You've come across a cracker of a site, and with great excitement you fire up your computer to check it out in more detail.
And that's when you see them - overlays! Cue the ominous music from Jaws...
But wait! Don't panic! While there are some overlays which definitely should get you firing up the boat's engine and heading back to shore at high speed, there are others which are a lot less fatal to your potential project when you get up close.
Let's start by understanding what overlays are. Essentially, they're specific regulations and restrictions on how a property can be used and developed. Generally, local government authorities, which can be known as councils, shires, or municipalities, have the authority to establish and enforce overlays when developing a property.
Of course, just to confuse things, sometimes governments impose overlays at a state or federal level. Even worse, these don't always appear on property planning and data sites, because those sites only include local government zones and overlays.
There, that's the formal stuff out of the way. Now, the most important thing to realise with overlays is they fall into two main categories - informational (the water is clear) and critical (risk of Jaws music starting up again).
Then, within those two major categories, there are subcategories. Eyes glazing over yet? This will wake you up - the tricky thing with overlays is that although an overlay may only be informational for the vast majority of properties it covers, occasionally it can bite.
So although you might see an informational overlay and let the property through the gate into the next level of due diligence, it should always be checked out before committing to the site.
Informational Overlays
Informational overlays typically refer to layers of information that are superimposed on a map or other geographical representation to provide planners and developers with additional data and context for decision-making. They fall within 3 broad categories:
Some of the overlays that fall into these categories are much bigger than the local Council. For example, if you're looking at a property on a main road, there may be specific requirements that have been set by the state government or the roads department (whatever that's called in your state), with specific reference to things such as access to the property.
It's a good idea to know what infrastructure already exists in the area, and what's planned, as this can sometimes uncover an overlay or restriction which may be administered by relevant infrastructure departments or utility authorities. All part of being an Area Expert!
At a local government level, there may be specific rules around public transportation hubs to reduce reliance on cars and encourage public transit use. Developers may receive incentives or face additional regulations to support these goals.
For people and neighbourhoods, overlays tend to focus more on improving the aesthetics and urban quality of a specific area. They often set design standards for elements like building facades, landscaping, and street furniture. These may also be written into a covenant over the property, so check for those as well.
This type of overlay might also extend further into preserving views, or maintaining animal access corridors, as two examples. Again, depending on what you want to do with the site, the overlay can range anywhere from having no effect to having a major impact. And while most of the time they're more general in nature and won't impact your site directly, if your site is the one with the grove of trees particularly beloved of local koalas right where you want to put a couple of dwellings, you're in trouble.
You'll soon learn to recognise the types of overlays that fall into this "informational" category, but just keep in mind you still need to check out the details as part of your due diligence.
Critical Overlays
As you'd expect, given the use of the word "critical" is used to describe these overlays, these are the types of overlays that can make or break a deal.
Does that mean you should automatically discard a site if one of these critical overlays is there? No. But it means you need to be very thorough in your due diligence, and be prepared to spend some dollars before fully committing to the property.
These overlays fall into four broad categories:
Even just reading the category titles gives you a pretty good idea why they're considered critical!
Hazards can come in all sorts of shapes and sizes, and to some extent there's some overlap with the pollutants. Sounds like a dad joke. When is contaminated soil not a hazard? When it's a pollutant...
Okay, no more dad jokes, I promise. Both of these categories are quite far reaching, covering everything from floods and bushfires, right through to air pollution.
As I've said earlier, there are times when these overlays don't specifically affect your property, but if they do apply, money is going to be involved to either remediate the hazard or there will be extra build requirements to avoid it. So these extra costs have to be included in your feasibility.
Heritage or historic overlays are similar, in that the title sums up what they cover. These overlays are designed to protect historically significant properties or districts. Developers within these areas must adhere to guidelines that preserve the historical character of buildings and the neighbourhood, as well as culturally significant properties and spaces.
Again, that can range from using the right paint colours right through to not being able to change or build anything at all. Definitely one for due diligence before you sign on the dotted line to secure the property.
Areas of ecological or environmental significance aim to protect natural resources, ecosystems, and sensitive areas. This can cover everything from individual trees, native vegetation requirements and preserving animal habitat through to maintaining wetlands on bigger properties.
Bottom line, the impact of overlays on property development varies depending on the specific regulations and goals of the overlay. Developers need to be aware of these overlays and work with local authorities to ensure their projects align with the applicable rules and requirements. Non-compliance can result in permit or approval delays, fines, or even the denial of development plans, which can affect the timeline and profitability of a project.
All of which means you can still go out on your boat, but make sure someone with a good pair of binoculars is checking for anything that might bite you.
And that's when you see them - overlays! Cue the ominous music from Jaws...
