There’s a lot of history in Melbourne’s inner suburbs and with all the rezoning that’s been going on in recent times, heritage overlays have become a point of contention for some property owners—and a monumental headache for unsuspecting buyers.
Heritage properties tend to fall into two categories: those that have had plenty of attention (and dollars) lavished on them over the years, and those that haven’t.
The unloved ones are easy to spot. Unhinged gates, rotting timber window frames and peeling paint that reveals more than a couple of historic colour palettes, are fairly reliable indicators that what you’ll find inside has also lost some of its period charm.
You might think there’d be a strong case for knocking down the sorry remains and building from scratch but that’s where you need to do your homework to understand the ins and outs of Heritage.
Yep, that old chestnut.
Know your heritage
There are two types of heritage we’re talking about here: heritage listings and heritage overlays.
Both mean you’re buying a home that represents a piece of history, but there are big differences between the two which could have serious implications for the value of your property.
A heritage listing is designed to preserve and protect the character of a particular place for future generations. It can apply to an individual property, a group of buildings, a tree, a garden or pretty much any place deemed to have aesthetic, archaeological, cultural, scientific or social value or significance. Think of it as your capital H variety of heritage.
Heritage listing comes with an A, B or C grading which will govern how much (or more commonly, how little) you can renovate your property. In most instances, you can forget about demolishing and rebuilding.
Though you usually can’t do much to change the facade, there’s often scope to renovate what can’t be seen from the street.
A heritage overlay applies to an area, usually a particular street or group of streets. An overlay is designed to retain a streetscape or the urban character of a neighbourhood. Put simply, if a heritage overlay covers a tree-lined street that’s filled with Edwardian homes, you’re going to have a hard time building your multi-storey contemporary masterpiece here.
Heritage overlay is usually a little less restrictive than heritage listing. It’s difficult but not necessarily impossible to demolish or renovate a property with heritage overlay, but you’ll need to do your homework.
How heritage overlays affect property value
So the big question is how does either type of heritage status affect the value of your property?
Heritage listing will normally devalue a property because of the restrictions that apply to it.
It restrains property owners from making the best and highest use of the land. For instance, if your A grade heritage listed home happens to be in the middle of a growth area which allows for higher density dwellings, your chances of being able to take advantage of the zoning and build a couple of units on the block are zero.
That distinct lack of development potential, plus the fact that increased development density around you will likely have neighbours overlooking the property, means that when the time comes for you to sell, your pool of potential buyers will be smaller.
Even if you have no intention of changing the property, a heritage listing demands deep pockets when it comes to upkeep.
Whether you’re extending or just restoring, it’s far more expensive to maintain a heritage listed property—and I speak from personal experience. (Let’s just say that the cost of repointing the mortar in a brick wall recently was more than three times the price of building a brand new one).
When it comes to maintaining period homes, you’ll be shelling out for specialist skills and expensive materials. Know this upfront.
A heritage overlay often won’t impact a property’s value quite so hard.
Heritage overlays usually apply to better quality streets with higher standards of architecture.
Unsurprisingly, it’s the better quality streets that experience stronger demand from buyers. (Tip: if you find a 1960s anomaly in a heritage street, you could be looking at a good opportunity because you might be able to build your contemporary masterpiece in a highly desirably street).
Ultimately, the demand for period homes fluctuates depending on what’s in favour with the market.
Right now, the strong preference of current overseas buyers is to build their own home from scratch which means properties on streets with heritage overlays aren’t as hot as they have been. That said, given the higher quality of heritage streetscapes and individual homes, there’s a very good chance that capital values for these properties will be sustained in the long term.
When it comes to heritage, what the market tends to favour is a heritage façade with a contemporary interior that reflects how we live now. It’s the best of both worlds.
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