So, you want to take on a heritage property?

So long as a property’s heritage values are respected, the planner stated that it is possible to “leverage off those values to obtain a financial return”.

Shannan Whitney, director at Sydney real estate group BresicWhitney, concorded with this view, noting that heritage properties are at no more risk of overcapitalisation than other properties.

“If anything, making strategic and high-quality updates to a heritage-listed property either at time of sale, or soon after an owner has purchased it, often ends up adding value in the future,” the director observed.

But heritage properties nevertheless raise unique challenges for investors seeking to refurbish them for sale or lease. Mr Bartinel and Mr Whitney ran through their key tips and warnings for brave investors who would like to take these historic properties on.

1. Choosing a site

Heritage management practices vary substantially from council to council, so savvy investors should start by identifying a local government area (LGA) that is likely to be amenable to the development.

However, this does not mean seeking out councils that are careless in enforcing heritage laws. Mr Bartinel observed that “a council that takes a lax approach to heritage might potentially be inconsistent, under-resourced, or prone to taking irrelevant matters into consideration.”

Instead, the town planner recommended seeking out councils that have “good quality information about its heritage listings” while also maintaining a commitment to increasing housing supply.

Signs of a potentially uncooperative council include “approaching heritage on an incoherent basis so as to restrict development for other reasons” and imposing heritage orders without sufficiently inspecting the property.

2. Planning and design

When it comes to developing a heritage property, research and time management are essential. For many investors, time is of the essence, but heritage properties can throw up unforeseen delays.

In NSW, for instance, a heritage listing can sometimes prevent the issuing of a complying development certificate (CDC), meaning that “if development consent is required, such as for a fit-out and change of use, then there is likely to be a significant delay”.

It is also essential that an investor is willing to pay for an experienced architect and structural engineer with heritage experience. Without this, not only is a design likely to be poorly thought-out, a sensitive design may also get lost in translation without sufficient documentation, leading to council refusal.

Finally, Mr Bartinel warned that “investors taking out a lease on a heritage-listed property for commercial purposes often make incorrect assumptions about their ability to readily address disabled access, fire regulations or other technical issues”.

“There will need to be trade-offs – a solution to an accessibility issue might not be optimal from a heritage standpoint,” he stated.

3. Community consultation

Heritage properties are a source of identity for many communities, and changes to these beloved landmarks can frequently be met with resistance. For investors seeking to redevelop a heritage-listed property, careful and sensitive community consultation is, in Mr Bartinel’s view, “absolutely key to the project’s success”.

Taking the example of a consortium of investors on Sydney’s lower north shore who successfully converted an Arts and Crafts Federation manor into a childcare centre, Mr Bartinel noted that the project’s champion “took surrounding residents through the property and talked about its internal features and the way in which he intended to renovate or adapt them”.

“He listened to what the residents thought about the design and demonstrated that he cared about the property’s heritage values,” the planner recalled. “That gave the residents a sense of inclusion and of them being active project participants.”

4. Refurbishment

When it comes to the nitty-gritty of renovating a historic property for sale or lease, Mr Whitney observed that developers should “complement its heritage features, not detract, or try to hide them”.

“Be sympathetic to the property and its history, and its location,” he warned. “Don’t try to turn it into something it’s not.”

According to the real estate director, it is essential that refurbishments ensure a property’s “long-term structural integrity and suitability for a new owner to move in”. Cosmetic updates might include flooring upgrades, paintwork, lighting, landscaping and restoring bespoke heritage features like architraves.

Mr Whitney pointed to the example of one recent property he sold, a sandstone 1860s cottage in Sydney’s inner west, where even the gardens were created by a renowned heritage landscape architect who used plants listed in Governor Macquarie’s catalogue.

“Many times former owners will have already invested time and money into restoring it and preserving its charm,” Mr Whitney emphasised. “Most astute buyers and investors understand this.”

5. Marketing

Heritage properties have a niche market, and Mr Whitney stresses that it’s vital to take this into account when developing a marketing strategy for sale or lease.

“We know that heritage properties are not for everyone,” he shared. “We treat our sales strategy as such.”

This might mean connecting with potential buyers via off-market platforms in order to link up vendors with buyers who “we are already talking to and know will have interest in the home,” stated Mr Whitney.

If a property does go to market, Mr Whitney underscored the importance of “not hiding or masking the true condition or state of a property.” It is crucial, he emphasised, to “photograph and represent all homes authentically”.

“It’s not only a better experience for those coming to see a property, but it sets the foundations of building relationships that are authentic, accurate and based on trust,” he said.

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