So you’ve heard about the “300 m2 per lot” rule of thumb used by planners for potential developments.

You factored this in as you purchased your 900 m2 block of land.

You’re sure to get a Planning Permit for three townhouses, right?

Building Envelope

On a pure square metre basis, a site may satisfy (and even exceed) the “300 m2 per lot” rule of thumb yet not be suitable for a Planning Permit.

Sometimes, the issue is purely physical – given all planning and legal constraints, the site simply cannot physically fit the number of units/townhouses desired.

This is because the Building Envelope is too small.

The Building Envelope is the area of land, within the title boundaries of a subject site, that the proposed building/s can legally and physically occupy.

It does not appear on title nor on any official planning documentation – rather it is the result of the specific planning constraints that apply to the site given the development you propose.

Building Envelope Example

Consider the picture above.

Even though this hypothetical block may well be above 900 m2, there are four constraints marked on the site:

1. There is an “E-1 Easement” running parallel to the rear fence.
2. There is a significant “Average Front Setback” for this street which cannot be built in front of
3. There is an allowance for the Driveway
4. There is an allowance for “Private Open Space”

These four constraints alone can effectively halve the Building Envelope.

Victoria’s Planning Scheme for residential developments (Clause 55) defines 34 such constraints.

Consequences

When a Building Envelope is too small, compromises sometimes need to be made that can significantly impact the proposed subdivision/development.

The typical compromise is that building area is saved by reducing car parking which therefore affects bedrooms.

So for example, a triple three bedroom townhouse development all with double garages may need to be scaled back to two three bedroom townhouses with double garages and a two bedroom unit with single garage.

The worst case scenario is that a proposed three townhouse development may need to be scaled back to two.

Needless to say, compromises with dwelling type and configuration affect the profitability – and in some cases the feasibility – of the proposed development.

Conclusion

The Building Envelope is the area of land, within the title boundaries of a subject site, that the proposed building/s can legally and physically occupy.

It does not appear on title nor on any official planning documentation – rather it is the result of the specific planning constraints that apply to the site given the development you propose.

If a Building Envelope is too small, compromises need to be made that can significantly impact the proposed subdivision/development and its feasibility.

CONTACT US
Ensure you have sufficient Building Envelope before
you spend time and money on applications

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1. Property Investment Strategies: How to proactively add significant equity without building or renovating
2. What is the minimum size of land to subdivide in Victoria?
3. Turning Circles and Accessways: Think Parking Part II

In an earlier article, Subdividing land in Victoria: The 5 tests your property must pass, we described the “300 m2 per lot rule of thumb” that Town Planners generally like to use.

What if you wanted to fit more dwellings on your block than the “300 m2 per lot rule of thumb” would allow?

Is it possible to break this rule of thumb?

What is the minimum size of land to subdivide in Victoria?

In 2008, we were approached by a client who wished to subdivide and develop their 930 m2 block, located in Melbourne’s South East, into three double storey luxury townhouses.

With the project clearly within the “300 m2 per lot rule of thumb”, we immediately approached Council with a high level Land Use Plan, confident that the three townhouse proposal would gain Council support.

Not only did Council Town Planners like what we had proposed, they strongly suggested that we increase the development density to four dwellings on the site.

Why was the “300 m2 per lot rule of thumb” able to be broken?

The primary reason was that the site fell within the Local Council’s residential housing diversity policy that defined targeted areas for Council Town Planners to permit higher density developments.

The secondary reason was that the Land Use Plan was open ended enough that our Town Planner felt that they could significantly contribute to the direction of the development – and have their feedback incorporated.

As an aside: imagine for a moment that you’re the Town Planner involved. If someone, came to you after spending thousands of dollars and months of work on a beautiful, finished set of compliant plans for three townhouses and now requires a Planning Permit asap, would you have the heart to suggest to them that they could, in fact, repeat the entire process and fit four townhouses? Or would you simply grant their desire, approve the three and move on?

By using Land Use Plans, we were able to pass on the good news to the client at the start of the process before they had spent any money on a full set of Town Planning plans.

Conclusion

Generally speaking, Town Planners like to use the “300 m2 per lot rule of thumb” to determine the minimum size of land to subdivide in Victoria.

However depending on State & Local planning policy, a site’s acceptable development density can fall over or under this rule.

To find out, approach Council Town Planners as early as possible with your proposal.

Come well researched with high level Town Planning compliant plans but don’t wait until your plans are perfect and final.

Go in with an open mind and be prepared to collaborate with council on an outcome that is mutually beneficial.

You never know – you just might be surprised.

SUBDIVIDING LAND IN VICTORIA?
Ask us how a Land Use Plan can help you gain early
Council support before you spend time and money
on Town Planning Applications.

Related posts:

1. Subdividing Land in Victoria: The 5 tests your property must pass
2. Planning Permit Victoria: How to get a “Yes” from Council
3. STCA – What does STCA mean?

STCA – four letters you have seen many times as you browse through Australian real estate websites searching for your property.

