What is Medium Density Development
Medium-density (mid-density) development is a type of housing development that bridges the gap between single-family detached houses and high-rise apartments. Most Australian suburbs in east-coast cities will have medium-density housing options in some capacity in areas of the suburb where there is greater demand for people to live. Some examples include townhouses, du/tri/quadplexes, units, flats, 3-story terrace houses, small apartment blocks up to 4-5 stories tall and mixed-use developments. This type of development usually does not have a lot of the shared facilities that are common in high-density dwellings, but also has larger dwelling sizes.
Due to the increased dwellings in an area, there will inevitably be increased pressure on local infrastructure, which is where Section 94 contributions come in. More on that later.
Why does mid-density development occur?
The introduction of some mid-density development is the steady, natural progression of a low-density neighbourhood when there is increased demand to live within an area, without dramatically transforming the neighbourhood. It would feel out of place for a neighbourhood made mostly of single-family homes to have a 20 story high rise building placed in the middle of it, but an increased number of two-story units and three-story townhouses appearing would be pretty natural. This type of development can occur when a local government and council decide to rezone the land due to their belief that there is adequate infrastructure available for the community to sustain it, alongside future infrastructure projects being developed to help support the growth.
Factors that increase demand in an area and are considered for zoning changes include proximity to employment/ employment hubs, lots of facilities within walking distance, strong public transport connections and access, good education, and great public space such as parks.
While each state and city will have their own dedicated zoning rules and plan, building restrictions for different areas can vary on a street by street basis and their requirements of the local community.
Benefits of mid-density development
The immediate benefit of medium-density development is having an increased housing supply so more people can live within an area, meaning more employment opportunities, local businesses, etc. More people living in an area also means a greater chance of new public infrastructure and transportation.
Mid-density developments are inherently more affordable than detached houses so there will be a varied supply of housing types available to meet the differing requirements and budgets of individuals planning to live in the area. However, rezoning also has positive consequences for existing landowners in the area. The land value of their properties has immediately become more valuable as it has the capacity and demand to be subdivided upon sale.
The potential downsides of mid-density development
As mentioned previously, more people in an area can put pressure on local infrastructure such as pipes, roads, etc. One of the many considerations councils and local governments consider is how much traffic a new development will generate. Mid-density developments are preferred around areas where there is strong public transport connectivity, alongside everyday facilities such as shops, gyms, and cafes within walking distance, so that people don’t feel the need to use their cars as often. Luckily, the cost of infrastructure to a mid-density dwelling is significantly cheaper (per dwelling/person) than if the properties were detached on larger blocks for example, 18m of road and pipe may be required per dwelling if the properties are on larger blocks with semi-detached houses, meanwhile, a block of land with 6 dwellings only requires 3m of road per dwelling.
The increased tax generation in the area due to a greater population, combined with a decreased cost of public spending per dwelling frees up room in state and local budgets for better public facilities in the area, transport, parks, roads, etc.
Other downsides to medium-density development include the increased considerations when placing more people in a small space. Noise, privacy, garden space, road access, and shared amenities are all elements that need to be considered by the developer and council when making medium-density dwellings; hence they may have a longer approval process.
Section 94 contributions
One of the ways councils and governments combat the increased pressure on local infrastructure is via section 94 contributions. As mentioned, new developments usually require upgraded infrastructure in some capacity. Rather than the tax burden of that being passed on directly to existing residents, developers are required to pay a levy for projects with an estimated development cost of greater than $500,000. This payment will allow for the new services and amenities to be built for the local community.
Quantity Surveyors and Section 94 Reports
To ensure correct and appropriate Section 94 contributions occur for any new projects, it’s important to liaise with a quantity surveyor and organise a section 94 report. At Section 94, our team of highly qualified quantity surveyors can help organise all the required and recommended quantity surveyor reports for your development.
With over a decade of industry experience, our qualified building quantity surveyors are AIQS certified with a fast turnaround time and clear communication. Give us a call today at 0413 953 869 or email us at info@section94.com.au to discuss our quality budget services for residential and commercial builds.