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Tichaona Chikede
In Zimbabwe, there are some suburbs with vast pieces of land that can be subdivided into residential stands, for example Waterfalls, Prospect, Hatfield, and many other parts of Harare. You need to learn to evaluate the risks and rewards of subdividing land into residential stands. Successfully subdividing your land into residential stands can have many benefits, including providing a landowner both increased profits and flexibility.
If you have a large parcel of land, or even a home stand that has extra land area, you may wish to consider whether subdividing your land can help you maximise your real estate resources, something that many landowners are evaluating in the current Zimbabwe economic conditions.
In Zimbabwe you can increase the total value of your land by subdividing it into stands — that are then sold to one or more buyers. In essence, through subdivision the parts can be more valuable than the whole. Another benefit of subdividing for land owners who would like to liquidate some of their real estate without having to sell, is that they may be able to both cash in on a portion of vacant land and stay put on the rest.
Many landowners who have lost their income are finding it as a way of financing their retirement expenses. Holding onto some of their land can give that property time to increase in value as the surrounding subdivided stands becomes developed.
Subdivision concepts are common knowledge and practice among experienced professionals like contractors, land developers and real estate agents. In fact, subdividing land really is a fundamental part of all real estate development, but it is only one part of the overall development process.
Subdividing land also can be risky and costly if you are not thorough with your due diligence. Whether you own the land or are just evaluating a potential new purchase, the risk that a subdivision is not able to be done — or at least done in a way that makes financial sense — can often cost you money and valuable time.
There are a number of preliminary items that help you decide whether a subdivision is feasible. If you are a landowner or homeowner considering subdividing land into vacant lots, read on to learn more, and — as always — plan to seek the guidance of experts.
Mind the size of subdivision
In Zimbabwe you need to consider the size and scope of your plans, because there can be different degrees of difficulty when subdividing land and, to put it simply, these can align with the project’s size — the bigger the project in hectares and number of stands, often the greater the complexity. If you are dealing with a single stand being subdivided into two or three residential stands, you may be able to handle this by working with a few real estate professionals like Terezim Fortress Properties that will help you in the process. Be thorough during your due diligence and planning so you can evaluate whether subdividing is feasible and makes financial sense.
Once you get over about an acre in size and two or three stands, the complexity of the subdivision process can rise dramatically. The level of difficulty — and expertise needed — can be compounded if you have a site where stands will not front on an existing public road or where utilities and infrastructure must be built.
This likely will require you to undergo council oversight for the subdivision’s site design and layout, as well as construction of roads, utilities and other infrastructure. In this scenario, you basically are stretching the activity from simply subdividing a parcel to full-scale community and land development.
What causes losses?
One of the most important step before subdividing your land or land you wish to buy is to make sure there are no restrictions that will block your plans. Everything from ordinances, neighbourhood covenants to deed restrictions may prohibit or fatally complicate your plans.
Review these items carefully, plus order a professional title review (typically through a real estate lawyer) so that you can understand whether there are any deal killing issues that apply to the property and prevent subdividing.
If you find items during your review that may be problematic, you and your lawyer should evaluate them carefully to find a solution, or see if you are able to get title insurance that provides specific coverage to protect you and ultimately your buyers. But never ignore a tricky restriction or convince yourself that it won’t be a problem.
Beware, even the pros can get into trouble if they become too wedded to their grand plans. You may get away with bypassing restrictions for a while, but doing so can cost you down the road — especially when trying to sell or finance the property.
When subdividing a parcel, make sure your proposed stand layouts and stand sizes are appropriate and will work not only legally, but for the market. Selling stands is not like Field of Dreams, where if you build it they will come. You need to make sure there is a market for stands in your area and at a price that makes sense.
Determine the size, layout and other requirements that are expected for new stands to be marketable. A good real estate agent with expertise in land can help you with this. You also may be able to get some advice from builders — reach out to the ones who are active in your geographic area and in the price range for new homes that would likely be built on your stands. Getting their input could be the key to successfully subdividing marketable stands.
Even if you’ve confirmed that there are no restrictions that forbid subdividing the land (or make it unfeasible), you and your experts also should research the local zoning, subdivision and development laws so that you can understand the layout and size limitations for your planned stands.
There are regulations that describe important items like current zoning requirements, minimum stand sizes, setbacks, buffers, building heights, required open space and other significant details that affect the size and layout of your stands.
You also need to confirm that each of your planned stands will be properly serviced. Most homeowners expect to face a public road (with adequate frontage) and have water, sewer, power and other utilities available. So be sure to confirm both that typical utilities are available for your stands and that they will have the capacity to handle the load from any new homes that would be built on the subdivided stands. Do your research and have your surveyor locate water, sewer, electricity and other utility lines and infrastructure on your plan.
Many of these lot size, layout and service matters will be driven by the council requirements through a subdivision permit, but others will be driven by the market.
If builders and new homeowners only want to buy 1 000m2 stands in your area, you may not want to create a subdivision that results in 500m2 — even if you can.
Likewise, consider the negative effect of providing any infrastructure, utilities or other services that are less than normal for the market — so even if it is allowed by law, using a dirt road as your stands’ access will not compare well to a nearby stands on a paved road with sidewalks.
Evaluate these items carefully in advance and include the related costs in your financial analysis and budget.
Understand impacts & other requirements
Another surprise to Zimbabwean landowners attempting to subdivide their land is that the act of subdividing can raise any number of additional requirements and costs on your land. While your existing land may have been grandfathered so that it does not have to comply with some newer laws and regulations, undertaking a subdivision can trigger a new set of impacts and requirements.
Consult your local authority for those requirements and make sure they are factored in as costs of the project.
These can include a requirement that you dedicate part of your land that is in the road right-of-way to the local authority as endowment fees, causing you now to be working with a smaller land size. Other rules may require you to build or improve roads, sidewalks, street lights, curb and gutter and even to plant trees. In addition, you also may be required to install water and sewer connections and meters for the stands, or to pay capacity fees, impact fees and other assessments e.g. environmental impact assessments when adding the new stands. You need also to consider how you are going to sell the stands and consider issues of VAT and capital gains tax and factor it with the assistance of ZIMRA.
You will need to keep items like these in your budget too, including contingencies for some which may not be known upfront.
Do you want to subdivide your land, Tichaona can be contacted on [email protected] or whatsapp +263771293450.
Bongani Ndlovu