[+] Carrot or Stick: What the ALP Win Means for NSW Development

The ALP victory in the NSW election at the weekend has turned mainland Australia red for just the second time in its 120-year history. But state government changes often mean changes to the ways planning and development take place. So what does the win at the polls mean for developers? More importantly, what opportunities do they see with a new party in the driving seat? Deicorp’s executive manager corporate communications Rob Furolo says that the priorities of the new NSW government should first and foremost be geared towards alleviating “severe” housing problems. “There is already huge pressure on household budgets as rents rise faster than wages with rental vacancy rates across Sydney set to fall below 1 per cent,” Furolo says. “To their credit, the incoming Minns government seem focused on a holistic response to the housing crisis and have committed to working with the construction and development sectors to fix the problems. “But whatever solutions are contemplated to fix the housing crisis, they will not succeed unless they include a dramatic increase in the supply of housing.” Waiting to see what policies make the cut and what gets reshaped may take some time but hopefully not too long as Minister Paul Scully confirmed exclusively to The Urban Developer following a landslide victory. “NSW Labor is busy putting together the infrastructure of the incoming government,” he says. “We remain determined to implement the commitments that we took to the election. And we look forward to working hard to give New South Wales the fresh start that they voted for on the weekend.” Pre-election promises In the run up to the state election , NSW Labor promised to merge the Land and Housing Corporation, the Aboriginal Housing Office and the Department of Community and Justice Housing into a new body, Homes NSW. The then NSW ALP shadow minister for planning Paul Scully said this would allow faster development, oversight and upgrading of housing so tenants, residents and others were not waiting for outcomes. “There are currently more than 30 agencies, not including utilities and local governments, who touch on the planning system in one way or another and have some sort of responsibility,” Scully said. “So what we would do … is bring those agencies and responsibilities under the responsibility of the Minister for Planning and get projects going.” ▲ Incoming NSW planning minister Paul Scully. Abolishing stamp duty had also been raised as a means of fixing housing affordability. NSW Labor’s plan had been to abolish it for first homebuyers buying property valued up to $800,000 with a concessional rate for those buying property under $1 million. It estimated that 95 per cent of all first homebuyers would be assisted under the plan, something the NSW Liberals disputed with rising house prices. The party also indicated it would scrap the recently introduced first homebuyer choice subsidy scheme, which cost $800 million. If this change goes ahead, the scheme will have been in force for just two months after its introduction in January this year. Other means of addressing the housing crisis also put forward included spending $30 million on build-to-rent housing at Nowra on the South Coast. Changes to rules for renters to make it easier to have pets were also flagged as were a portable bond scheme for renters and a mandate that 30 per cent of housing built on surplus government land must be social, affordable or universally accessible housing. The former Liberal government's introduction in 2022 of funding to assist with the cost of trunk infrastructure in peri-urban and regional areas is also in the crosshairs. Many councils experienced an increase in the demand for housing as their populations ballooned during and post-pandemic. But though they rushed to unlock farmland for housing, councils were unable to borrow finance for or bear the cost of the trunk infrastructure needed to support more people on the land than previously expected. This created delays as developers also balked at fronting the costs. ▲ Recruiting planner for local government will be one the issues facing the incoming NSW ALP government. Affordability has been a hot-button issue after Sydney was once again named the world's most expensive city, while the social housing waiting list in January this year was around 57,000 people, vacancy rates were low, and just 13 of the 33 Sydney-based councils had met their housing targets. What the development industry wants to see Deicorp’s Rob Furolo says they particularly welcome the new government’s focus on delivering more housing at or near Metro stations and transport hubs. “This approach is appropriate and sensible, and will deliver the housing supply so desperately needed,” he says. Property Council of Australia acting NSW executive director Adina Cirson agrees. “We saw a number of announcements from NSW Labor which were very much in our wheelhouse,” she says. “We are focused on making housing supply, access and diversity our Premier’s priority and the first step must be to address affordability and supply in the state. “Our housing targets are well behind, more than 100,000 homes behind, in fact. “We need planning reforms to deliver