What is Zoning?

Zoning is an urban planning tool used by the government to allocate segments of the land within towns and cities, with each segment assigned for specific uses, rules and regulations. For example, certain areas such as Kampong Ubi, are designated as industrial estates, while others such as Bishan, are regarded as residential areas.

Initially, zoning was used as a means to protect the health and safety of communities. For obvious reasons, you would not want a sewage plant built within your neighbourhood, and zoning laws and regulations prevented that.

Now, zoning is used by governments to promote economic development, create residential communities with sufficient complimentary amenities, protect wildlife and environmental resources, etc.

Why is Zoning Necessary?

Zoning allows local and national governments to regulate the use of land to ensure that the types of facilities within an area complement each other to make for more efficient outcomes and for the overall betterment of the community living experience. For example, zoning allows governments to dictate certain areas to be residential areas, have amenities such as public transport, hawker centres, shopping malls and healthcare facilities located in proximity to these residential areas, with industrial and commercial buildings situated further away from the residential areas.

Without zoning laws or regulations, buildings for varying use would be built haphazardly without a proper plan and this could negatively impact the lives of residents. Not only would essential amenities such as food and healthcare services be located far away from residential areas, it could also result in highly disruptive living environments. How would you feel if you reside beside a noisy entertainment park, or have your child go to school located amidst industrial buildings? Not a pleasant or safe environment, I would imagine. Therefore, zoning is an important strategy to regulate land use and foster a long-term planned development.

In an effective zoning strategy, governments use a master plan which demarcates the segmentation of the land and the purpose for each segment. The master plan takes into account factors such as population size, transportation needs, local industries, need for amenities, etc. A well thought out master plan and effective zoning allows for efficient usage and development of land over a long time horizon.

Economic Theory of Zoning

Even though zoning is a common practice across the world, is it truly necessary? Economist Ronald Coase’s Theorem states that when there are no transaction costs, perfect information and equal market power, parties are able to resolve their disputes regarding land development efficiently and without any government interference, coming to the most optimal solution.

However, in the real world, there are bargaining costs, imperfect information, market dominance etc., which affect and influence the ability of stakeholders to reach a socially optimal solution. Therefore, zoning and other similar regulations are required to ensure that optimal outcomes are achieved and to safeguard the interests of all relevant stakeholders.

Issues Created by Zoning

Notwithstanding the benefits zoning provides, it is not without its flaws. Some claim that zoning creates and widens the disparity between socioeconomic groups in the form of exclusionary zoning. For example, a city may have zoning laws that limit the type of homes that can be built in particular areas, with minimum size requirements, limits on height, etc. This prevents lower-income families from purchasing homes in the area due to the higher costs, thus making it difficult for lower-income families from being situated in these neighbourhoods. This creates enclaves that segregate higher-income households from those of lower-incomes, thereby impacting any initiative to encourage and nurture an inclusive society.

Zoning also creates potential disputes when there is a need for rezoning. For example, when a residential area is rezoned to an industrial zone, the residents who are currently staying there will be required to relocate. Other residents who live in adjacent areas will now have to reside near an industrial area, which is then unfavourable for them.

Deviating from Zoning Laws

Deviations from zoning laws are possible without fully changing the legislation itself. As an owner or property developer, you can apply for deviations from zoning regulations. For example, you can make a request for approval to convert your terrace house situated in a housing estate into a childcare facility. All you need to do is to apply for a change of use to the relevant authorities citing the reasons for requesting the deviation and how this change could enhance the surrounding community and not detrimentally impact it.

Conclusion

Zoning is a useful tool adopted by governments and urban planners around the world to organise and plan the community and surrounding environment we live in. Although zoning has its flaws and can potentially cause some unintended consequences, it is still widely regarded as perhaps the best approach to regulate and instill the most effective and efficient use of land and to foster planned and vibrant townships.

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Disclaimer: The information and/or documents contained in this article does not constitute financial advice and is meant for educational purposes. Please consult your financial advisor, accountant, and/or attorney before proceeding with any financial/real estate investments.