But what exactly does STCA mean?

What does STCA mean?

STCA stands for “Subject to Council Approval” and is typically used to describe the subdivision / development potential of a property.

For example:

• “Multi-unit site (STCA)”
• “Dual occupancy site STCA”
• “Development site (STCA)”
  

Unfortunately (in Victoria anyway), all that the term STCA can legally refer to is exactly that: potential.

It is simply sales copy used by Real Estate agents to add perceived value to a property.

The Real Estate Agent only needs to have an opinion that the property is suitable for development (after all, final say rests with Council).

Remember that the Real Estate Agent’s job is to sell the property – on behalf of the vendor (& not to offer you qualified development advice).

That said, the property may very well be suitable for development – there is just no level of recourse with the Real Estate Agent if its not.

Conclusion

Ultimately, the potential of a property to be developed does not rest with the words of a real estate agent but rests with solid research and State & Local planning policy compliancy.

The letters STCA may mean “Subject to Council Approval” but our preferred interpretation is “Caveat Emptor: let the buyer beware“.

BUYING PROPERTY STCA?
Ask us how an STCA Development Assessment
can help you gain Council support before you purchase.

Relevant Links:

• Sydney Morning Herald/The Age article titled “Lost in Translation” – about Real Estate terms including STCA

Related posts:

1. Property Investment Strategies: How to proactively add significant equity without building or renovating
2. Searching for a Development Site
3. Do you have plans for 2012? Part 1 – Your homework

If you own or are considering purchasing a large block of land, you have probably asked the question: “Can I subdivide?”.

This article will provide a big picture overview of the 5 tests your property must pass when subdividing land in Victoria.

Subdividing Land in Victoria: The 5 tests your property must pass

The ability to subdivide land in Victoria is determined by the following 5 factors:

1. Zone,  Schedule & Overlay/s
2. Size of land
3. Building Envelope
4. Neighbourhood character & Precedent
5. Clause 55 & 56

1. Zone, Schedule & Overlay/s

What State and Local Planning Scheme Zone, Schedule and Overlay/s apply to your property?

This information alone may be enough to eliminate some properties from the ability to be subdivided as some Zones, Schedules and Overlays place subdivision constraints (eg. any subdivided lot must be of a minimum size) and even subdivision restrictions.

This information can be obtained either by calling the Town Planning department of your local council and enquiring about your specific property or (in Victoria) visiting the Department of Sustainability and the Environment website.

2. Size of land

Assuming that your property’s Zone, Schedule and Overlay/s allows for subdivision the next question to ask is: What is the area of your property?

This information can either be found (or calculated from) your Copy of Plan attached to your Title.

For proposed multi-unit residential townhouses and units in a Residential 1 Zone (with no other schedule or overlay constraints), town planners generally like the ‘300 m2 per dwelling’ rule-of-thumb. Planners may be more or less strict depending on the other factors mentioned in this article.

It is for this reason that generally speaking, the minimum area of a block to be considered for subdivision would be 600 m2. (ie. All things being equal, such a block would be suitable for a dual occupancy subdivision).

In Victoria, you can do a Land Title search and Title download at the Landata website.

3. Building Envelope

The Building Envelope is the actual area within your title boundaries that is legally and physically possible to build on.

The building envelope can be affected (reduced) by:

• The size and positioning of easements
• Restrictive covenants
• Signficant trees
• Existing buildings/structures that can’t/wont be removed
• Neighbourhood amenities
• Driveway requirements & crossover issues
• Nature strip assets

As you can imagine, in tying all of these factors together, building envelope constraints can quickly turn a potential 4 unit development on 1200 m2 into a 3 unit development, thus severely affecting your Strategy.

4. Neighbourhood Character, Strategic Planning & Precedent

Over and above all the factors considered, your council may have set specific local Neighbourhood Character & Strategic Planning policies in place.

If your property is in a good location – close to transport, schools & shops – these policies can sometimes favour you. For example, we recently were advised by a Town Planner that council would support a higher density development than we had proposed, due to the location of the property and its alignment with council’s residential strategy. (For those interested, the property was located in a ‘Neighbourhood Centre’ as defined in Clause 22.07: ‘Housing Diversity Area Policy’ of the Local Planning Policy Framework of Glen Eira Council).

Neighbourhood precedent (other recent, similar developments in the immediate vicinity) is also a big factor that can make your subdivision application more favourable.

You can view any Strategic Planning Policies for your local council at the DSE Planning Schemes Online website.

You should also check your local council’s website for any additional Neighbourhood Character guidelines or local planning preferences.

5. Clause 55 & 56

The previous four factors can all be determined well before any serious drawing work is done. Ultimately, however the permit to subdivide will rest on the Victorian Planning Scheme’s:

• Clause 55 (Two or more dwellings on a lot and residential building) – governing any proposed dwellings you wish to put on the site, and
• Clause 56 (Residential Subdivision).

That said, the better your research (and the greater your experience) with the previous four factors, the more confident you should be of obtaining both your planning permit and subdivision permit.

