Epic Warehouse - zoned commercial... What are the implications?

First of all.. What is ‘zoning’?

Zoning is a framework, generally set out by state and territory governments and applied by local councils, which dictates what can be built where and how. It regulates the pace and pattern of development, growth and character of an area.

Restrictions, codes and processes vary between states but the main zones are residential, commercial, industrial, agricultural and public.

So whether they are truly off market, or if they’re pre-market, the beauty of these opportunities is the lack of competition. You are negotiating with the vendor at their reserve price, not at an inflated price set by the market and competition

The main reason it is important to be aware of property zoning prior to purchase is because lenders assign different policies to each property type based on the zone it falls within.

If you do not have a basic understanding of zoning laws and regulations in your area, you could run into a problem when attempting to secure a residential loan. If the property is zoned for commercial use you may not be able to obtain a standard residential loan for the property. Unlike normal residential loans, banks usually have higher interest rates, and will only lend up to 65-70% on those zoned for commercial use. 

There are also regulations around what you can do to the property in terms of renovations, so it is important to check with the council to ensure you understand any restrictions. 

And finally in some scenarios and in some councils, commercially zoned properties can’t actually be lived in or used for residential purposes, unless you have what's called ‘existing use rights’ .  

Finding out what a property is zoned isn’t hard.. You’ll find it within the contract of sale. You can also check out property zonings here - https://mapshare.vic.gov.au/vicplan/ 

As advocates, this is just one of the many things we check.. So if you’re buying, and you want to make sure you don’t miss the important details when buying property, book a call.

Tabitha