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Making sense (and dollars) of split coding

Wednesday, 7th Sep 2016

subdivisionSplit coding can be a cash cow for developers. However, given each council controls their own planning policy, investors must be aware of the differing criteria needed to attain the higher coding.

When purchasing a property in Perth with plans for future development, it’s important to hold a comprehensive understanding of the local council planning policy and scheme to ensure the property meets the necessary criteria.

The most common form of strategic planning used to help guide development is through the use of split-density ‘dual coding’ (for example R20/40).

This split coding is then coupled with criteria that has to be met in order to obtain the higher coding. If this criteria is not met then property developers can only attain the lower code.

Because each council is in charge of their own planning policy, the zonings and associated criteria needed to meet the higher codes vary significantly from council to council.

For example, below are several Perth councils that have introduced split coding in the past 5 years. From these examples it’s easy to see the vast differences in local council planning policies.

City of Joondalup – Allows for the higher of the dual-density coding to apply when the lot/development meets 4 specific points. A major point that influences property investment selection is the requirement of a minimum 20-metre frontage for multiple dwelling developments and a minimum lot width of 10m for all lots, with the exception of battle axe sites.

City of Belmont – Allows for the higher of the dual-density coding to apply when the lot/development meets 13 criteria. The 2 major points that influence property investment selection include the requirement of a 16-m frontage or greater, and a minimum of 50% of the dwellings constructed must be double storey to achieve the higher coding in the zones R40 and above.

City of Wanneroo – Allows for the higher of the dual-density coding to apply when the lot/development meets 2 criteria. These points aren’t overly influential in site identification as they orientate around the planning of the development lay out with the requirement of only a singular crossover.

It’s not uncommon that investors purchase a property with split coding to find out later that it doesn’t meet the dual-density criteria needed to gain the higher coding.

This can severally affect an investor’s strategy and may set them back significantly in their financial goals.

Therefore, when considering buying a development site with split coding, it’s important to understand the criteria needed to meet the higher coding and apply this to the proposed property when completing feasibility studies.