You See 1 House, But I See 2: Severing Properties

 Where There Was One House There Are Now Two110 hollis new

I wrote about this issue a couple of years ago, but I think this is a good time to update.

About 8 years ago I was hired by the executor to list her mother’s house who had passed away.   She was rather apologetic when she was showing me the home as everything was old and dated.  The heating, plumbing, windows and electrical all needed replacing, as well every room needed a major overhaul. My seller had come to the conclusion that the house was so worn and dated they would take a beating on the sale price.   Yes the house was a mess, however what it had going for it was it was on a 50 foot frontage. What truly added great value to this property was most of the neighbouring homes built on the block were all on 25 foot lots.  This was exactly what a builder would sell their soul to the devil for…if developers actually had souls.

The house was aggressively priced and as first time buyers came through they saw a rundown house and evaluate a price on the homes bricks and mortar, but not the lot potential.   We knew who would buy and in the end two Toronto East builders were in competition to secure a deal.

The key factor in determining if severance is possible is whether a smaller lot frontage exists within a defined radius.   In parts of the city you will see 50, 80 or 100 foot frontages but expect to have your request denied if no smaller lots exist presently.  I have attended more Committee of Adjustment hearings where someone purchase a 100 foot lot expecting to sever, but instead be shot down.  As they walked out leaving with nothing they tried to figure out how they can recoup some of their costs.  It should be said that the costs for applying for severance would be around $5,000 with the levies and hooks-up to apply if approved.

If you are looking at severing a property in Toronto there are a number front-end costs to consider:

  • New survey – $2,500
  • Municipal levies for transit, schools and garbage – $30,000
  • Water and sewer hook-ups – $12,000
  • Permits and fees – $8,000

So before you get to actually dig you should expect to out lay between $50,000 to $55,000.  Individuals who approach me for advice are cringe when outline the costs of severing.    This is cash out so don’t expect a lender to bankroll your venture.

The good news is there are still properties to sever, but you need someone who has experience on what to buy and which ones to give a pass.

In the 8 years since I sold this property 4 other properties in the same block have been severed and two new homes were constructed on the lots.