Zoning can dramatically affect property values by restricting what can and can’t be built in a particular area. Here’s what you need to know as an Australian property owner
If you’re in the process of buying a property, it’s important to take local zoning laws into consideration. These laws may restrict how you’re able to use your property and how you can develop it. Zoning laws can dictate minimum lot sizes, maximum building heights, and planning approval processes, as well as regulating whether a property can be used for residential, commercial, industrial or agricultural purposes.
Given the potential financial implications of zoning laws across the country, it’s nonsense to think that only investors and developers should be concerned with zoning. As a buyer, no matter your intention with the property, it is essential to recognise that zoning can have a significant impact on any property.
What is zoning?
Zoning is how municipal councils control what can and can’t be built to help maintain sustainable population growth. Zoning laws can become complicated very quickly. Across Australia, there are 517 councils and currently, the only state with standardised zoning codes is New South Wales.
In general, however, zoning could be said to fall into one of the following categories:
- Residential;
- Commercial;
- Industrial;
- Mixed use;
- Agricultural; and
- Public use.
Each state and territory uses different terms and definitions, so you will need to check with your local council to define your area’s zone.
How can zoning laws affect property values in Australia?
Zoning can have a quantifiable effect on property values. Let’s look at some examples.
Example one – change from “rural” to “residential”
New estates are popping up all the time to meet the demands of our growing population, creating the need for more and more available land for development. If an area previously zoned for agricultural use is changed to a residential zone, the value of the land will almost certainly skyrocket. The most common example of this scenario is farmland on the outskirts of a city where infrastructure is creeping out towards the rural zone. Agricultural land rezoned into residential land in such areas can be heavily subdivided and sold to developers, exponentially increasing the value of the land.
Example two – suburban housing density
An area zoned for low density residential implies that the density of housing cannot exceed a certain limit determined by the council. What this usually implies is that subdivision and the building of apartments and units will likely not be allowed. This further means that the area will not be viewed as a worthwhile investment by property developers, and so the expected sale price of any given property will reflect its current state, rather than its development potential.
An area zoned for medium to high housing density will likely mean that the council will permit the construction of multiple dwellings on a single block. This allows developers to increase their investment opportunities, meaning that properties for sale in that area will likely go for a much higher price.
Example three – zoning implications for current housing
Zoning laws can also have a detrimental effect on current properties. For example, a property that enjoys views of the bay will likely be worth more than similar properties in the same area a few streets back from the water. However, if zoning laws change to allow the development of high-rise apartment buildings, previously pricey properties may suffer on the market in the event that a large apartment building development steals its prized waterfront view.
Can I get a property rezoned?
Zonings are almost always determined in council zoning meetings organised by local governments. Essentially, local councils use land re-zonings as a more strategic way of addressing the changing demand for housing based on population, infrastructure and employment growth.
However, there are examples of local zoning being formally amended to suit a community’s changing needs. In fact, it is common for government officials to rezone whole sections of land during council zoning meetings in response to a growing population or environmental considerations.
It is possible for individuals to apply for rezoning if the current zoning status of the property no longer fits the needs of the area. Investors and homeowners can apply to have an area rezoned if their development plans conflict with the existing town planning rules. Developers can also request zoning changes to increase the return on their investment. It is a long process, but it can be done.
Is it likely that my application for rezoning be considered?
Rezoning applications have to go through a formal amendment process. Applications for rezoning are generally considered by the council if the land cannot reasonably be developed or used under its existing zoning or if the development of the land under the existing zoning will be to the detriment of the public good.
You will need to know the current zoning classification of the property and the category you want to change it to when submitting your application, and you will also need to determine whether your plans for the property fit with the zoning laws of the neighbourhood.
In general, if you want to build, extend, subdivide or change the use of your land, you will need to lodge a development application with the local council.
Do your research
Anyone can access plans made by councils, who lay out their goals for rezoning in detail to show what areas and suburbs are set to be rezoned. However, not always do these plans come to fruition. Whether you are an investor, or developer or are looking to buy a home to live in, don’t take your council at their word when it comes to future plans – you never know what government policies or funds redistributions are going to affect their plans for rezoning.
If you are in the process of buying a property for the purpose of redevelopment, seek the advice of an experienced conveyancer to help you determine the current zoning laws that apply to the area and how the zoning will affect your development plans. Jim’s Property Conveyancing has offices in Melbourne and Brisbane and can provide you with comprehensive advice and assistance moving through your property transaction. Please get in touch with our friendly and experienced staff on 13 15 46.