Can DA approvals influence valuations and by how much?

I recently had my house valued for a bank refinance. I have a large block which meets the minimum lot size and frontage requirements for subdivision. This is an established area in Western Sydney and subdivisions are rare.

During the valuation I explained that another house a few streets away which is similarly subdivide-able had sold for a much higher price because of the land potential. The valuer asked if I had a DA approval and said they could not factor in the subdivision potential without this.

Using above logic if I were to get a DA does this mean I could request a future valuation that would take into account the subdivision potential and therefore unlock additional equity? I have no idea how much a DA would cost, and would there be anyway I could find out how much additional equity is potentially available (with DA) to determine if it is a viable option?

Can any brokers or valuers comment on the realities of this?

 

To answer your question, yes, DAs can make a massive difference in the value of a property!

 

Note I'm not looking to sell or build using a DA in the short term. Looking to understand impact and maximize bank valuation for equity release using a DA.

 

Achieving a DA provides a buyer with some degree of certainty that some works may be undertaken eg subdivision, 5 storey apartments, boarding house etc. Otherwise, it's just a block with potential.

 

Does this also translate to a higher bank valuation?

 

In some instances say if you're buying a site that is development potential then the valuation can actually come in lower as the valuer will look at the "current" marketable condition. Will be case by case.

 

DA will lapse after 5 years, So if you have no intention to build or sell then may be not ideal for you.

By the time you get your DA approved this boom might me over and your valuation may reflect the poor market condition.

DA for subdivision will cost money. Register survey, stormwater plan, SEE report, Town planner's fee, drawing, DA fees, easement cost (if needed), Power pole relocation cost (if needed), utility connection,

 

AND if you activate the DA by starting physical work then your CGT exemption for PPOR sacrifice. Take your own taxation advice on this.

 

The DA itself won’t really increase bank val for standard resi purposes, can work against as some banks may treat it as development.

nonetheless if your lot has subdivision potential then it should be reflected in the comparables used in the figures by a valuer.

This isn’t always the case. We recently had a development deal where valuer had it at 1.5m as a family home. Next month the same plot of land was valued at 2.4m as a construction loan application with the DA in place. The unique nature of the development approval couldn’t be factored in as there were no comparables in this market at the time at the higher end.

 

I've never seen one that long.
2 or 3 years the ones I seen. And that is to commence works, not completion.

 

Most NSW approvals are valid for 5 years.

 

I should've specified.
There's a big difference to those categories and it also depends on council.
I've done a few, seen a few, one was 2 yrs the others 3 yrs mostly in 2560 area.
Both Resi and CIP.

 

It got nothing to do with individual councils as all councils in NSW get power to grant approval under the Einvironmental Planning and Assessment Act 1979. So all DA lapse in 5 years regardless of single dwelling or RFB.

2 or 3 years lapsing time is related to deferred commencement DA. Where Council issue deferred commencement consent due to certain thing which council could have found reasonable time to resolve. Such as relocation of power pole, obtaining drainage easement etc. This that situation Council use their discretion and give 2-3 years time to resolve such issue. Otherwise all DA lapse in 5 years time.

DA needs to commence in these 5 years, once it commences there is no timeframe. Commencement of DA is not that simple, some people have demolished the dwelling and Court did not consider it as commencement.

Also there is no remedy to increase lapsing timeframe. Many caselaw on this...

 

Which means depends on council and whatever conditions they apply on your DA, some which can be silly and unreasonable regarldess of number of meetings before submission.
I have a seen a fairly long list of council odd requests including allocation of public space and being responsible for it's maintenance.

Never done anything that small, I have no experience in that.