IT’S slow, it’s uncertain and it’s costly. That’s how property industry players describe the processes for gaining approvals for new developments.
It doesn’t matter if the development is in the outer suburbs or the inner city – the same problems keep recurring.
Having worked with many land developers, m3 Property managing director WA Gavin Chapman sees a litany of issues.
“Our land is expensive to get on the market because of regulatory controls, infrastructure costs, environmental constraints, holding costs … it is just ridiculous,” Mr Chapman said.
He was particularly critical of the process for flora and fauna studies needed for new sub-divisions, which he said created major risks for developers.
“You’ve got a three- to four-month window to study those things – it could be sun moths, possums, parrots, rare orchids – and if you miss that window, you have to wait another 12 months, and you can’t get that land on the market,” Mr Chapman said.
Another significant cost was the provision of infrastructure, which can encompass everything from road and water supply upgrades through to public open space, which has to be landscaped, with street art and furniture, and maintained for three to five years before it is handed over to the local council.
“The cost of producing land here is ridiculously high, because of those fixed costs, the environmental constraints and the time lags (and funding costs) those things put on a sub-division,” Mr Chapman said.
Pindan director of development & management Nick Allingame said similar issues arose in the context of infill developments in established suburbs.
Part of the problem was the ‘nimbys’ (not in my back yard), but Mr Allingame said the problem ran deeper.
“The first developer to come along and build anything of decent scale is lumped with all the upgrade costs of infrastructure,” he said.
“So you look at it, and you think why would you bother investing your money because you’ve got no certainty if you’ll get approvals and then you’re going to cop this bill before you’ve even put a spade in the ground because of all these infrastructure upgrades you’ve got to pay for.”
Roberts Day managing director Deon White said there have been efforts to address these problems.
“There have been significant efforts through the WA Planning Commission, the Department of Planning and industry to streamline the approvals process in line with the COAG reforms, and the supporting legislation introduced in 2010 will particularly help free up infill opportunities,” Mr White told the forum.
‘‘Notwithstanding there is still a lot of agency crossover, particularly with the Commonwealth environmental provisions and too often multiple agencies involved in the same issues.
“There also needs to be a balance between streamlining of process and allowance for innovation.
‘‘Perhaps a basic compliance approach but with performance based options that reward innovation with incentives in approval time and other development conditions.’’
Mr Allingame agrees there have been efforts to improve processes, but found a big flaw.
“There has been a big focus on planning reform, which is good, but where they have let themselves down is implementing the proposed reforms,” Mr Allingame said.
“Directions 20131, for instance, is a good document but where it has got lost is, how are we going to make sure it can actually be implemented?”
Mr Chapman has also encountered major shortcomings when governments have tried to deliver improvements.
“About six months ago the (state) government engaged in this discussion about flooding the market with land supply to bring down the price of land,” he said.
“But has the government thought through the logistics of providing the infrastructure to do it? It doesn’t have the capital, and the time constraints are inconceivable,” he added, citing problems around Baldivis as an example (see Pipeline issues muddy waters at Baldivis).
Local councils continue to frustrate many people in the property industry, who argue that the insistence on operating at arm’s length from developers and following strict processes adds substantially to the cost of projects.
“If developers did it themselves it would probably be 20 to 30 per cent cheaper,”
Mr Chapman said.
In some cases, the problem has been worse. “There are a lot of local councils that can’t even decide what the infrastructure costs should be,” Mr Chapman said.
“They’ve got interim schemes in place where they say ‘we want you to pay infrastructure costs, and we’ll tell you later what we want you to pay’.
“So the developer could have a contingency for $23,000 a lot or it might be $6,000 a lot. They don’t know what their infrastructure costs will be.”
Mr Perrin said while developers had to meet infrastructure costs up-front, the reality was that the costs are passed through to their customers, including first homebuyers.
“These public infrastructure investments benefit the whole community but it’s all being pinged on one tiny segment of the market,” he said.
Peter Stannard Homes chief executive Trent Bartlett also has concerns about the consistency of local government decisions.
“We deal with 35 shires, and planning approvals can be quick as a flash or it can take three months; that creates a lot of cost and uncertainty,” Mr Bartlett said. “There are some shires that do it very well, and others run as a sovereign state.
“Something has to fundamentally change to free up the bureaucracy in this planning process.
“If we don’t get some big changes, the ability to deliver extra land and infill by 2031 won’t happen; it will be just rainbows and butterflies.”
Realmark managing director John Percudani believes the problem is entrenched.
“Our planning schemes were born in a whole different era, they are highly regulatory, highly statutory; they are not really in a position to accommodate the incredibly fluid nature of urban development and social change today,” Mr Percudani said.
“Things don’t take a decade to change, they are changing very quickly.
“So the whole thrust of our planning approach is not only very complex, it’s fundamentally flawed.
Many of those at the boardroom forum agreed with Mr Chapman’s suggestion that local councils should be removed from the process.
“There is a lot of emotion at a local government level about planning decisions, but they shouldn’t be about emotion,” he said.
“Planning decisions should be based on a project’s planning merit, not on emotion.
“So take the local government layer out of planning, put it with state government, and let it be run by a body of professionals who make decisions on reasoned planning grounds.”
The state government has introduced development assessment panels, or DAPs, to try and get a better outcome.
While welcoming this initiative, the forum participants felt that DAPs had unduly limited powers.
“DAPs are a sound mechanism but have been limited in some areas because of the age and scope of some of the existing town planning schemes,” Mr White said.
“The reality of what can be achieved from an architectural quality and public benefit point of view is often compromised by outdated provisions for land use, height, density and parking ratios. These are the things that make a difference to the commerciality of a development.”
Mr Allingame agreed that rules around parking were particularly out-dated.
“Parking is a cracker. It doesn’t matter if you are building apartments next to a train station, you are still obliged to provide car bays,” he said.
