Pros & Cons of Severance


So you own a big piece of land, and you want to maximize your return when it’s time to sell. Is it wise to sever the lot into plots of land for developers, or sell the property as is?

Severing your lot refers to the process of dividing a larger piece of land into smaller, separate lots. The decision to sever your lot before selling your home comes with both advantages and disadvantages. Here are some of the pros and cons to consider:

PRO – Increased Value

By dividing the land into smaller lots, you may be able to sell each lot for a higher price than if you sold the entire property as a single unit. As housing becomes scarce, adding more opportunities to increase inventory adds value on its own.

CON – Cost

Severing your lot can be expensive, as you need to hire a land surveyor, a lawyer, and other professionals to help with the process. Additionally, you may need to pay fees to the local government or municipality.

It’s also worth understanding that simply applying for a severance does not guarantee it will be approved. Investment into the venture could be a wash if no approvals are given.

PRO – More Flexibility

Severing your lot can give you more flexibility in terms of what you can do with the land. For example, you may be able to sell one lot and keep the other for personal use or sell both lots separately.

CON – Time-Consuming

The process of severing your lot can be time-consuming, with various requirements and regulations that must be followed. On average, a straightforward severance could take approximately 12 months. However, if any complications or variances arise, it could double the time.

PRO – Potential for Additional Income

If you decide to keep one of the lots and rent it out, you could generate additional income. Depending on zoning, a lot could be turned into a multi-family property or a semi-detached home, further adding value to your investment.

CON – Risk

There is a risk that severing your lot may NOT increase the value of the property or may even decrease it if the divided land is less desirable to potential buyers.

Reducing the size of your existing property will certainly have an effect, as well as the stigma some buyers may have to being neighbours to a construction site as soon as they move in.

Overall, severing your lot can be a good option if you’re looking to increase the value and flexibility of your property, but it’s essential to carefully consider the costs, risks, and complexities involved before proceeding.

It’s also recommended to seek the advice of professionals, such as a real estate agent, a lawyer, and a land surveyor, to help you make an informed decision.