What Is Multi-Generational Living?
There’s a long held strategy in property development that goes like this:
Buy as much land as you can
Near a growing population centre
Wait for the zoning to change
Then… subdivide or sell to a developer.
Subdivision is distinct from just putting more houses on your existing land. Subdivision is where the new blocks of land each have their own individual land titles, which means they can be sold off to other owners and the original land owner reaps the benefits of the sale.
A multi-generational subdivision opportunity where land owners can subdivide their own land (a micro-development) might look like this:
Subdivide your own large block of land into 5 blocks
Sell off 3
Keep 2, one for you and another for your son or daughter.
This ‘micro-development’ concept has always assumed that you could: subdivide and sell off some property to help build your house, or one for your son or daughter.
Why It’s Gaining Popularity in Australia
In Sydney, this strategy has worked well for owners of large land holdings on the outskirts of the city or owners of land that has been rezoned to a higher density.
But most Sydney families have not had the foresight or luck to benefit from a large land subdivision opportunity. And over the last decades, multi-generational, micro-development opportunities in Sydney have shrunk along with the size of the land available for subdivision.
Since the introduction of the Environmental Planning and Assessment Act 1979 and up to now, multi-generational micro-development was only available in very limited circumstances:
Your land had to be zoned in a way that would allow subdivision
Large enough so the subdivided blocks would be big enough to comply with land size regulations
Not restricted by flood, bushfire and easements
Local Environment Plans (LEPs) frequently set minimum lot sizes that were only attainable for a small percentage of land holdings in the local government area. This has the effect of making subdivision mostly impossible for owners of normal sized lots (500–750m² with a 15 metre frontage in a residential (R2) zoning).
The Rise of Low & Mid Rise Zoned Housing (LMR)
Now, thanks to a State Government initiative called Low & Mid Rise Housing, there’s a window of opportunity to attain the Holy Grail strategy of: subdivide and sell off extra property to help pay for your own house and one for your son or daughter.
What Is LMR and Where Is It Found?
Low & Mid Rise Housing allows subdivision on normal-sized suburban blocks of land (that are not flood or bushfire affected) and are located in the Low & Mid Rise Housing areas around 171 suburban town centres in Sydney.
Why LMR-Zoned Land Is in Demand
The building designs allowable under Low and Mid Rise Housing are large, comfortable and ideal for multi-generational living.
And because they can be subdivided and owned or sold individually, this is a great opportunity for families or groups who want to embark on a micro development.
Why LMR Is Ideal for Multi-Generational Living
You can subdivide even normal-sized suburban blocks
Each dwelling can be sold or owned individually
You don’t have to sell the family home to access the equity
You can create homes for adult children, ageing parents, or both
This brings us back to multi-generational Living. The concept is sometimes a hard one for many older Australians to adapt to, but we must adapt for the sake of the next generations.
The price of housing in Sydney is the second highest in the world (only exceeded by Hong Kong), so we need to find a way to help the upcoming generations onto the property ladder.
These days, much of the wealth in Sydney is held in the form of the family home. This is often owned by what some call the ‘boomer’ generation (those born after WW2 in the 1950s & 60s).
The ensuing generations (those born in the 1980s–early 2000s) have borne the brunt of rapidly rising property prices that have contributed to the wealth of the ‘boomers’ to the detriment of the younger generations.
In Sydney, the window of opportunity now exists to leverage the wealth of the family home and build new homes for the younger generations. This may not necessarily mean having to sell the family home.
Terrace Houses and Manor Houses: Two LMR Pathways to Multi-Generational Living
The most popular low rise designs will be Terrace Houses and Manor Houses, simply because they can be built on normal-sized blocks of land zoned residential in an LMR area.
Terrace Houses
Minimum 6 metres wide
2 storeys
Can have common walls (to save on building costs)
Each needs public street frontage
Minimum total lot width: 21 metres
Must allow for side setbacks and a driveway
Each terrace house needs 165m² of land
This makes it hard to find blocks of land that will support Terraces, but Thorn Property is currently listing sites that will support them.
Make sure you sign up to our listing database so we can contact you when suitable blocks of land become available, or so you can get in early if you want to purchase a finished Terrace House.
Manor Houses
A 4-apartment design
Can be built on a 600m² block with a 15 metre frontage
Only in LMR-zoned areas (check the map)
Requires a Class 2 licensed builder
Ideal for occupying 2 apartments and selling the other 2
This can result in a huge saving in the overall cost of ownership once the sales funds are used to pay back the initial mortgage.
Depending on what is achieved for the sale price on the excess apartments, the resulting mortgage may be a lot lower than the price of a similar apartment to purchase.
Contact a financial professional before pursuing this strategy.
As with Terrace House sites, Thorn Property is currently listing Manor House sites, so don’t forget to sign up if you’re interested in exploring this opportunity.
Key Benefits for Families and Investors
Build wealth by unlocking equity in existing land
Provide housing for adult children or elderly parents
Lower your mortgage through selling part of the development
Avoid full relocation or sale of the family home
Flexibility to sell, rent, or keep properties within the family
What to Consider Before Building or Buying LMR Land
Zoning must allow for LMR
Minimum lot sizes, widths, and setbacks apply
Land must not be flood- or bushfire-affected
Some builds (e.g. Manor Houses) require specialised builders
Get professional financial and legal advice before starting
There’s a lot that goes into finding and assessing Low & Mid Rise sites, far more than we’ve covered here. Whether you're looking to buy, sell, or develop, get in touch with Thorn Property for expert guidance and access to upcoming LMR opportunities.
Why Sellers Should Understand This Trend
Landowners with LMR-zoned property may be sitting on highly valuable, sought-after land. Highlighting the subdivision potential can attract multi-generational buyers and micro-developers, increasing interest and sale price.
Thinking of Selling or Buying LMR Land?
If you are interested in:
Buying a Low & Mid Rise Micro Development site
Understanding if your home is located in a Low & Mid Rise housing area
Buying a finished Terrace House or Manor House apartment
…then sign up to our Listing & Sales Database, either as a seller or a buyer, and we’ll keep you updated.
Disclaimer:
This property report is for general information only. No information, forward looking statements, or estimations presented herein represent any final determination on investment performance. While the information presented in this report has been researched and is thought to be reasonable and accurate, any real estate investment is speculative in nature. Thorn Property and/or its agents cannot and do not guarantee any rate of return or investment timeline based on the information presented herein.
By reading and reviewing the information contained in this report, the user acknowledges and agrees that Thorn Property and/or its agents do not assume and hereby disclaim any liability to any party for any loss or damage caused by the use of the information contained herein, or errors or omissions in the information contained in this report, to make any investment decision, whether such errors or omissions result from negligence, accident or any other cause.
Investors are required to conduct their own investigations, analysis, due diligence, draw their own conclusions, and make their own decisions. Any areas concerning taxes or specific legal or technical questions should be referred to lawyers, accountants, consultants, brokers, or other professionals licensed, qualified or authorized to render such advice.
In no event shall Thorn Property and/or its agents be liable to any party for any direct, indirect, special, incidental, or consequential damages of any kind whatsoever arising out of the use of this report or any information contained herein. Thorn Property and/or its agents specifically disclaim any guarantees, including, but not limited to, stated or implied potential profits, rates of return, or investment timelines discussed or referred to herein.