Why it pays to do your house-hunting homework: Buyer gets $270,000 discount on Melbourne property because of a little-known rule
- Home in South Melbourne came onto the market after sitting empty for 50 years
- The home falls under heritage overlay, meaning it can’t be demolished
- Buyer argued the asking price was too steep due to the hidden costs of repairs
A run-down Melbourne home that hit the market with a $1.2million price guide has sold for $930,000 – a 26 per cent discount = because of a little-known property rule.
The home on Martin Street, South Melbourne, came onto the property market after sitting empty for 50 years.
But despite its excellent location, Full Circle Property Advocates director Rob German considered the price guide to be too high.
When the asking price dropped to $1.1million Mr German showed the property to his client, who intended to knock down the home and rebuild.
The home on Martin Street, South Melbourne, came onto the property market after sitting empty for 50 years
‘I looked into it and noticed it had a heritage overlay and as a consequence you couldn’t demolish, which seriously affects its value,’ German told the Herald Sun.
‘I spoke to the St Kilda (Port Phillip) council and got an opinion from the heritage town planner and also got an independent opinion … and it was pretty clear we weren’t going to be able to demolish it.’
The heritage overlay means restoring the home to a livable standard would be very expensive.
Places of significance can be protected by heritage overlays in Victoria.
They are part of council planning schemes and blanket an area rather than a typical property.
Properties covered by a heritage overlay come with a range of conditions.
For instance, heritage overlay does not mean a council can force the owner to restore a property to its former glory.
However, they may refuse demolition requests.
Mr German stressed to Daily Mail Australia that heritage overlay is an overwhelmingly positive measure.
‘Heritage overlay can be a positive thing as it protects Edwardian, Victorian and art-deco homes, so generally speaking they are a good thing as it protects the history of the home,’ he said.
Mr German stressed to Daily Mail Australia that heritage overlay is a positive measure
‘It becomes problematic when heritage homes become so run down, the cost of renovation becomes impossible to know.’
Mr German said it applied to this home as the double-fronted Victorian house had sat vacant for more than 50 years.
He said the cost of repairs can’t be correctly estimated, so it negatively impacted the asking price of the property.
Another instance of when heritage overlay can have a negative impact is when a home has been built before the overlay was put in place.
That means the modern home, which is not in line with the other homes in the area, is held to the the same restrictions as older properties.