Understanding the Impact of the TOD SEPP
The property and development market is experiencing significant changes due to the newly announced Transport Oriented Development State Environmental Planning Policy (TOD SEPP). This policy aims to promote higher density development near transport hubs, particularly around train stations, to address the housing crisis. Consequently, developers are increasingly approaching property owners directly in these areas, seeking to capitalize on rezoning opportunities.
Are You Getting Less Money and More Risk for your TOD Property?
Property owners may be tempted to negotiate directly with developers, but this can lead to unfavourable results. Developers are expert at acquiring sites and often negotiate agreements at prices that are lower than they can afford to pay and that also shift risks on to property owners. For instance, option agreements typically benefit developers only by allowing them to decide whether to proceed with the purchase, leaving property owners vulnerable to their deal collapsing.
Seek Advice from Experts
To counteract developers' negotiation advantages it's crucial to seek expert advice. Professionals can help you understand developer strategies, pricing tactics, and risk transfer methods. Their expertise can potentially make property owners significant amounts of money.
“Imagine selling any other asset where you, the seller, can’t know the true value, yet negotiate with a highly informed buyer backed by a team of experts. That’s the situation many property owners face with developers.
Successful property development requires expert judgement about the land acquisition price. If the developer wants to buy your property, then they have judged they can make significant profit at the agreed price. This could mean you’re not getting the highest price, which is disastrous when you only one chance to get it right with your major asset.”
Case Studies
An Epping investor experienced a $6.5 million loss after agreeing to share proceeds of a joint sale 50:50 with the adjoining property owner. Our expert analysis revealed that the investor's property would contribute 71% of the development floor space despite being only 47% of the combined land area. Proper advice and negotiation could have made the owner an extra $6.5 million.
We regularly significantly increased price and improved terms of property owners. An accountant introduced us to the owner of a property in St Leonards who was negotiating directly with a developer. By analysing the property’s development potential using developer analysis methods and backing that up with expert negotiation, we achieved a 30% price increase and improved terms. With the right advice and support property owners can better navigate the new TOD SEPP planning controls and maximize their property's potential while minimizing risks.
Key Questions Property Owners Should Ask Themselves:
Should I Collaborate with Neighbours?
The value of a development site is determined more by the potential floor space than the site area. Combining properties with a neighbour can significantly increase this floor space, often yielding a greater overall value. However, small differences in property shape and size often impact each property’s contribution. So yes, consider combining with your neighbours but knowing how to ensure a fair deal and maximize your share is crucial to your result.
What Should I Say to Developers?
Before engaging with developers, it's crucial to understand and what your property's TOD development potential is worth to a developer . Augusta Advisors can equip you with the knowledge and confidence to maiximise your price and terms.
How Can I Maximise Value?
We deal with the TOD developers on behalf of our property owner clients and we know the developers have teams of experts focused on acquiring properties on the best deal for the developer. The best way for you to maximise your value is to have experts on your side that negate the developer’s expertise advantage.
How Augusta Advisors Empowers Ku-Ring-Gai Property Owners:
We give property owners confidence that they are maximising value and avoiding mistakes because they are supported by expert strategic advice and analysis aimed solely at achieving their best result.
Without expert guidance, you can't be certain you're achieving the highest possible return on your property. Without expert advice you won’t know with certainty that you have maximised from this one opportunity to get it right.
We have two core skills, providing strategic advice based on expert analysis, and skilled negotiation with developers. So you can benefit from our expert strategic guidance and analysis and, if you wish, have us negotiate with the developer for you.