But wait! Don't panic! While there are some overlays which definitely should get you firing up the boat's engine and heading back to shore at high speed, there are others which are a lot less fatal to your potential project when you get up close.
Let's start by understanding what overlays are. Essentially, they're specific regulations and restrictions on how a property can be used and developed. Generally, local government authorities, which can be known as councils, shires, or municipalities, have the authority to establish and enforce overlays when developing a property.
Of course, just to confuse things, sometimes governments impose overlays at a state or federal level. Even worse, these don't always appear on property planning and data sites, because those sites only include local government zones and overlays.
There, that's the formal stuff out of the way. Now, the most important thing to realise with overlays is they fall into two main categories - informational (the water is clear) and critical (risk of Jaws music starting up again).
Then, within those two major categories, there are subcategories. Eyes glazing over yet? This will wake you up - the tricky thing with overlays is that although an overlay may only be informational for the vast majority of properties it covers, occasionally it can bite.
So although you might see an informational overlay and let the property through the gate into the next level of due diligence, it should always be checked out before committing to the site.
Informational Overlays
Informational overlays typically refer to layers of information that are superimposed on a map or other geographical representation to provide planners and developers with additional data and context for decision-making. They fall within 3 broad categories:
- Infrastructure and Movements
- People and Neighbourhoods
- Adjacent Uses
Some of the overlays that fall into these categories are much bigger than the local Council. For example, if you're looking at a property on a main road, there may be specific requirements that have been set by the state government or the roads department (whatever that's called in your state), with specific reference to things such as access to the property.
It's a good idea to know what infrastructure already exists in the area, and what's planned, as this can sometimes uncover an overlay or restriction which may be administered by relevant infrastructure departments or utility authorities. All part of being an Area Expert!
At a local government level, there may be specific rules around public transportation hubs to reduce reliance on cars and encourage public transit use. Developers may receive incentives or face additional regulations to support these goals.
For people and neighbourhoods, overlays tend to focus more on improving the aesthetics and urban quality of a specific area. They often set design standards for elements like building facades, landscaping, and street furniture. These may also be written into a covenant over the property, so check for those as well.
This type of overlay might also extend further into preserving views, or maintaining animal access corridors, as two examples. Again, depending on what you want to do with the site, the overlay can range anywhere from having no effect to having a major impact. And while most of the time they're more general in nature and won't impact your site directly, if your site is the one with the grove of trees particularly beloved of local koalas right where you want to put a couple of dwellings, you're in trouble.
You'll soon learn to recognise the types of overlays that fall into this "informational" category, but just keep in mind you still need to check out the details as part of your due diligence.
Critical Overlays
As you'd expect, given the use of the word "critical" is used to describe these overlays, these are the types of overlays that can make or break a deal.
Does that mean you should automatically discard a site if one of these critical overlays is there? No. But it means you need to be very thorough in your due diligence, and be prepared to spend some dollars before fully committing to the property.
These overlays fall into four broad categories:
- Hazards
- Pollutants
- Heritage or Historic Significance
- Ecological Significance
Even just reading the category titles gives you a pretty good idea why they're considered critical!
Hazards can come in all sorts of shapes and sizes, and to some extent there's some overlap with the pollutants. Sounds like a dad joke. When is contaminated soil not a hazard? When it's a pollutant...
Okay, no more dad jokes, I promise. Both of these categories are quite far reaching, covering everything from floods and bushfires, right through to air pollution.
As I've said earlier, there are times when these overlays don't specifically affect your property, but if they do apply, money is going to be involved to either remediate the hazard or there will be extra build requirements to avoid it. So these extra costs have to be included in your feasibility.
Heritage or historic overlays are similar, in that the title sums up what they cover. These overlays are designed to protect historically significant properties or districts. Developers within these areas must adhere to guidelines that preserve the historical character of buildings and the neighbourhood, as well as culturally significant properties and spaces.
Again, that can range from using the right paint colours right through to not being able to change or build anything at all. Definitely one for due diligence before you sign on the dotted line to secure the property.
Areas of ecological or environmental significance aim to protect natural resources, ecosystems, and sensitive areas. This can cover everything from individual trees, native vegetation requirements and preserving animal habitat through to maintaining wetlands on bigger properties.
Bottom line, the impact of overlays on property development varies depending on the specific regulations and goals of the overlay. Developers need to be aware of these overlays and work with local authorities to ensure their projects align with the applicable rules and requirements. Non-compliance can result in permit or approval delays, fines, or even the denial of development plans, which can affect the timeline and profitability of a project.
All of which means you can still go out on your boat, but make sure someone with a good pair of binoculars is checking for anything that might bite you.
