What are the benefits of rezoning property?
Rezoning property can be highly lucrative and there are two main reasons why:
- A property can see a huge increase in value when rezoning is announced.
- It can allow you to subdivide your lot or sell it to a developer who can subdivide and build residential unit blocks or commercial and industrial properties.
Bear in mind, that many banks are against investors buying land with no existing property (like some rural properties) or borrowers who otherwise have no intention to build.
This is known as ‘speculative investing’.
If the land has property built on it, you are more likely to qualify for a home loan.
Call us on 1300 889 743 or complete our online enquiry form and we can organise a free property valuation before you buy.
If the property is acceptable to the bank, is there anything you can do to have the property rezoned?
How to get a property rezoned
Councils lay out their strategic plans in great detail, showing what areas and suburbs are set to be rezoned.
Whether those plans actually come to fruition is another question entirely!
Generally, if you want to build, extend, subdivide or change the use of your land you will need to lodge a development application (DA) with the local council.
Keep in mind that rezoning a property can be a difficult and costly process.
There are public hearings and there are no guarantees that your DA application will be approved.
We’re specialists in residential development loans for multi-unit blocks up to 5 or 6 dwellings.
For any larger projects, we can help you get approved for a commercial development loan.
Do your research
Check out your local council website and find the local zoning rules and ordinances.
Determine whether your plans for the property fit with the zoning laws of the neighbourhood.
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.
The good news is that certain minor works may not require DA approval.
Visit your local council
The council will have all the necessary forms and will be able to help and guide you from there.
They will request a lot of documents, so be prepared. This may include:
- Property surveys.
- Traffic studies.
When you lodge an application with the local council, your state’s relevant Environmental Protection Act specifies certain matters that must be considered.
Some of these considerations include the suitability of the site for the development and the likely impacts of the development on the locality and the environment.
How much does it cost?
An informal pre-lodgement consultation fee can be as much as $140 an hour and $70 for each additional hour.
This is verbal advice only and does not guarantee your property rezoning proposal will be approved.
Development application fees
Development application fees are based on the estimated cost of the development.
|Estimated cost of development||Fee amount (including GST)|
|Less than $5,000||$110.00|
|$5,000 – $50,000||$170 plus an additional $3.00 for each $1,000 of the estimated cost.|
|$50,000 – $250,000||$352 plus an additional $3.64 for each $1,000 of the estimated cost.|
|$250,000 – $500.000||$1,110 plus an additional $2.34 for each $1,000 by which the estimated cost exceeds $250,000|
|$500,000 – $1,000,000||$1,745 plus an additional $1.64 for each $1,000 by which the estimated cost exceeds $550,000|
|$1,000,000 – $10,000,000||$2,615 plus an additional $2.34 for each $1,000 by which the estimated cost exceeds $1,000,000|
|More than $10,000,000||$15,875 plus an additional $1.19 for each $1,000 by which the estimated cost exceeds $10,000,000|
Note: The above costs are an example fee schedule from a Sydney city council. Property rezoning application fees can vary so it is best to speak with your council for an up-to-date fee structure.
Wait for the planning commission
Once your state’s relevant planning commission has completed their analysis of the development application, there will be a legislative meeting.
Make your case and answer any questions/queries from the board members and the general public (if applicable).
After this, the decision goes to a vote.
How long does it take?
A couple of months for simple requests, however, 6 months to a year for more complicated circumstances is not unheard of.
What if your application gets declined?
There are provisions that allow you to apply to the council to review their decision.
Under sections 97-99 of the EPA Act, the Land and Environment Court can also hear an appeal of the council’s decision.
Common mistakes when rezoning a property
- Providing incorrect landowner details so they don’t match the person/company listed on the rates notice.
- Missing development application deadlines or failing to provide additional documents when requested may mean that an application may revert to a previous stage of assessment or lapse altogether.
- Not being aware of restrictive covenants on the land or the property which will prevent certain development work being undertaken (check the Contract of Sale or the Certificate of Title for details).
Do I need to hire a town planner?
A town planner can assist you through the application process and help you comply with the local assessment requirements.
Town planners often liaise with local councils on a regular basis so they tend to have a clear idea whether the changes you’ve requested will be accepted or not.
They can give you a good indication of your chances of success before you spend considerable time and money pursuing it.
Hiring a town planner is done on a consultation basis where the town planner charges by the hour.
While they can be helpful, they can also be costly.
Real-life examples of property rezoning
Rezoning multiple units on one title
When rezoning changes were announced for properties on the north of Derby Street in Penrith, property values doubled overnight.
Specifically, it allowed for six-storey blocks to be constructed, up from two-storey blocks.
This increased the value of these properties from an average of $600,000 to $1 million.
Another example is in Sydney’s inner west, where a 1,000 square metre block of land was rezoned from industrial to eight-storey apartments. This saw the land value increase from $2 million to $10.7 million.
