As we continue our conversation with guest Mark Percy, we come to the diverse topic of planning which is clearly another key factor that occupies a central role in property development and for anyone working in the NSW market, it is a subject that is almost never out of the headlines.

It’s impossible to overstate how critical this subject is and planning is, according to Mark, another of the ‘big issues’.

“For the development sector the current planning controls and process, particularly in NSW, are ‘onerous’. This is in contrast to Victoria where controls are less prescriptive.

Cromwell Road, South Yarra, Melbourne“In Victoria, the more flexible controls have contributed to making new homes more affordable. There is not the equivalent of NSW ‘State Environmental Planning Policy No.65 – Design Quality of Residential Flat Development’ which has had major impacts on design outcomes and costs. The more flexible design criteria in Victoria is making the planning process faster and, importantly, more efficient.

“The Victorian combination of less restrictive planning controls and faster determination of planning applications, helps to make homes more affordable because the time lines to deliver a completed project are reduced. I can appreciate that planning has a central role for all levels of government, there is no argument there, but in NSW the result of the delays and the more protracted process has not necessarily resulted in better built form outcomes.”

“If there were some sort of significant tangible up-side benefits, then the delays might be more palatable, but there’s little up-side.”

According to Mark, when you look at how dwelling commencement figures keep falling, in particular in NSW, then every part of the delivery process needs to be looked at very carefully to stimulate new housing development.

“It has to be realized that, for example, for small developers or private individuals, the complexity of the planning process is very difficult to understand and work through. What aggravates the point is that in some circumstances the planning issues encountered are not major. But they can, and do, tend to simply fall into a minefield of interpretation requiring numerous consultants reports to be prepared and extensive consultation with the community, authorities and other stake holders. The cost and time to go through this process are disincentives to creating new housing.

But in Mark’s direct experience, moving on from small developers, there is also a very real impact on even the biggest developers, because size or resources gives no sort of immunity to the concerns being discussed.

There is some evidence to suggest that some developers, both small and large, are leaving the development field, reducing activity or radically changing their business models to focus on areas where the planning risk is reduced. The gaps they leave behind are not being filled by new entrants to the residential development sector; the financial implications and risk associated with being a developer post GFC make it difficult to enter the industry and this just further adds to the low levels of activity and falling construction numbers.”

Taking this topic to its logical conclusion, Mark Percy believes that the impact of planning system delays needs to be fully understood by everyone involved. This is not a small issue and there is clearly a need for good planning controls. Because of his role with Cbus Property and previous experience with a range of other major developers, Mark is keen for some robust debate that would involve all industry players, both government and private sector, that are directly impacted.

According to Mark: “This is not about conflicting ideology, the industry simply wants to get the job done but planning and on-cost issues are clearly hindering progress.”

As Mark has already pointed out, this is not a subjective discussion, because, above all, planning concerns are centered around timing – time delays clearly cost money, day in and day out. For the development industry, where extensive capital investment is involved in the planning process, delays are not simply eroding margins, they may ultimately result in the project not proceeding.

Delays can extend by any number of multipliers, months and even years and all the while the end cost of the project, is increasing making the project less viable in the next post we will look at some possible solutions.