What Are R-Codes?
Residential Design Codes are a set of comprehensive guidelines to control and manage residential development, set by local and state governments via planning schemes.
Each code indicates the amount of development that can be achieved within a set zone, based around factors that affect growth, density and development, such as the number of properties per Lot, or the number of storeys allowed per new build.
Factors like these are paramount within areas of high development, such as the Perth Northern Suburbs which have an array of ongoing development projects that are contributing to Perth’s population growth.
Ever since the introduction of R-Codes, savvy investors have used this factor as a key driver when purchasing either land or properties they wish to sub-divide – as the codes themselves control the design of most residential development throughout Western Australia.
Why Do We Need R-Codes
Given Perth’s projected population growth is expected to almost double in size by the year 2040, R-Codes have become essential to controlling and coordinating this extreme growth. The Australia Bureau of Statistics has tipped Western Australia to be the fastest growing state during this time, with a projected 4.7 million people expected to eventually call Perth home.
Through the introduction of zones which align with specific R-Codes, local councils and authorities are able to address emerging design trends whilst ensuring communities are not over-populated and congested.
Other factors which can be dictated by R-Codes include; open space, garage design, parking, property heights, streetscape and overshadowing, just to name a few.
Sustainability is key in introducing guidelines to residents and investors, to enable better living environments and to promote a higher standard of living despite a swelling population density. Listed on the State Government website, R-Codes also aim to improve clarity and highlight assessment pathways to facilitate better outcomes for residents.
The naming convention for residential design codes is based on a “density code” allocated to any given suburb or residential area. Each code begins with an “R” and is followed by a numerical value which indicates the number of dwellings permitted per hectare on that Lot. The classifications are as follows:
Source: Dale Alcock Homes
If you’re in the market to develop a triplex sub-division, R20 and R40 zones are the most ideal, however investors are advised to pay particular attention to properties which are located with R20 zoning, as this has the most potential for growth.
Corner Blocks Are Gold Mines
The Perth Northern suburbs have seen examples of homeowners and property developers seizing opportunities to leverage R-Code loopholes. Whilst the state government relaxed its sub-division laws a couple of years ago, property owners can get more out of their Lots if they are lucky enough to live on a smaller corner block.
As it stands, properties which front onto two streets but are smaller than standard blocks by at least 5%, are in fact eligible for sub-division. Each council has different minimum block sized limitations, so it is wise to always investigate this when considering adding to your investment portfolio.
In a nutshell, the changes to residential design codes (R-Codes) ultimately mean smaller corner lots have the potential to be split up by councils into plots beyond standard sizes, which is great news for investors.
The Perth Northern Suburbs primed to benefit the most from this loophole includes; Hamersley, Warwick, Carine, Karrinyup, Ocean Reef and Joondanna.
This loophole means investors now have the opportunity to sub-divide previously ineligible blocks providing they fit the above criteria specific to their location. For example, on a 700sqm Hammersley corner block, investors can introduce either a 3×2 or 4×2 property, which seem to be the most common configurations for sub-divisions. A standard block would need to be 200sqm larger to qualify for the same investment project.
Warwick home owners Cliff and Kaylene Mullins are about to embark on this very journey, with the plan to split their property into three, with two properties being rentals whilst they live in the other.
When the couple spoke to Channel 9 News, they explained how they plan to leverage the loophole to further their property portfolio. “We will get our money back and use it as seed money to do another development and still have equity in this, and be getting an income,” Ms Mullens said.
It comes down to simple economics, multiple properties on one block means more tenants, and more tenants mean more revenue opportunity. You just need the right R-Code, the right location and a good fence to segment your Lots.
The team here at Benchmark Specialist Property Managers are well-versed in assisting investors who are focused on property development particularly on the Perth Northern Suburbs, and the latest changes to R-Codes are most certainly introducing a series of exciting opportunities within the market.
If you’re looking for a property management team to help you nurture the capital growth and maximise the rental returns from your subdivisions, contact us today to find out more about out tailored portfolio style management services.