Do you need a loan to buy multiple units on one title?
Speak with one of our specialist mortgage brokers by calling us on 1300 889 743 or by completing our free assessment form.
Industrial to residential rezoning
In 2012, the Port Phillip city council adopted the Montague Precinct Structure Plan (with changes).
The plan provided a framework for the renewal of the Montague precinct to allow for both industrial use and residential development.
When a property has multiple zonings, this is known as a mixed use zoning.
Land prices in Montague almost doubled when the changes were announced.
Rezoning agricultural land to residential zoning
The inclusion of agricultural land within the urban growth boundary of Melbourne raised the value of that land from below $35,000 a hectare to over $300,000 a hectare.
What does each property zone mean?
Property zones vary between each council and state.
To give you an idea though, the following zoning types apply to a number of east coast councils.
Residential zones are divided into five categories namely R1, R2, R3, R4 and R5.
R1 zoning or General Residential Zone typically refers to real estate that is located in a neighbourhood of single-family residences.
Most local laws restrict R1 zoning to one freestanding house intended as a dwelling place for one family.
R2 zoning or Low-Density Residential zones are comprised mainly of low-density housing where the planning objective is to protect the locality’s single dwelling-character.
It allows for a variety of housing types, facilities and services such as bed and breakfast (B&B) accommodations, child care facilities, dual occupancies, home businesses, multi-dwelling housing, places of worship, recreation areas and aged care facilities.
R3 zoning or Medium Density Residential zones provides for medium density houses such as townhouses, villas and residential flats.
R3 zoning permits a denser urban form than R2 and provides a transition between areas of single dwellings and residential flats. It also permits non-residential uses including preschools, childcare centres, neighbourhood shops, and churches.
R4 or High-Density Residential zones provides for residential flats and supportive non-residential uses such as child care centres, educational establishments, healthcare facilities, places of worship, entertainment and community centres.
R5 zoning or Large Lot Residential zone is intended to provide for rural residential housing while minimising the impact on the environment. Examples include inner city unit developments and serviced apartments.
Commercial zones are divided into eight categories, namely, B1, B2, B3, B4, B5, B6, B7, and B8.
B1 zoning or Neighbourhood centre zones allow for small-scale retail, business and community uses to serve the needs of nearby residents.
Prohibited uses in the zone include residential flats, general industries, and sex service premises.
B2 Local Centre zones allow commercial premises, such as shops and offices, medical centres, shop top housing, as well as food and drink premises.
B2 zones provide for a range of small-scale retail, business, entertainment and community uses to serve the needs of people who live, work in and visit the area.
B3 zoning or Commercial Core zones provide for extensive commercial and high density residential development with close proximity to public transport.
Prohibited uses in the zone include smaller residential units such as dwelling houses, dual occupancies, industrial outlets, and sex service premises.
B4 mixed-use zoning
B4 Mixed Use zoning provides for a mixture of compatible land uses, integration of suitable business, office, retail and other development in accessible locations so as to maximise public transport patronage and encourage walking and cycling.
B6 Enterprise Corridor zones enable a mix of employment uses including business, office, and light industrial, as well as bulky goods retailing. This zone primarily applies to a few areas along main roads.
B7 Business Park zones allow for many different industrial uses.
Industrial zones are divided into four major categories namely IN1, IN2, IN3 and IN4.
IN1 General Industrial zones provide a wide range of general industrial and warehouse land uses. To prevent competition for industrial land, business and retails uses are not permitted in this zone.
IN2 Light Industrial zones provide a range of light industrial and warehouse land uses as long as they don’t interfere with amenities of adjacent residential areas. Permitted uses include light industries, hardware and building supplies, takeaway food and drink premises and neighbourhood shop.
IN3 Heavy Industrial zones are intended for those industries that need to be separated from other land uses.
IN4 Working Waterfront zones are intended to retain and encourage waterfront industrial and encourage maritime activities. It is a specialised zone for maritime specific industries which require direct waterfront access.
Rural zones are primarily divided into four zones namely, RU1, RU2, RU3 and RU4
RU1 Primary Production zoning
RU1 Primary Production zones are intended to encourage sustainable primary industry production by maintaining the natural resource base. This zone aims to minimise the fragmentation of resource lands and minimise conflicts within the zone and land uses with adjoining zones.
RU2 Rural zoning
RU2 Rural Landscape zones are intended to maintain the rural landscape character of the land and to provide for a range of compatible land uses including extensive agriculture.
RU3 Forestry zoning
RU3 Forestry zoning is intended to enable development for forestry purposes and to encourage the recreational use of forest resources where such uses are compatible with timber production.
RU4 Rural Small Holdings zoning
RU4 Rural Small Holdings zonings are intended for home occupations with aquaculture, bed and breakfast accommodation and community facilities permitted with consent.
Do you need a property investment loan?
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Give us a call on 1300 889 743 or you can fill in our online assessment form.