Crash course in property development
Learn how to develop property , subdivide your home and build equity from residential property in Melbourne.
Residential Property Development in Melbourne,Victoria Au
Residential property development is generally encouraged across Melbourne where the population is expected to outgrow that of Sydney by 2060. The Bureau of Statistics predicted Melbourne’s population will overtake Sydney’s by 2053. Australia’s largest cities of Sydney (now @4.9 million people) and Melbourne(@4.5 million) will both have populations of 7 million by 2041 which will create and underpin ongoing opportunities for investment and development of new projects across a range of property markets.
Whilst Sydney and Melbourne are still comparatively small cities in the global context they are nonetheless economic outperformers because of their very high livability and their competitive advantages in attracting investment in advanced economic sectors such as education, finance, ICT and biotechnology. The recognition of being amongst the world’s most liveable cities is also one of the factors underpinning Sydney and Melbourne’s exposure to high levels of investment from international developers and purchasers into their housing markets.
That population explosion means Melbourne is in need of housing stock to meet the population growth and this factor in turn provides both short and long term comfort to the residential developer and investor. Melbourne house prices are more affordable compared to that of Sydney while both cities have maintained a steady growth.
As a result the new residential zones in Victoria allow medium density in most areas subject to meeting lot size restrictions. The Industrial zones do not allow residential development under their zoning. However, one can build townhouses or units in the General Residential Zone, the Residential Growth Zone the Mixed Use Zone and the Commercial( Business) Zones and the Township zone. The Low density residential zones have lot size restrictions which is shown in the Planning Report Schedule obtained from Land Channel.
More and more Councils are slowly following the trend of introducing minimum lot sizes for medium density development. Nillumbik Shire Council has tried but failed to gather support from the Planning Minister's office in 2015
In this paper we cover a broad range of topics from types of residential development, subdivision costs and all the way to the site constraints or the challenges your architect, designer or town planner will encounter at the local Melbourne or regional Victorian Council or for that matter at VCAT if your local Council refuses the Planning Application or if your neighbour objects and challenges the Council decision to grant a permit!
If one works collaboratively with the local council its easier and faster to obtain that all important Town Planning Permit for your property from your Local Council across metropolitan Councils which include Banyule, Bayside, Boroondara, Brimbank, Cardinia, Casey, Darebin, Frankston, Glen Eira, Greater Dandenong, Hobsons Bay, Hume, Kingston, Knox, Manningham, Maribyrnong, Maroondah, Melbourne, Melton, Monash, Moonee Valley, Moreland, Mornington Peninsula, Nillumbik, Port Phillip, Stonnington, Whitehorse, Whittlesea, Wyndham, Yarra and Yarra Ranges.
A dual occupancy development will outperform a single home on a block significantly as shown in the graph below which was prepared by David Shaw a certified accountant.
"Remember no Town Planning Permit means no Property Development- so don’t even think of the finishes and colours now – think of the big picture first- your planning permission to build. A Planning Permit allows you to build."
Property development is enjoyable and profitable. Once the first project is completed and sold or leased, the development bug will get into you as long as you do it with good advice. There are different types of residential property developments.
Town house or medium density developments are the traditional townhouse architecture or can be more contemporary in design in the appropriate neighbourhoods. They are generally two stories high but one can go up to 9m in wall height as long as the amenity of your neighbours is not adversely affected if there are no Design Development Overlays restricting maximum building height.
Dual Occupancy is generally allowed across greater Melbourne and regional Victorian Councils under the reformed zones. However one must watch out for the minimum lot sizes Councils have the power to impose or may already have imposed.
Dual Occupancy developments can be a success if one follows the basic principles on how to obtain a planning permit from your local council and take into account the financial aspects to make the dual occupancy a success.
Learn the step by step process on how to develop a successful dual occupancy or townhouse subdivision below. How long will the process take? That depends on a number of factors but between 18-24months from start to finish is possible.
Apartment style developments
Apartment style units up to four stories high can be developed in the new Residential Growth Zones which are areas generally within 800m of Activity Centres, train stations and shops; however some councils who are yet to have their zoning maps approved by the Planning Minister in November 2014 are pushing for a distance of 400 m only. Three storey apartment style units can be attempted in the General Residential Zones which have a maximum building height of 9 m unless the site has a slope across the land.
In the city centres the apartment heights are restricted by the Structure Plans or zoning of the individual Councils.
The Block of land
Now lets turn to that important subject. The land itself.
The block of land, its topography, orientation, size, width, access, the type of buildings abutting your site boundary, the streetscape are some of the elements that determine the type of development you will be allowed to build.
Architects and Designers with the expert planning skills and strategy must take each one of these components when designing to your wish list. Sometimes all your wishes might not be granted if the site constraints prevent that from happening. Accept that from the start to avoid disappointment.
Councils are fixed in their decision-making process as to what they will and will not allow to be built.
The key items Council’s Planning Officers and the VCAT for that matter will consider are:
How will your neighbours amenities be affected by way of shadowing
Overlooking and what your neighbours will see from their land.