You can view Clause 55 and Clause 56 in full at the DSE Planning Schemes Online website.

Assuming you arrive at the conclusion that subdivision is worth pursuing, you may also be interested in our earlier article that walks through the land subdividing process in Victoria.

Subdividing Land in Victoria: Conclusion

The ability to subdivide land in Victoria is determined by the following factors:

1. Zone,  Schedule & Overlays
2. Size of land
3. Building Envelope
4. Neighbourhood character & Precedent
5. Clause 55 & 56

SUBDIVIDING LAND IN VICTORIA?
Contact us to ensure your property passes all 5
tests and is suitable for subdivision/development.

Related links:

• Department of Sustainability and the Environment (DSE) – Planning Schemes Online
• Landata – Land  title search and title download from the Titles Office of Victoria
• Property Development 101 – our mini Property Development Course

Related posts:

1. Subdividing Land: Are you being served? Part II
2. Subdividing Land: Are you being served?
3. Land Subdividing

How can you proactively add significant equity to your investment property without building or renovating?

Read more to find out how one of our clients took less than six months to do just that.

Property Investment Strategies: How to proactively add significant equity without building or renovating

Last year, a client approached us with the intention of demolishing their property located in Melbourne’s South East, and replacing it with three brand new double storey luxury Townhouses.

By the end of the year, their circumstances had changed and they decided not to complete their project.

Yet within six months and without any building works, they added $90,000 equity to their investment property.

How did they do it?

The secret is: The Planning Permit.

A Planning Permit is not just for developers – it is an advanced tool that investors can use to add significant value to their investment property in and of itself.

Why would a Planning Permit add value?

A property with an approved Planning Permit and Plans is particularly valuable to builders because it means that the builder doesn’t need to go through the planning process themselves.

Purchasing a property with Plans & Permits means that the builder can very quickly proceed to building (in our 7 Step system, it means a builder can skip Steps 1 through 4 and commence immediately from Step 5). Thus, any property with approved Plans and Permits effectively has a new, secondary market of prospective purchasers: builders.

The converse, is that if you are intending on purchasing a property with Plans and Permits, you might find yourself in a bidding war with builders.

It is important to note that it is only an approved and current Planning Permit and Plans that add value. Merely having plans drawn up (no matter how good they are) will not add any value as there is no commitment from your local council that those plans will be approved. Occasionally such properties are seen on real estate websites such as realestate.com.au and domain.com.au with the letters STCA (Subject to Council Approval). Any statements STCA are an attempt by the real estate agent to add perceived value to the property that cannot be substantiated.

Why wouldn’t a builder go through the planning process themselves?

There are many reasons why a builder would not want to go through the planning process themselves but all of them come down to risk:

• Time risk: A builder might not know how long it will take to obtain a Planning Permit
• Outcome risk: A builder might not be sure that they are able obtain a Planning Permit
• Competency risk: The process of obtaining a Planning Permit could be outside of the field of expertise of a builder
• Opportunity cost: It may simply not be worth obtaining a Planning Permit, given all of the things a builder could spend their time and resources

Thus, a builder would be prepared to pay a premium for properties that have already had this risk mitigated ie. a property that has an approved Planning Permit with Plans.

How much value does a Planning Permit add?

In our client’s example, the subject site was an existing dwelling on a land allotment of over 900m2 located in a prime location close to schools, shops and transport.

The Planning Permit and plans for three luxury townhouses added an approximate $90k of equity to the subject site (each lot contributing roughly $30k).

Note that the exact value added to your property will depend on your subject site, proposed development and local market conditions – do your research (remember Step 2: Strategy?). Speak to your local Real Estate agent, find out what local market conditions are like, what the demand and recent sales activity is like for new townhouses/units and ask for examples of recent comparable sales of properties with plans and permits.

If possible, speak to your bank’s panel valuer (who would be responsible for revaluing your investment property should you go down this path) and ask for their feedback on the additional value that plans and permits would add to your site.

To find out more about the Planning Permit process, read our earlier article – Property Development 101 Step 4: Application.

How does one extract the value of a Planning Permit?

There are two ways to extract the additional equity that a Planning Permit adds to your property:

1. Sell the property with plans and permits attached, or
2. Have your property revalued with plans and permits attached and draw down on the additional equity.

The second option is particularly attractive for two reasons:

1. You can release the additional equity you have created even if you have no intention of selling your investment property
2. Drawing down on equity can be tax free* (as opposed to selling which triggers a Capital Gains Tax event).

* Always seek professional accounting/tax advice specific to your personal situation.

UNLOCK YOUR EQUITY!
Contact us to find out how equity in your property can
be unlocked without building or renovating!

Related links

• Read more about the Planning Permit application process in Step 4: Application of our 7 Step Property Development 101 series.
• Read more about the research required to determine if this strategy is suitable for your property – Step 2: Strategy

Related posts:

1. Property Investment Strategies: Buy to Subdivide
2. The right way to get a Building Permit
3. Building Envelope: How three townhouses can become two