Practical Property Tips

How to Determine a Property’s Zoning?


Property Zoning

When purchasing a property it is important to identify how to determine the zoning and overlays of a property. In doing so, a buyer can have greater clarification around what they are purchasing. The zoning of property outlines the use or potential use of a lot as governed by the local council. Zoning can be broken down into numerous facets including residential, business, and industrial. Each of these components even has a range of branches within themselves. In addition, the overlays of a property outline additional information about a parcel of land. These generally include environmental factors which can impact future development.

Why Is Zoning Important?

Understanding the zoning of a property can determine what you can or can’t do with a property. It may also outline what the council has planned for a particular lot moving forward. Councils across the country may use a range of terminology to explain types of residential zoning. For example, councils may use codes such as R1 or R2 to explain different types of zoning. Alternatively, terminology such as next-generation neighbourhood or urban development may be used. Despite the range of jargon, the council will provide an explanation for each type of zoning. The outline simply explains the types of zoning and what each entails.

Different types of zoning have different implications. If a property has “development potential” it means the zoning of the property (if within certain requirements) can be developed to a greater density. Density can be generally broken down into three categories: low, medium, and high. Low density looks at houses with big land components while high density is usually apartment buildings. Essentially, density outlines the proximity of dwellings on a particular block of land.

Changes to Zoning

Over time, the zoning of a property can change. This is important to note because changing zoning can lead to a change in demand. This is because the zoning of a property may not reflect the current dwelling/s on a given property. A property could be zoned for apartments but currently only has a small house with a large land component. This is an opportunity for a developer to purchase that asset and immediately or further down the track develop that property. In some scenarios, investors may even purchase property with development potential with no intention of developing but because it is an additional drawcard further down the track if they choose to sell. Understanding how to determine the zoning of a property enables the investor to purchase properties with greater potential.

Why Are Overlays Important?

The overlays of a property outline hazards that an investor may want to avoid. An overlay can identify areas in which a particular property is compromised such as slopes, noise, soil, and floods. If a property is over-layered with a particular hazard it means the property is affected by this hazard to some extent. The Council usually outlines this using a percentage scale. For example, if a property is entirely flood zoned it will highlight in the overlays that it is 100% flood affected. Moreover, if the property has a slight slope it may say 20% slope affected and illustrate the portion of the land affected.

Identifying these overlays highlights for the investor any additional risks associated with a particular property. If a property has a slope it may become harder to develop the property should it also has development potential. If a property is flood zoned it may not be covered by insurance and thus could be an extremely risky investment. Identifying the overlays of a property can be a deal-breaker and is almost always incorporated in a seasoned investor’s due diligence when researching a property.

How Do I Find This Information?

The zoning and overlays of a property can be extremely important information for both investors and homeowners. However, where can this information be derived from? In most cases, this information can be found on the local council’s website of a particular property. The search engines used, and terminology can change from council to council, but each council should be able to provide this information to a prospective buyer. For some, it may be harder to decipher exactly what the zoning and overlays of a property mean. In most cases, further explanations of a property can be found on the council’s website.

If the individual is still confused about the zoning or outlays they may choose to contact a town planner. Getting in contact with a council can be quite straightforward and when explaining a particular request, the council can have a town planner call the buyer. This can be extremely useful for those out-of-box questions or something that isn’t covered on the council website. A town planner is an extremely useful resource who can help to provide clarification around the implications of the specific zoning and overlays of a property.

The Verdict

Being able to determine the zoning and overlays of a property is fundamental in identifying the value of a property. On paper, a property makes stack up numerically but has underlying issues in its overlays which are a deal-breaker. Likewise, a property at face level may not look that appealing but could have development potential which could be extremely beneficial to an investor. By identifying how to determine this information and interpret it correctly the investor can make better-informed investment decisions.

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