Will your development create a fire risk to the adjoining owners
Will your site restrict storm water flow in the event of flooding
Will your development require native and nowadays exotic trees of a certain size to be removed
Will your development affect the roots of trees on the abutting land
How will your new dwelling sit in the streetscape and sometimes backyard scape.
The new residential zones
The planning overlays
The new residential zones introduced in Victoria will generally allow dual occupancy development with some zones allowing more than two dwellings on one lot.
The new Residential Zones are:
The Neighbourhood Residential Zone (NRZ)
The General Residential Zone (GRZ)
The Residential Growth Zone (RGZ)
What does this all mean for you as a developer?
The new residential zones are the General Residential Zone (GRZ) which is in some ways similar to the Residential 1 zone. This zone allows moderate growth in housing development with buildings up to 10 metres in height.
The Residential Growth Zone or (RGZ) is the more development friendly zone which is located close to principal transport infrastructure or larger retail areas. How close should a site be to these two criteria is at the discretion of Councils with 800m being the average distance to a train station, tram stop or retail hub. RGZ developments consist of apartments and unit developments. which are generally four storeys or 13.5 metres high.
The Neighbourhood Residential Zone (NRZ) is more restrictive with dual occupancy developments allowed on lot sizes at the discretion of the Council.
Town Planning Permit challenges.
A Town Planning Permit Application for a dual occupancy or residential development like townhouses on a block of land in Melbourne is complex.
To learn how to obtain a successful permit one must take into account the following:
The site constraints, challenges and most importantly the opportunities the site offers by way of size, width, crossover location, orientation to name a few
The title and any restrictions it may contain like covenants if any or Section 173 agreements
The Zoning- this will spell out what you can and cannot do on the land. For example a Neighbourhood Residential Zone may restrict developments to two dwelling-s like a dual occ or duplex on a lot or more depending on the land size and Council’s discretion; but it will be clearly specified in the Zoning Schedule whereas a General Residential Zone will allow more than two dwellings on the block if your Architect or designer can satisfy all the objectives and standards of Rescode and any specific provisions in the Planning Scheme for that particular Council
The streetscape and neighbourhood character plays a role in how the design responds to the characteristics of the neighbourhood- something Councils are paying a lot of attention to now
Proximity to schools, transport, retail hubs or employment corridors decide on the density of development the closer to an Activity Centre means the more units or townhouses one is allowed to build
The provisions in the Planning Scheme- this is complex and can run for pages and pages over 140!
The location of adjoining buildings to determine if your development will affect the amenity of the abutting neighbours like overshadow their current amenity or overlook on their private garden areas- Secluded Open Space in Planner speak
Only a professional person with expertise in these subjects can quickly identify the opportunities your land offers.
Often a desktop analysis will give you the answers- as to whether you should proceed or abandon the idea of developing a block of land.
But don’t despair if your land is not the Ultimate Development Site or if it does not tick all these boxes required for a Planning Permit for a subdivision. There are many other ways to obtain a Planning Permit for a dual occupancy or townhouse development.
They could include on how one presents the Application, the strength of a Design Response or Rescode Report, the justification for the variations from the standards are just a few ways to think laterally when one hits an obstacle.
We suggest you either get a Free Desktop Site analysis or a second opinion from us to put your mind at rest.
The constraints on the land
The title may have constraints and I have seen many older titles putting restrictions like the number of dwellings allowed on a block of land.
Then there are the site constraints. They include but are not limited to :
Storm water discharge points
Site orientation- which side faces north for best solar access
Vegetation- trees on your block or on adjoining lots. Size and type of trees will determine the new building footprint
Width of driveway to rear if building one at the back
So How long a dual occupancy process take from design brief to completion. we say a Planning Permit can take anywhere between 6 and 18 months with 9 months being the average. Having said that we have obtained planning permits from some developer friendly councils within four months!
The Planning Scheme regulations
The Planning Scheme Regulations are housed in the Councils own Planning Schemes. These Schemes are spread over 150 odd pages with some pages relevant to your block.
Other Items which could be relevant are:
Risk from fire
Traffic access and egress
Setback from all boundaries
Number of car parking to be provided
Protection of amenities
Cultural Sensitivity to name a few
Dual Occupancy or townhouse General Development Costs
The first cost to consider are soft costs like professional fees for all consultants, application fees, contributions to the authorities, legal costs for acquisition, costs to register titles and to form an Owners Corporation and finally any marketing fees and costs. The consultants could include design fees, structural and drainage engineering fees, building surveyor, land surveyor, an arborist, a landscape architect or designer and any specialist consultant if required by council to prepare reports or assessments.
Then there is the matter of interest if you are like most of us taking out a loan to do the development. The amount of interest depends on how much you borrow and the period of the loan- typically to completion stage or till the subdivision is sold or the dwelling leased.
The site and building design will determine your building cost. So if it’s a sloping block or the soil type is reactive your costs will be higher than a level block with the services, like the sewer and stormwater discharge point , in the most advantageous location.
We suggest one allows around $1200 to $1500 for straight out build costs for simple buildings with medium quality finishes.