RZ1 planning changes could increase value of Canberra blocks but prepare for dual occupancy costs

But they say costs associated with building a secondary dwelling could deter some home owners from making use of the new policy.

Under changes announced by the ACT government on Monday, a second, separately titled dwelling of up to 120 square metres will be allowed on any RZ1 block of at least 800 square metres.

The change would apply to almost 45,000 blocks across Canberra.

Tigran Amiyants, a certified property valuer and managing director at Northbourne Valuers, said the changes had the potential to increase the value of RZ1 properties.

"With two separate dwellings, the property becomes more attractive to potential buyers or investors, as it offers the possibility of rental income or flexible living arrangements," he said.

Mr Amiyants said the costs associated with building a second property would need to be weighed up against a project's financial feasibility.

"Homeowners may be required to invest in land surveying, architectural designs, construction, and other associated expenses," he said.

The possible cost to create unit titles could also be a barrier for some owners of RZ1 blocks, Frank Walmsley, director and client services manager at Canberra Granny Flat Builders said.

The costs involved with applying for a unit title and connecting new services could be up to $150,000, Mr Walmsley estimated.

"I don't think people are going to be doing this for profit," he said.

"I think it's going to be people that are empty nesters that basically want to provide an option for their kids."

Mr Walmsley said there was already significant demand for "inter-generational housing on one block".

"I do feel like if the [planning] codes are clever and are consumer-driven then this will open up a lot of opportunities for people that want to stay on their blocks and build something inter-generational," he said.

He said while there was still a lot of detail yet to come, there was a "once in a generation opportunity" to improve the housing sector.

Howard Maclean, convenor of housing advocacy group Greater Canberra, said he was concerned take up of the new policy would be low, given the costs involved.

Based on unimproved land values and lease variation charges in inner Canberra, a second dwelling could set owners back more than $900,000, he said.

"In many cases, it may be better financially for the owner of the block to redevelop the block as a larger single residence (which would pay no lease variation charge and would involve no DA), as the substantial lease variation charge and development application costs may be higher than the gains from the creation of a relatively small second dwelling," Mr Maclean said in a statement.

Savvy developers and builders, however, could also see the changes as a good opportunity.

Josh Finnigan, senior residential sales executive at Civium Property Group, said the changes were likely to make some RZ1 blocks more appealing for development potential.

"With that increased appeal you'd anticipate a somewhat increase in price," he said.

But demand would likely be subdued given the number of blocks the changes will apply to.

"It's going to be such a vast number of blocks that people are still going to be looking at," he said.

"There may be some smaller circumstances where if a block really suits it or it's got a different appeal to it, it may increase a little bit of demand."

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Mr Finnigan is currently selling a 913-square-metre block of land in Weston with an asking price of $990,000.

The RZ1 block at 38 Buvelot Street, Weston already permits a dual occupancy as it formerly housed a Mr Fluffy property.

The majority of buyers who were interested in buying blocks like the one on Buvelot Street were small developers and builders, Mr Finnigan said.

"Generally the vast majority are looking at dual occupancy builds on these types of blocks," he said.

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