that the small setback would be the main sticking point in our application, so instead of trying to hide it, we emphasised it and showed how we were addressing it. Although we didn't meet the standard we demonstrated how it met the objective, see the clause I am talking about- http://planningschemes.dpcd.vic.gov.au/aavpp/55_03.pdf
Finance
This is the sticking point. Once we had our planning permit, we could go ahead and apply for finance. We wanted to borrow enough for both the subdivision and the build, roughly $170k. The trick, as we eventually found out, is that the bank wouldn't lend until the subdivision was completed.What we were told by the people with the money (ie the bank), is that they will not value the property as two separate houses on two separate lots until the subdivision is complete, that is until we have two separate titles in our hot little hands. Essentially, two houses on one lot is not worth as much as two houses on two lots. The result of this is that our loan to value ratio was too high which equals....no loan! :(
Sucks right. So we are having to finance the subdivision ourselves, but after that is finished we will be able to get the loan for the build from the bank and start seeing some spades in the ground.
SMALLTIME LESSON- Not enough equity in the property? You need the cash to do the subdivision.
Sewer extension
Fortunately our subdivision is relatively cheap (I think so anyway and something that will be gone into in more detail next post). We are subdividing a corner allotment and are lucky that most services are right out the front of our new lot; all except sewer.The authority responsible for sewer and water in our area is Coliban Water. We needed to engage an engineering firm (Coliban had a list you had to choose from) who would chat with Coliban and draw up plans as to how they would get the poo pipe to our lot. After that was agreed, they tendered out the work to about 5 different companies. The prices that came back were enormously different, the cheapest being a bit less than $10k and the most expensive being almost 25K! Now we already know we should get a few quotes but I think this shows why it is important. Even the cheapest one is a bit more than we accounted for, however it was the design of the system, mainly additional manholes, which added the cost.
