Short-term development approvals are devaluing properties before they are even built, says the industry.
The Urban Taskforce is calling on the NSW state government to “urgently” introduce special legislation automatically extending the life of all development consents by two years.
A blanket extension to development approvals will be “crucial” to economic recovery, the group said.
Many developers are unable to proceed with long-planned projects because their bank has abandoned them, Urban Taskforce’s CEO Aaron Gadiel said.
“When credit is available the terms are so prohibitive that very few projects are viable,” Gadiel said.
Developers are now starting to run up against the existing provisions of the state’s planning law that cause a development consent to lapse, after five years, when it is not acted upon, he said.
“In some cases local councils have required project commencement within three years of issuing a consent,” he said.
Councils don’t have the discretion to extend the life of an existing development approval beyond the mandated five years. And, when a development consent lapses, it generally results in an “immediate devaluation” of the property concerned, Gadiel said.
This will, in turn, weaken the financial position of the developer and further reduce the chances of the development proceeding.
“If we are going to build our way out of this economic slowdown then action is urgently needed to safeguard the position of projects queued up, ready-to-go when credit conditions return to normal.”