higher density around transport hubs and to ensure housing targets are matched to infrastructure, in addition to the streamlining of planning.” ▲ Urban Taskforce chief executive Tom Forrest says a carrot and stick approach is needed. Other organisations echoed these sentiments. Urban Taskforce chief executive Tom Forrest says that there are key issues that the new state government now has the opportunity to address. “To get anything done with councils and for development you need to have carrots and sticks,” he says. “The carrot needs to be an active reward for councils to achieve on housing supply [but] because it causes local issues they are reluctant to allow it to happen. “If you make it attractive for them and give them funding for parks, bridges and so on for achieving those targets, they could tap into that to make it worthwhile. “If that can be matched with a Commonwealth fund you can deliver some serious numbers.” Overly constricting design guidelines are also hurting development and the provision of housing, Forrest says. “There are 220 pages in the NSW design guidelines. In Victoria this is 60 pages and in Queensland it’s a few pages. Clearly, apartments being built there are not slums. “We are over-prescribing to the point where we are making houses unaffordable. “We don’t need to throw the guidelines out the window but they need to be seen as a guideline not a rule book.” Affordable housing will only be viable if height and floor space ratios (FSR) are increased, as well as allowable density, with a move away from “old-fashioned” segregation of areas by land use, Forrest says. “In places like St Leonards, they dropped heights and density by 30 per cent. “Increase them and that then effectively provides a reward for the developer and a reward for the community. The downside is that buildings will be higher, but if we have more population, then houses are going to get bigger, we can’t just keep spreading out and out.” ▲ Who should handle DAs, the state or local government, will be a hot topic for the incoming NSW government. State or council led? Whether development application assessment should be council or state-led has prompted considerable controversy in the run-up to the election. “The previous government talked about the state government leading those processes around bigger projects because councils find it difficult to get state government agencies to even return their phone calls. So the state government is better placed to do those assessments,” Forrest says. Given that the Queensland government recently heralded the manufacture of prefabricated homes, Forrest believes that the NSW government is limiting itself and developers at a crucial time for housing supply. “Manufactured homes are a cheap way of providing housing. They’re certainly not caravan parks but they are banned within the whole Sydney basin. It’s the whole market in Japan and they’re used widely in Queensland—they should be an option in here.” But there are still uncertainties. “We’re keen to have a more detailed discussion around what Homes NSW can do,” says the Property Council’s Adina Cirson. “What is the government approach that is going to be taken? The remit for Homes NSW should be broader than affordable or social housing.” There should also be a focus on up-and-coming sectors and their tax implications, she says. “What we are keen to get more of is built-to-rent. We have a rental shortage impacting so many people, particularly in the regions which alternative asset classes like built-to-rent and student accommodation could help - but we need to have the tax settings right. Paul Scully told The Urban Developer in January that the build-to-rent sector was of keen interest to NSW Labor. “We’ve also committed $30 million to a build-to-rent trial on the South Coast and that will help us to to develop a model for build-to-rent and we believe that will be successful and will give us an opportunity to to roll it out to the rest of the state,” he said. Cirson is also concerned about the potentially short-lived changes to the stamp-duty scheme for first-home buyers. ▲ Incoming NSW premier, Chris Minns. “The final thing is that the Coalition had implemented a scheme changing the way stamp duty was collected, including annual fee and upfront costs. “There’s a detailed discussion we’d like to have with the new government, as I did note they opposed that and would wind that scheme back, so what does that mean for people who have already committed?” But the industry is hopeful that a new state government will make material changes to improve the ability of developers to move ahead with much-needed projects. “Other ministers were protective of certain areas and you got decisions which were mainly politically oriented,” says Urban Taskforce’s Tom Forrest. “That’s inevitable when you want to get elected but it would be great if a minister did what was best for Sydney. “I’m very encouraged by certain things but am I confident? We will have to wait and see.” You are currently experiencing The Urban Developer Plus (TUD+), our premium membership for property professionals. Click here to learn more.

[+] Carrot or Stick: What the ALP Win Means for NSW Development

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