Throughout my discussions with potential investors, I notice that there are quite a few dual occupancy investment myths in the market that people have believed to be true. Lets go through a few myths here so I can dispel them.
Difference in use of terms across different areas, ie dual occupancy, Duplex, auxiliary:
There are a number of different terms which are used interchangeably to describe the dual occupancy/auxiliary dwelling. One of the key issues is that different council areas use different terms to refer to these dwellings. To simplify things we refer to a property with a smaller auxiliary dwelling which cannot be strata titled as a dual occupancy/auxiliary and where a property can be strata titled we will refer to it as a Duplex.
Inability to strata title:
Generally there isn’t the ability to strata title a dual occupancy/auxiliary property, and this is how we differentiate between the dwelling types. However, to make things a little more confusing, under some Council areas there is an ability to pay a second set of headworks and strata title the property. However, this varies from Council to Council and each individual property purchase would need to be assessed against the individual townplanning requirements.
You don’t have to pay two lots of rates:
You don’t have to pay for two lots of rates unless the property has been strata-titled. For example if the property is a dual occupancy / auxiliary that’s on one title, you only have to pay one set of rates. However if the property is a Duplex, or a dual occupancy which is in an area where you can strata title, once the property is strata-titled there will be two sets of rates payable.
Headworks fees: not required in some areas.
Generally for a dual occupancy/auxiliary property there is only one set of head works fees payable. However if you are in one of the Council areas where you are able to strata title the property into two dwellings then there is generally a second set of headworks payable.
Separate metres in some and sub-metres in others.
Dual occupancy/auxiliary properties will generally have most of the same inclusions that you would find in a Duplex property. This means that where it is possible there are separate water metres, however in some council areas and estates there may only be sub-metres. This allows the different water bills to be assessed for both sides of the dwellings.
Firewalls are the same as what you would get in a Duplex
The firewalls which separate a dual occupancy are the same as what would be used in a Duplex dwelling. Different builders will have different methods of reaching the specified fire protection, as there are different building methods available and different fire wall products available. However, the standards that are reached in a dual occupancy in South East Queensland are the same as what would be used in a Duplex dwelling.
Yields are better for a dual occupancy than a Duplex.
In most instances the yields achievable from a dual occupancy/auxiliary dwelling are better than what are achieved by a Duplex in a similar suburb. There are a number of additional fees which are associated with a Duplex which are not applicable to most dual occupancy properties, these include: strata fees, additional rates and water fees, head works, higher land prices (due to the ability to build a Duplex on it). These additional fees push the price of a Duplex up and therefore make the yield for the property lower.