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Planning restrictions when developing land as an investment

Sunday, 15th Aug 2010

 Property development

An important aspect of turning over a successful and profitable development is ensuring you have the right piece of land to work with. Not quite enough land to build a four-unit development, leaving you with a triplex as your only option, or finding out the dwelling you were to partly demolish has heritage value, could spell disaster as far as your numbers (or profitability) are concerned.

In many cases, these scenarios can be avoided by scoping out the land thoroughly before purchase. A first step for most investors is investigating the applicable zoning of the area where your block is situated. Zoning is a key determinant of what the land can be used for and how much you can develop the land – whether it can only accommodate a single residence, a small group of units, or perhaps even more. Don’t rely on what a real estate agent has quoted, check it out for yourself with the local council.

Alongside the general zoning, there are a number of other land-use issues that are often overlooked yet are vitally important to the potential profitability of a project.

Covenants
These are restrictions placed on how you use the land and are recorded on the Title for the land in question. Examples of restrictions could include limitations as to where on the plot you can build or on constructing a second story. In newly developed areas, often the covenants are far more onerous dictating a range of minute details such as specific building materials.

Overlays
These do not apply to every parcel of land. They are essentially another layer that places further restrictions on use of the land, to protect a particular and important aspect of that land that is considered culturally or naturally significant. For example, some land may have a ‘Heritage’ overlay designed to preserve historic structures or vegetation. Any work in relation to such a property will likely require a planning permit and compliance with a number of additional requirements.

Setbacks
These cover an area that cannot be built upon between a main road and the dwelling, and usually between the dwelling and all property boundaries. In some cases, setbacks are also governed for secondary streets also.Setbacks allow for privacy, utilities access, safety, and consistent street appeal.

Crossovers
Developing land usually means building additional driveways. A crossover is the component situated on public land between the driveway and the road. If a new crossover does need to be constructed, it must not interfere with drains, electricity, trees and the like, and you will likely need to get special permission to erect it.

Easements
An easement is a legal right for a third party to use or control a section of the land, usually for the service of utilities such as sewerage and electricity.These are usually situated along the back or sides of a parcel of land. Generally speaking you can not build over an easement, only up to its boundary which can means increased costs for footings. In some cases, you may be able to negotiate to relocate easements to develop the land to its full potential.