Think carefully before using hard-earned equity from family home to fund a holiday home.
Beware the friendly developer’s knock on the door
Don’t be surprised if there is a knock on your door or letter in the post in coming months from a friendly developer. Contain your joy if they make you an unsolicited offer that seems generous even in today’s strong market. And definitely don’t start negotiations until you’ve sought independent advice.
Be wary because you may be the target of a clandestine raid to secure your property on the cheap. The catalyst for this behaviour is the advent of a new planning regime for Victoria, one which will relax restrictions on development in some areas. Fewer development restrictions inevitably equate to higher values, so canny developers are looking to snap up land in these areas before current owners cotton on.
Where is this scenario playing out? The new planning regime, called Plan Melbourne, defines a series of residential zones, each with varying restrictions on the amount of high density residential and/or commercial development that will be permitted. Watch out if your property ends up in a Mixed Use Zone or a Residential Growth Zone. Your property may be considered suitable for four-storey apartments.
Typically, these sorts of properties are found on and near main roads and also near train stations.
Your local council was given the job of recommending to the State Government which zone your property should sit within. So in the first instance you should visit the council’s website to view the recommended planning maps they will have drawn up. However, the final planning maps are likely to be far more pro-development. That’s because the State Government correctly anticipated that the natural inclination of councils was to maintain the status quo by allocating few areas to sit within the Residential Growth Zone. Consequently, the council plans were reviewed and toughened up by a Standing Advisory Committee before final sign off by the Planning Minister. In theory it should have all been done and dusted by 1 July but in reality it may take many months before greater clarity is achieved in many municipalities.
It’s a bit of a dog’s dinner. And the sort of circumstances that some opportunist developers are taking advantage of at the expense of unsuspecting owners. Our advice if you get an approach from a developer is to seek your own independent advice about zoning and, if you are happy to sell, how to negotiate a premium sales price with a developer.
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