Local zoning laws should be a consideration when buying an investment property – or an owner-occupied home for that matter.
Even the Reserve Bank has a view, reporting a few years back that “anecdotal evidence suggests that zoning can have a significant effect on land values. For example, a 363-hectare site in Wyndham Vale (40 km west of Melbourne) increased in value from $120 million to $400 million following its rezoning from rural to residential[i].
Zoning laws usually regulate a property’s used whether it’s for residential, commercial, industrial or agricultural purposes. Given the potential financial windfall involved, it’s also folly to think only property developers should be concerned with zoning. As a property investor, it is essential to recognise that zoning can have a significant impact on any property and therefore, any investor.
So how can zoning laws impact a real estate investment? It might be that the current use of a property isn’t suited to the demands of the market. For instance, an older single-storey home might sit on land zoned for ‘medium-density residential’ such as townhouses or villas. However, residential apartment buildings are prohibited. This zoning, therefore, might be at odds with the market, where the preference is for apartment living.
Likewise, identifying the zoning of surrounding properties with the help of a conveyancer can help investors avoid surprises. The last thing you want as an investor is the surprise of a large apartment block stealing a prized waterfront view or bushland vista.
While many property owners have a basic knowledge of local residential zoning, it is essential to know that there are also subcategories that provide more detail about the exact types of activity that are permitted. For example, in NSW, R1 zoning allows a property to be used for general residential uses. In contrast, R2 zoning restricts property to low-density residential and R3 to medium-density residential.
In South Australia, one way of finding the zoning for a property is by using the Property and Planning Atlas, which displays current zoning across the state. Type your address into the search bar, and the zoning information will appear.
How is my property zoned?
If this website does not provide the information you’re seeking, contact your council and ask for a copy of the zoning regulations for your suburb or town. Many councils across Australia also provide this information online and offer zoning maps showing all the information about what can and can’t be developed on a property.
If you commission a solicitor or conveyancer, he or she will also be able to help you.
To find out more about the zoning regulations in your suburb or town, check out your local council’s website.