If subdivision or development is on your short list of property investing strategies, then you’ll need to understand what the zoning codes mean in the areas you invest. Even if you’re buying a simple rental property, it’s important to be aware of your future options, so you will know how zoning could impact the future appeal of your property.
Australia Zoning 101
In some areas, research projects Australia’s population to almost double in size over the next 25 years. This will present huge challenges.
Your local government planning department exists to strategically manage this expansion and ensure that your city remains a desirable place to live. Of course, this means reigning in the greed of overzealous property developers who tend to prioritize profit over planning.
To keep us in check, state and local municipalities enact zoning laws. Their purpose is to regulate the use of land and buildings to control the rate and pattern of growth in the area. These zoning regulations have corresponding zoning codes to communicate what is legally permitted on the land in question.
Zoning restrictions tend to fall into six basic categories, from which more specific zoning codes are derived:
- Public Use
Knowing Your State’s Zoning Codes
It would make sense for all councils to adopt the same language to communicate the requirements of zoning codes. That, unfortunately, is not the reality.
Because it’s up to the states and territories to establish their own legal framework for zoning in Australia, each state or territory has different zoning rules. They also have different ways to communicate those codes.
Here’s the lowdown on Australia’s various State and Territory Zoning Codes:
Australian Capital Territory (ACT)
The ACT wins the prize for the most logically-named zoning codes. Here are the highlights:
Residential Zones (from lower to higher density):
- RZ1 – Suburban Zone
- RZ2 – Suburban Core Zone
- RZ3 – Urban Residential Zone
- RZ4 – Medium Density Residential Zone
- RZ5 – High Density Residential Zone
You may also want to look at Commercial Zones CZ1 through CZ6. CZ5 is a Mixed-Use Zone, which allows for residential development.
Northern Territory (NT)
If you live or invest in the NT, check out the Department of Lands, Planning and the Environment and their Planning Scheme. They have a long index of codes, but here are a few that you may be particularly interested in:
- SD – Single Dwelling Residential
- MD – Multiple Dwelling Residential
- MR – Medium Density Residential
- HR – High Density Residential
- RR – Rural Residential
- RL – Rural Living
- FD – Future Development
- CB – Central Business (permits some residential development)
New South Wales (NSW)
The NSW Department of Planning and Environment is responsible for managing the significant growth expected in the state. In 2006, they created the “Standard Instrument Local Environment Plan” (LEP) that guides the planning decisions for local governments. This greatly simplified the zoning laws. Before the Standard Instrument LEP was passed, local governments were using approximately 3,100 different land zones.
Some noteworthy codes include:
- R1 – General Residential
- R2 – Low Density Residential
- R3 – Medium Density Residential
- R4 – High Density Residential
- R5 – Large Lot (Rural) Residential
- B4 – Mixed Use
To find the detailed zoning description for your area, search on the Department website by typing in your city name, followed by equivalent zones in the search box at the top of the page.
The Queensland Department of State Development, Infrastructure and Planning could take a lesson from New South Wales and create a Standard Instrument LEP of their own.
While the Queensland Planning Provisions serve as the standard planning scheme for the state, they have not yet created a uniformity of zoning codes.
If you want more information about zoning codes throughout Queensland, you’ll need to refer to the local government where you intend to invest.
If you’re in Brisbane, you can find zoning maps here with a list of zoning codes on each map.
South Australia (SA)
Like Queensland, South Australia has no uniform zoning codes. The Department of Planning, Transport and Infrastructure has a planning strategy, including a 30-Year Plan for Greater Adelaide and plans for regional South Australia.
Their planning framework has designated 23 different zones without bothering with the use of code numbers. Here are a few of the more relevant ones:
- General Residential Zone
- Inner Residential Zone
- Low Density Residential Zone
- Rural Living Zone
- Environmental Living Zone
- Urban Mixed Use Zone
The Victoria Department of Transport, Planning and Local Infrastructure manages the growth of the State. They have created a Melbourne Metro Planning Strategy, as well as eight Regional growth plans to provide a comprehensive strategy to local councils for land use.
Planning zones have recently been reformed. After deleting nine existing zones, they created five new ones, and amended another twelve. Investors will find the following relevant:
- RGZ – Residential Growth Zone (new)
- GRZ – General Residential Zone (new)
- NRZ – Neighbourhood Residential Zone (new)
- C1Z – Commercial 1 Zone (new – includes some mixed use)
- C2Z – Commercial 2 Zone (new)
- LDRZ – Low Density Residential Zone (amended)
- MUZ – Mixed Use Zone (amended)
- TZ – Township Zone (amended)
- RLZ – Rural Living Zone (amended)
Western Australia (WA)
The Western Australia Planning Commission is the place to start for information on zoning in WA. While local governments prepare and amend their own planning schemes, the State planning commission has laid out certain provisions that must be followed.
The state created Residential Design Codes (R-Codes) to control the site and design of residential developments. These R-Codes use numbers to indicate, in general, the density of dwelling units permitted per hectare of land. For instance, R30 would allow for 30 dwellings per hectare, R40 for 40 dwellings per hectare, R60 for 60, and so on.
These designations also include minimum and average lot area requirements. For example, under the R20 zoning, the minimum lot area is 350 square meters, with an average lot area of 450 square meters.
Therefore, if you want to find an existing home, subdivide and build two units on the back, you’ll need to look for a minimum lot size of 1350 square meters (450×3). Investors can apply for a five percent variation, which could reduce this requirement to 1286 square meters.
For more insights on R-Codes, also known as R-Zoning, and what it means, read this document.
Getting To Know Your Local Council
While it’s the state’s responsibility to create the zoning laws, it’s up to local councils to interpret and apply them in the local context. If you’re a developer, your success hinges on a good working relationship with these powers that be.
Some town planning departments tend to have an objective framework from which they make their decisions. Others seem to make decisions very subjectively. You’ll find that some local council planners will be easier to work with than others.
Either way, make it your goal to learn as much as possible about your town’s plans and goals. The more you can align yourself with their objectives, the greater the likelihood of having a mutually beneficial working relationship. They need you as much as you need them.
Understanding Zoning Laws Can Really Pay Off
It’s not unusual for agents to make mistakes when advertising, or ineffectively market a property, and you can often profit from this.
A mate of mine recently picked up a great residential development block that was being advertised as a commercial property. Because the agent did not understand the mixed use zoning designation, he did not bother advertising it for either commercial or residential development. After being on the market for many month, the price dropped significantly, so my friend picked it up. If all goes to plan, his understanding of local zoning codes should net him about $400,000 on this deal.