Outdated minimum block sizes causing oversized housing headache

Australia could do worse than take a read through New Zealand's planning codes and subdivision rules to potentially triple the availability of new homes in our major cities.

Real estate concept with a vacant land parcel available for building construction
Size matters if the housing crisis is to be resolved. (Image source: Shutterstock.com)

Is getting rid of minimum lot sizes the solution we’ve all be looking for to solve the housing crisis?

For decades councils and state governments have held tight to what some would now consider to be outdated notions that once a block of land is under a certain size you shouldn’t be allowed to build on it.

That type of thinking strongly entrenched the 400 square metre (sqm) suburban block as the standard. Before that, it was the 600sqm suburban block. Before that, it was the 1,000sqm suburban block. You get the picture.

But as our population continues to grow and we seek to affordable accommodate for more people in our main cities, is it time we threw out the whole minimum block concept in favour of something else?

Perhaps instead, development applications should be judged on whether the house is being built on a “suitable lot size”.

Assessed against minimum benchmarks such as front, rear and side setbacks, rather than an arbitrary “minimum lot size”.

This approach would encourage the buyer to dictate what housing is supplied and created. This approach would encourage innovation and creativity in tackling the problem of housing supply and affordability.

We’ve already seen a number of state governments waive their rules around granny flats either permanently or temporarily to try and encourage more small-scale housing to provide desperately needed accommodation, but in most circumstances, this doesn’t allow the land to be subdivided.

The ACT took a step toward this late in 2023. It introduced legislation that allows landowners to divide their blocks into dual-occupancy housing.

The blocks must be 800sqm or more to be able to be split, with one of the two dwellings limited to 120sqm of floor space.

The ACT government estimates about 45,000 blocks may be eligible for this type of development.

The important thing in this new policy is that it allows for a formal subdivision, meaning each block is on a separate title.

Think terraced housing or townhouses on their own separate block of land and without the need for complicated body corporates. We can’t build these types of housing in suburban Australia where there is an arbitrary requirement for a minimum lot size of 400sqm.

Kiwis already ahead of Australia

New Zealand is already ahead of Australia in its thinking.

The Government rezoned every residential block as medium density in its five biggest cities, allowing townhouses to be built.

This means in Auckland alone dwelling capacity has tripled.

It’s definitely food for thought and may go further in helping alleviate our critical housing shortage than some of the previous quick fix solutions around rent freezes and new social housing construction.

It can work. We’ve done 150sqm blocks in Holmview, Queensland, which is one of only a handful of areas in Southeast Queensland with “no minimum lot size” zoning. A two-bedroom house can be built on that for less than $500,000, including the land. Imagine if other locations adopted the same principle.

With research and patience, subdividing land can provide property investors with significant returns while also addressing housing affordability and supply issues.

The solution to affordability is density. But first, we need to remove some of the rules that are getting in the way of innovation and progress.

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