Time will tell if proposed changes to NSW planning laws improve housing affordability: Peter Chittenden

Peter ChittendenMay 6, 20130 min read

The New South Wales government has announced a review of the state’s planning laws suggesting some of the biggest changes in 35 years.

A white paper and draft legislation have been released and comments can be submitted until June 28, 2013.

Key among the changes will be how infrastructure is planned, delivered and paid for. For many years infrastructure has been a central concern among planners, the community and developers and has been a reoccurring theme for Project Agenda.

The white paper is proposing radical changes to the infrastructure charges and there is an urgent need for change as the current system can add as much as $100,000 to the cost of a new home. The current levies are seen as a major constraint on improving the level of supply of new homes in Sydney’s growth centres.

Currently developers are charged for, and then pass on, the costs of varied facilities and local amenities to buyers. The system is seen as very complex and expensive and lacking transparency.

Brad Hazzard, the NSW planning minister, has been quoted as wanting a simple and cheaper way of funding infrastructure with a direct link between the contributions and what is actually provided. From the feedback that I have observed, both the development industry and the wider community will welcome such an outcome.

The minister’s plans will limit the role of councils and ensure that money raised will be spent within three years and not simply squired away. This appears to be an overdue policy shift given that 43 Sydney councils have been accumulating $760 million of developer levies. Under the changes, local council will only be able to charge infrastructure fees for specific areas that will include essential roads, drainage and parks, and they will be unable to use levies to fund other projects.

But the big question, that only time will answer, is will these changes and many others contained in the white paper help improve housing affordability?

In theory the answer is yes. Because with new homes getting approval in just 10 days and some apartment projects and land subdivisions getting the go-ahead in less than a month, then in total all of the changes to the DA system are suggested to generate savings of up to $1.7 billion over the next 10 years.

Possible levy on all new homes

However, one aspect of the white paper that also requires some comment is the suggestion that a levy will be placed on all new home construction in metropolitan areas, not just those in new estates. The idea is that this levy will be redistributed and used for Sydney’s infrastructure shortage. The move to cover established areas is new and may impact investors and the knock down and re-build market.

While more and better infrastructure should stand to benefit, the possible levy which has been described ‘modest’ will be another cost that the end buyer may have to bear and is one of the ideas in the white paper that has received a lukewarm response.

But if we get better infrastructure and swift planning approvals then all buyers, property investors and developers should stand to benefit. There is no doubt that this debate will be very much back in the headlines in late June.

Peter Chittenden is managing director for residential of Colliers International.

Peter Chittenden

Peter Chittenden is managing director for residential of Colliers International.
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