23 April 2010
Legislation introduced into parliament by the NSW Government yesterday will help preserve NSW’s pipeline of development projects, according to the Urban Taskforce.
The Urban Taskforce’s chief executive, Aaron Gadiel, said that the absence of credit is currently a major hurdle preventing many development projects from getting underway.
“Despite their best efforts, many developers have been unable to proceed with long-planned projects because their creditor has abandoned them,” Mr Gadiel said.
“There has been a lack of willingness from major banks to extend credit to many new NSW projects.
“When credit is available, in many cases the terms have been so prohibitive that pending projects have been left unviable.
“As a result, some developers are finding that the development consent may expire, before they have had an opportunity to commence works.”
Development consents are typically issued for either 2, 3,4 or 5 years. If work has not physically commenced within that time, the consent will lapse.
Under the current law, existing development consents issued with an expiry date of less than 5 years can only be extended by an additional 1 year, with the approval of the council. Neither a council, or the Land and Environment Court currently have the discretion to extend the life of an existing development consent for a further period. It is not possible to extend a 5 year development consent at all.
“When a development consent lapses, a new development approval will only come with considerable cost and delay,” Mr Gadiel said.
“This burden cannot be absorbed in these difficult times for the NSW industry.
“If development consents were allowed to lapse, NSW could be deprived of a ready pipeline of approved shovel ready private sector projects.
“This would further delay any recovery in private sector construction activity.”
Mr Gadiel said the legislation was a positive move by the NSW Government.
“This is a sensible step to help the NSW private sector keep construction activity going, as the Federal Government’s economic stimulus begins to wind down,” he said.
“We hope the legislation is supported by the Opposition and the crossbench members of parliament.”
In the last two years the number of new private homes under construction in NSW fell by 19 per cent to a new record low of 24,000 homes. In the same period the real value of non-residential private building activity in NSW has fallen by 16 per cent.
The Urban Taskforce is a property development industry group, representing Australias most prominent property developers and equity financiers.
For every $1 million in construction expenditure, 27 jobs are created throughout the broader economy.
The construction activity made possible by property developers contributes $78 billion to the national economy each year and creates 849,000 direct jobs.
