Dual Occupancy Course. Learn from our experience in development!
Overview
A dual occupancy is successful when your local Victorian Council consents to you building two dwellings on a block and most importantly allows you to subdivide that block into two. The subdivision approval allows you to sell one or both blocks.
Some Councils across Melbourne have minimum lot sizes so even though that council might give you approval for a dual occupancy home, you are stuck with both dwellings on the one lot!
Contact us to find if your land is burdened by minimum lot sizes.
The second critical item to check is the title.
Does it contain a restrictive covenant, like a single dwelling covenant or Section 173 attached to the title? They could be problematic and restrict a second home on the land. Get a free Title Check today.
DUAL OCCUPANCY PROPERTY
Is your property suitable for a dual occ subdivision? You may be thinking of building a new home in your backyard.
Is it deep and wide enough to provide the private open spaces for each dwelling?
Will it allow for the appropriate number of car spaces?
Is the site wide enough to provide turning circles for the cars to exit the site?
Is the site wide enough for a side by side duplex?
Is it a corner site capable of supporting more than a dual occ- three units?
How many bedrooms will the dual occupancy house accommodate?
These are the most commonly asked questions by would be developers. Contact us for a frank and fearless opinion.
How much should you pay for a development site?
Read on.
ZONING , OVERLAYS, SCHEDULES AND COUNCIL POLICIES
The most challenging issue you will face are the councils zoning, schedule and overlays.
The Zoning will give you an idea of what you will be allowed to build. Most sites in Greater Melbourne will support a dual occ in the zoning.
However the Schedule will specify site coverage and other requirements including the amount and size of the secluded open space and garden area you need to provide each dwelling.
The overlays , if one burdens your land, could affect vegetation control, excavation, heritage, bush fire and more.
Why develop in Melbourne Australia?
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 ( @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 out performers 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.
Dual Occupancy VS non Dual Occupancy property
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. This study was done a while back when capital growth was very low.
In today's market that difference will be greater and the dollar amounts shown will be more significant.
“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.”
What is a development site worth?
You can work backyards to calculate the maximum price you should pay for a development site.
Lets assume a straight forward site where you plan to develop three units.
You are thinking of buy in the site. How much is the site worth? This is a hypothetical example.
The develop's objective is to demolish the existing house, which is in poor order and see how many units can be built.
Experience shows three units will be the maximum number which will garner this council's support for this wedge shaped land in a court bowl.
Each unit will be around 150sqm containing 3 bedrooms. Ask us how many units can we fit on your land.
Recent sales in area show 3 bedroom units sold for $510,000. We are cautious so do our feasibility on a$480,000 selling price for each unit even though the front unit might command a slightly higher price.
Gross Income from sale of 3 units
$ 1,440,000
Development cost
20% developer's margin $180,000
Selling/legal fees say $ 45,000
Building and soft cost $630,000
Subdivision cost $ 45,000
Others costs, say $ 30,000
Total development costs $930,000
Cost of property with a potential 3 lot subdivision is then $510,000 ($1,440,000 less $930,000)
We have not taken into consideration any contribution to be paid to council and holding costs.
Using this same formula you can work out how much is a dual occupancy site worth where you retain the existing house and build one new dual occupancy home in the backyard. Of course make sure you are allowed to subdivide the land into two lots as some Victorian Councils are or have put in place minimum lot sizes!
Allow for some renovations, contribution may not apply for two lot subdivisions and you may be satisfied with a smaller development margin.
Introduction
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.
Townhouse developments
Town house or medium density developments usually demonstrate traditional townhouse architecture or can be more contemporary in design in the appropriate neighbourhoods and councils. They are generally two stories high but one can go up to 6m 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
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. Some councils prohibit double storey units in the backyard. Some councils will not support side by side duplex unless the site has a minimum width.
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 some of 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.
How long does the planning process take?
That depends on a number of factors but between 9-15 months from start to finish is possible.
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.
Council decision making
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 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.
Design for multi unit development on a sloping block burdened by overlays
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 :
Site slope
Site access
Easements
Sewer location
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
Street frontage
Neighbourhood character.
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:
Vegetation Controls
Erosion Control
Flooding
Risk from fire
Traffic access and egress
Neighbourhood character
Subdivision
Building height
Building footprint
Setback from all boundaries
Number of car parking to be provided
Protection of amenities
Heritage
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.
Add subdivision costs per dwelling- fr driveways, crossovers, connection of services etc which can b around $10,000 per lo and more.
Other matters to consider are financing, feasibility ( we can prepare one for you), market an politics- will the current or future government introduce more difficult planning policies!
