You are at a seminar. Someone slides a brochure across: cheap land, a small option fee, and a rezoning story that is meant to make everyone rich. That product is what most people mean when they search land banking Australia. It is not the same as buying a dual-occ or townhouse site you can settle, control, and run through a feasibility before you spend on consultants. I buy on the second path. This article separates the two.
What land banking Australia usually means
MoneySmart describes land banking as an investment where returns depend on undeveloped land increasing in value, being rezoned, or getting development approval. Developers may buy land, divide it into smaller blocks, and offer investors a plot or an option to purchase a plot. The option is usually triggered when the local council approves development.
The marketing often lives in property spruikings and investment seminars: high-pressure rooms and rushed sign-ups. Consumer Affairs Victoria notes that developers often sell from concept plans not yet approved for subdivision. There is no guarantee of rezoning. You can end up with land you cannot build on, or cannot resell at a profit. That is a different product from a site you own after settlement.
Why ASIC and MoneySmart treat it as high-risk
MoneySmart's live page (last updated 1 September 2026) is blunt: investing in undeveloped land can be high risk, and there is little protection if something goes wrong. Developers can mislead about rezoning. Some offer land without knowing whether council will approve. Some fail to disclose development restrictions. Without approval, the investment can be unsaleable or worth less than you paid.
Planning can take many years and a lot of money. Legal and planning costs can eat the funds meant to support the development. If the operator becomes insolvent, option holders can lose everything. MoneySmart notes that a number of schemes have collapsed in Australia and overseas without the promoted development ever proceeding. Option agreements can expire under a sunset clause if the land is not rezoned or developed by a set date, and investors can lose the option fee if there is not enough money left to repay all option holders. Legal fees and commissions may not be refunded.
Promoters may refer you to lawyers, accountants, or advisers they already work with, who may have a personal interest in the development. Get advice from a solicitor or licensed adviser you chose, not one the promoter booked. If the investment is a managed investment scheme, you must get a PDS. If it is not regulated as a MIS, you may have fewer protections. Check ASIC Professional Registers for AFS licence status rather than trusting the brochure.
Court history sits beside that guidance. In *ASIC v Askk Investment Group Pty Ltd* [2020] FCA 1150, an unregistered MIS promoting Beveridge, Victoria land raised about $11 million from more than 200 investors in later reporting, and could not proceed after the land contract was avoided under Sale of Land Act s29F. In *ASIC v Midland Hwy Pty Ltd* [2015] FCA 1360, the Hermitage Bendigo matter involved roughly 700 retail investors in option deeds and about $24 million raised (figures as reported in the case and contemporary coverage). Those are ASIC and court outcomes, not a claim that every land holding is a scam. Direct ownership of a site you can settle, with a feasibility that survives, is a different product from a seminar option over farmland that might rezone in twenty years.
Victoria's trust and five-year rules
Under the Sale of Land Act 1962 as amended in 2019, option money in a land banking scheme must be paid to a legal practitioner, conveyancer, or licensed estate agent and held in trust. Option agreements automatically expire after five years if the trigger does not occur, and the purchaser is entitled to a return of fees. Penalties for failing to put option money in trust sit above $39,000 (240 penalty units) or two years' imprisonment for an individual, and above $198,000 (1200 penalty units) for a body corporate, per Consumer Affairs Victoria. Those rules do not apply to AFS-licensed financial-product options or registered MIS options. A trust account and a five-year expiry also do not turn a bad site into a good one. They protect the money trail. They do not create rezoning or DA approval.
The alternative I actually run: Feaso Filter first
On the development sites lane I source dual-occ, townhouse, and small unit sites. About 60 to 70 percent of deals I secure sit off-market or pre-market. The sequence is Source, Filter, Verify, Acquire. The filter kills more deals than it passes. That is the point.
The Feaso Filter™ is gross realisation value, build cost, margin, and sensitivity. GRV is what the finished dwellings are worth on a conservative sell-down. Build cost is a builder-grade number. Margin is what is left after land, build, holding, selling costs, and contingency. Sensitivity asks what happens when GRV softens or build cost lifts. If the deal only works on the optimistic case, it does not pass.
Illustrative example only (not a live quote, not a guarantee): a dual-occ site at $650,000 purchase. Conservative GRV for two townhouses at $850,000 each ($1.7 million). Build and soft costs at $700,000 all-in. After stamp duty, holding, and selling costs, the residual margin has to survive a sensitivity haircut. If a 5 percent GRV drop or a 7 percent build blowout deletes the margin, I walk. Smaller sites get a one-pager. Bigger plays get a full model. The filter runs before you spend on consultants.
