How to turn one property into four or more

Portfolio building the easy way

Property buyers looking to make a purchase in the current market will be the luckiest buying group for over a century.

The basis for this ‘luck’ is that when you buy one property in the current market – as long as you know what to look for when you buy – one property can easily become two and often four or more.  And this applies whether you’re buying a unit or a house.

Whhaattt? 

Recent changes to legislation have made the multiple builds possible.

The chronic lack of housing in Australia means that all levels of government (Local, State and Federal) are taking steps to address the crisis, with one of the key platforms being rezoning so we can fit more properties on to smaller blocks of land.

The rezoning applies to houses as well as smaller and usually older units, where currently the units might be only a few storeys high but with the rezoning they can now be much more. We recently reviewed a unit for a client where the block was ten storeys high, but had been rezoned to allow it to be 60 storeys high.

We’ll cover the unit block strategy in another story, but for now let’s focus on one of the newest housing forms that means you can turn one property into four or more.

The Manor House

The first point to note is that the Manor House code we’ll cover is currently for NSW only.  There are different variations in other States and Territories, but the NSW version offers the biggest opportunity due to population size and increasing housing demands.

When deciding if a Manor House would suit your property or a block you’re thinking about purchasing, remember to consider the ‘best and highest’ use of the property.  For example, you wouldn’t want to build a Manor House on a block that would be better used for a luxury duplex. 

What qualifies a property for redevelopment into a manor house?

A manor house is a two-storey building that contains three or four dwellings under the one roof, designed to appear as an oversized double-storey house from the street. According to the medium-density design guide, manor houses are best suited to corner lots or those with rear lane access, but this is a guide not a criteria. 

Each dwelling can be subdivided and strata titled to allow separate ownership, effectively creating a small apartment block.

• Blocks must be at least 600 square metres.
• Blocks must be at least 15 metres wide.
• Buildings must have a minimum side setback of 1.5 metres.
• Each dwelling must have at least one off-street parking spot and one secure bicycle storage space.
• Each dwelling must have a minimum internal floor area:
  • Studio – 35 square metres.
  • One bedroom – 50 square metres.
  • Two bedrooms – 70 square metres.
  • Three or more bedrooms – 90 square metres.
• Manor houses must be a permitted land use under the council’s local environmental plan.

Source: NSW Department of Planning and Environment

Power it up

If you’re quick and know where to look, the Manor House strategy can explode into much more, and effectively becomes an new, low rise apartment block.  The following example shows what can be achieved on a ‘small’ sized block that is zoned as high density.

The block size is 643 sqm, but has been designed to provide 11 units including

• six two bedroom two bathroom units
• three two bedroom three bathroom terrace units
• two one bedroom one bathroom units

In Queensland

Town house developments in Queensland run a close match to the NSW Manor Houses, and the range of what can be achieved on a traditional 800 sqm block has changed from the old idea of just splitting the block.

These days, the configuration includes the option of moving the original house to the front of the block and building three town houses at the back, through to selling the original house and building five or six town houses on the one block. 

How will you pay for it?

Included in the mix of what you can do with the property you own or the one you’re thinking about buying, remember to figure out how you’re going to fund the construction.  Six town houses might sound great until you realise all those extra bathrooms and kitchens are not going to be worth it and the value of four roomy town houses is going to be better than six squashed ones.

If you’re a lucky holder of property that has been rezoned and you’ve owned the property for a while, it’s highly likely you can fund the construction with equity.  Make sure you run the numbers with a finance broker who really understands the construction space.  Let me know if you need some recommendations because I know the absolute best ones.