The Duplex Explosion
Evidence of the duplex explosion is everywhere! Doesn’t it seem that almost every knock-down-and-rebuild development site in recent years has spawned two new homes in place of the original single dwelling?
Duplex properties are popping up all over the place, and appear to be driving the small development sector. We thought we’d look into this Duplex boom a little and explore why it is becoming so popular.
Without delving deeply into the complexities of financing, planning approval and the build itself, on the face of it we can certainly see the appeal for developers and owner-occupiers alike.
For developers:
You purchase an old, possibly run-down property on a decent flat block, demolish the existing home, and build a shiny new duplex.
The benefit is that, compared to building a new single dwelling, for a relatively small additional cost to the actual build, you now have two homes to sell, or to rent. Admittedly, they won’t attract the same sale price or rental income of a single dwelling individually, but you have two of them! So, their combined return greatly outweighs that of the stand-alone home. Another benefit for developers is that Duplexes create strong short-term equity in your asset, which could allow you to release some of the equity to finance your next project.
For owner-occupiers:
You get to build your brand new dream home, and have the opportunity to offset your costs by selling or renting out the attached property. The latter, also providing you with a great investment that will show an impressive return over time.
Building a Duplex is also working brilliantly for many families, as an alternative to adding a Granny Flat, with families living in one part of the duplex and the grandparents right next door.
It’s not difficult to see the duplex potential for both developers and owner-occupiers, but how appealing are duplex properties for buyers?
They certainly were never a desirable choice, going back even 10 years, however, as the property prices have risen, and consumer needs have shifted to smaller living spaces, the re-invented duplex, along with the townhouse (as featured in our recent newsletter) has become a strong performer in the industry. Add some inventive and impressive architectural designs and duplex dwellings have become both fashionable and desirable.
A duplex or townhouse is the aspiration of many Australian homebuyers with growing families, and is natural progression from apartment living that is more easily accessible than a large, detached home.
If building a duplex is something you’re keen to do for the first time, here are a few things you will need to consider:
Get some financial advice
You need to research the costs of building your Duplex and get your finance in order from the start – these builds typically require a higher financial commitment and the financing arrangement for development may be completely different to what you are used to, due to the additional risk. It’s important to conduct a feasibility study up-front, create a budget and stick to it. A good mortgage broker with experience in development finance will be able to help you, guide your budgeting and prepare you for the sums that will be required for deposits and progress payments.
Determine your Duplex strategy
Why are you building this Duplex? Will you sell both units once complete? Will you rent out both? Will you sell one and rent the other? Will you occupy one and sell, or rent the other? Lots of potential to consider, and each will drive a different strategy, feasibility study and financial plan.
Look for a Duplex-friendly flat block
Never underestimate the cost of a sloping block. While they do offer the opportunity for increased separation and a potentially more creative design, it is going to add to your costs significantly. Again, we come back to strategy. If this is your dream home and the objective for the Duplex is to offset some of your costs, this might work for you, but if you are developing for a quick return or rental income, go flat all the way.
Remember to check out the zoning for your shortlist of suburbs to determine whether or not the council is favourable to duplex development. Do your due diligence; check with council and ask your real estate agents lots of questions.
Also, pay attention to the size of the block – not just from a practical, development perspective, but understand that council requirements will differ. Some require a minimum of 500sqm – others 600sqm, for example. Aim to find out all the directives and limitations before you start your search.
Find a builder
Aaaand we’re back to strategy again. If you are developing with a plan to sell or lease, finding a building company that specialises in ‘project-home’ Duplex builds could be the most cost effective and efficient way to go. The added advantage is that many will give you great advice that will help you with your site search, check out zoning and local council requirements.
Alternatively, if you plan to occupy your property, you might want to splash out (within your budget, of course) on a unique architect design, and a bespoke builder. Again, both of these will assist you with DA approvals and zoning rules.
Consider the common areas
Talk to your architect or builder about layouts – even project home-builders typically allow flexibility with the inside space. Think about the rooms that will be connected to the attached property via the party walls. The best way if possible is to place garages and staircases against the party walls to increase the feeling of separation of the two properties and reduce transferred noise – especially from plumbing.
Think about subdivision
Duplexes maximise the potential of your land without the requirement for subdivision, which, in turn, reduces the cost of stamp duty, holding fees, insurance and council rates. This also means that strata and associated fees are not required.
So, if you are planning to occupy both dwellings as a family, or rent out one of the dwellings, holding off on subdivision may be the way to go. That said, it’s worth including subdivision in your design plans and DA, to give you the option in the future, should your plans change.
If, you plan to realise the gains of your assets from the off, you will need to subdivide the property before you are able to sell. In both cases, the subdivision plan must be created at the design stage by a building designer and included in your development application. Your DA Approval will then allow you to both construct the duplex and sub-divide the land. Only after construction is complete and your occupation certificate is issued, can the finalisation of the sub-division take place, creating separate titles for each dwelling.
Note that there are certain criteria that must be met for your subdivision application to be approved, which will need to be considered at the design stage of your development.
Don’t try to do this alone – you will need to consult a surveyor and lawyer to advise you and avoid costly mistakes. Again, construction companies who specialise in duplex design and construction will be able to guide you through the whole process.
Look into Complying Development for Duplex properties
In NSW, if your planned Duplex development meets a series of simplified standards, it may be fast-tracked with a Complying Development Certificate (or CDC). A CDC can pave the way for planning and building permits. It allows you to avoid going through council and instead use a private building certifier, providing your development meets certain standards, as follows:
- Blocks must be at least 400 square metres, or the minimum lot size according to council, whichever is greater.
- Blocks must be at least 15 metres wide.
- Buildings must have a minimum side setback of 0.9 metres. Greater setbacks apply for blocks wider than 24 metres.
- Each dwelling must be at least 5 metres wide and can’t be more than 8.5 metres high.
- Each dwelling must face a public road, and can’t be located behind another dwelling except on a corner lot.
- Each dwelling must have at least one off-street parking spot.
- Dual occupancies must be a permitted land use under the council’s local environmental plan.
Source: NSW Department of Planning, Industry and Environment
It should also be noted that in 2020, The City of Parramatta council designated certain areas of the LGA as land prohibiting Dual Occupancy properties, which includes Duplexes, and highlighted additional areas where the same action is proposed. That said, there is plenty of the Parramatta LGA left to pursue for the time being. If you are keen to build in one of the proposed areas, there may still be time if you can submit your application quickly.
You can check out the Parramatta Local Environmental Plan on this live map.
In conclusion
There does appear to be a huge amount of potential to exploit through the development of Duplex dwellings, and no shortage of eager buyers or renters ready and willing to take advantage of your product.
Aside from Parramatta restrictions, the government generally appears to be supportive of the initiative as evidenced through the easing of zoning restrictions and the aforementioned option for Complying Development.
So why not give it a try? Go forth and Duplify!