Verify is planning and zoning plus DA precedent in the surrounding pocket, not the council brochure. Paperwork can include the Feaso Filter report, a 10-slide JV teaser deck, a planning and zoning brief, and a DA precedent memo. Fee, stated lightly: $5,000 engagement, then a success fee of $15,000 or 2 percent of purchase price (whichever is greater) at unconditional exchange, $20,000 minimum including GST.
That process is closer to how I grade commercial deals than to a seminar option. See what a commercial buyers agent does for Deal Grade on income assets, commercial vs residential property investment for the broader frame, and the property due diligence checklist before any contract.
SA planning, four-state coverage, and first-timers
In South Australia I work inside PlanSA and SAPPA for zoning, overlays, and what the code allows on the parcel. Interstate coverage on the live development lane is VIC C1Z, NSW R2/R3, SA Township, and QLD LMR. Same filter logic. Different planning systems. A dual-occ on a code pathway in a pocket with recent DA precedent is a different risk stack from rezoning hope on rural land. Start where neighbouring approvals already show the answer. If the buyer is an SMSF, commercial or business real property is the remaining borrowed path under current LRBA settings (SMSF commercial and LRBA rules). Post-2027 new-build settings are a separate modelling layer if you are planning dual-occ supply after those changes (new-build exemption and negative gearing).
Own project call-out: Dry Creek
I am not selling farmland options. When I talk about Feaso-style discipline at scale, I point at my own capital. In February 2022 I bought 8,928sqm of Strategic Employment land at Dry Creek with two partners for $3.85 million (982sqm office warehouse, 11 percent site coverage). We onsold in December 2023 for $4.75 million with a masterplan and brand before a DA was lodged. That is Receipt 03 on the results page, and the write-up is in commercial property value add. Own project. Own partners. Not a client engagement. The transferable lesson is the filter and the planning read, not a promise that every site behaves like Dry Creek.
Practical checklist before you pay anyone
Before an option fee or seminar pitch: Are you buying land you can settle, or an option that only triggers on rezoning or DA? Who owns the land, and where does your money sit? Has the local council, contacted by you, confirmed any realistic pathway? Is this a MIS, and where are the PDS and AFS licence? What is the sunset date? Did you choose your own solicitor, or did the promoter book one?
Before you buy a development site: Does GRV, build cost, margin, and sensitivity still work after a conservative haircut? What DA precedent exists in the immediate pocket? Can you settle and control the title? Who is the builder-grade cost source? If JV capital is involved, does the teaser deck match the Feaso numbers you signed off?
Book a strategy call
If you have a dual-occ, townhouse, or small unit site in mind, bring it. The Feaso Filter runs free on a 30-minute strategy call. If you do not have a site yet, bring the brief and we talk sourcing.
Frequently asked questions
What is land banking in Australia?
Investing in undeveloped land where returns depend on value growth, rezoning, or development approval. Schemes often sell plots or option agreements, sometimes from concept plans, with the option triggered when council approves development (MoneySmart).
Is land banking illegal?
Not automatically. Direct ownership of a site you can settle is lawful property dealing. Problems arise when schemes are unregistered managed investment schemes, when option money is mishandled, or when promotions mislead about planning prospects. Victoria requires land-banking option money to be held in trust and options to expire after five years if the trigger fails. Always check regulation and get advice from a solicitor you chose.
What is the Feaso Filter?
My pre-consultant screen for development sites: gross realisation value, build cost, margin, and sensitivity. It kills more deals than it passes. Detail sits on the development page.
What is the difference between land banking and buying a development site?
Land banking schemes usually sell hope around rezoning or future approval, often via options and pooled money. Buying a filtered development site means you settle a title you control after a feasibility and DA-precedent check has already survived a sensitivity test. One is a seminar product. The other is an acquisition process.
*General information only. Not personal financial, tax, or legal advice, and it does not consider your objectives, financial situation, or needs. Property investment, including development sites, carries risks such as loss of capital, illiquidity, planning delay, build-cost overrun, and regulatory change. Past results (including own projects) are not a reliable indicator of future performance. Shayne Mele does not hold an Australian Financial Services Licence. Get advice from your solicitor, accountant, or licensed adviser before you act.*
