How Buyers Profit From Town Planning - July 2023

By Rich Harvey, CEO & Founder, propertybuyer.com.au

Of the many elements property buyers can use to their advantage, among the most underappreciated is the effect town planning has on a home or investment.

Buyers and sellers get caught up in the tangible elements of real estate. The things they can see and feel. The appearance and physical layout, or the property’s outlook and land size. But a comprehensive understanding of town planning can bring thousands of dollars in upside or the ability to walk away from a potentially bad decision.

Here’s why you should never underestimate the positives of town planning.

Planning due diligence 

The town plan is the local government rule book that describes what you can and can’t do on a property.

When conducting due diligence, professionals with experience and skills research a range of town planning facets to identify challenges and opportunities.

Most begin with a property’s zoning or designation under the local town plan. This defines the property’s various potential uses and restrictions, clearly set out in the plan’s tables and guidelines.

For example, in the Sydney City Council area, most standard inner-city houses will be on land zoned R1 – General Residential. The zone’s “Permitted use without consent” is home occupation, but among the restricted uses described in the plan are warehouses and agriculture. Sounds obvious, but the plan is very descriptive about how the land can and can’t be utilised.

The zone will also dictate elements such as minimum land size, how close buildings can be to their boundaries, the maximum heights of structures and so on.

Most town plans have additional overlays and addendums. These will describe whether a specific property or location is affected by other restrictions or benefits. For example, there could be a Heritage Overlay which contains rules on what can be done to older homes within its purview. There might also be flood overlays, or vegetation protection orders among others. All these overlays add detail to the property’s potential.

Using town planning to your advantage

Having comprehensive knowledge of your property’s town planning elements gives you an advantage when selecting a property and negotiating its purchase.

First up, take a look at where there might be some less obvious upsides.

For example, a zoning may indicate subdivision potential. That’s not hard to spot for the average purchaser in most cases. But a deep dive in the overlays might reveal something more.

I know about a property in Brisbane that’s 1050 square metre site could be subdivided, but its designation stipulates minimum lot sizes of 400 square metres – so two allotments in total could be yielded. However, the local area overlay allows for minimum lot sizes of 350 square metres if the property is within a certain distance of a designated local retail hub. A buyer, who knew their stuff, bought the property from a seller and agent who thought it was a two-lot maximum and priced it accordingly. The new owner split it into three and made a very handsome profit.

Of course, town plans will also place limitations on a property’s use… but even these can be used to your advantage as a buyer.

Research of the plan and overlays may reveal a home that is subject to a heritage order of some type, or overland flow that prohibits the construction of an ancillary improvement. For some buyers these elements are inconsequential – perhaps they love working with heritage or don’t mind the extra unimproved and protected yard area. But in negotiations, a smart purchaser will highlight the disadvantages and price their offer accordingly.

Planning flexibility

Perhaps one of the most effective ways to profit from a nuanced understanding of town planning is by recognising that guidelines can be negotiated.

Talk to a town planning professional and they’ll tell you there are some “fuzzy edges” to the rules. While zonings may set out what you can and can’t do under a zoning, individual properties may have characteristics that lend themselves to flexible solutions outside of the town plan.

Recently an associate of mine purchased a renovation project on a steep block. He said many buyers were put off because the town plan restricted the ability to construct to three storeys on the site, but the slope meant a three-storey home made more sense for catching CBD views. By working with a town planner, they mounted an argument that part of the building could go to three storeys without impacting other residents in the street and would actually enhance the home’s streetscape. The certifier agreed and my friend is now seeking quotes from builders for the project.

To develop or sell?

For those who already own a property that looks like it could be redeveloped, there is a way to utilise the services of a professionals to ensure a great outcome from any venture.

The fact remains that conducting an accurate feasibility on a proposed development is tough if you don’t have the right skills and resources. You need to draw on the services of specialists who not only advise on how to enhance your development, but who can also assess whether the result will justify the cost.

The development division at Propertybuyer undertakes multiple feasibilities every day. Our crew can quickly assess whether a proposal is a money maker or a money pit.

In addition, our team have built comprehensive networks of connections right across the development spectrum. We may be able to assist by putting you in contact with an experienced developer willing to complete a joint venture. This helps ensure the best possible outcome without undue risk.

The upshot is this – town planning is a crucial factor in the due diligence of a potential purchase or project. Don’t risk missing an opportunity because you’ve discounted the importance of town planning research. Instead, rely on the expertise of an experienced buyers’ advocate who understands the implications of the pertinent town plan. The result could be a wonderful home with outstanding future potential all at a price well below what you expected.

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