Why Does Zoning Of The House Matters?

Disclaimer : Articles in this blog are just personal opinion of the author or authors. It may or may not be correct. Pls do your own due diligence and pls seek professional advice according to your own personal circumstances.

During the office coffee break, me along with Ramesh and Suresh went for 7-11 one dollar coffee.
We are addicted to this coffee due to some reason.
Ramesh is a first home buyer and Suresh is an experienced property investor.
Ramesh pays one dollar and goes to the vending machine and says that he is signing a contract for his first home.
Suresh standing in line asks him whether he has checked the contract for the zoning of this proposed house.
Ramesh replies that why does that matter and why he should check the zoning.
Suresh while pouring his coffee gives several reasons as to why zoning in the contract should be checked:-
– Say for example R2 means where normal houses are, R3 means low rise appartments and R4 means high rise appartments.
– A house in R3 or R4 is essentially a development site. So it can be shabby house but very expensive, you will wonder why?.
– It is the land value that is important because once the house is demolished, then appartments can be built on it.
– Also you may not be wanting to buy in a pocket of suburb, where two years down the line, there will be appartments surrounding your house.
– Or you may want to buy and hold in a pocket which is expected to become R3 or R4 in future so that you can sell it to a developer.
– The house may in special zoning for example health zoning where there may be a restriction that only hospital or health related services can be opened.
– It may be in environmental zoning, which may mean that 60% of the land area cannot be constructed. So effectively 40% is only useful land.
– It may be heritage listed so the house cannot be demolished because the history of the suburb has to be preserved. Such a house will be significantly cheaper and you will wonder why?
– It may be business zoning where a shop along with a house can be constructed.
Ramesh while sipping the coffee and on the way back to office says that you guys carry on into the office, as he has to call his solicitor and wants him to check the zoning
of the house and Thanks Suresh for the invaluable insight into this topic.

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