Grab a home-ground advantage
THE tax burden on new housing in Tasmania is massive. As much as 40 per cent can be added to the cost of a new build by direct, indirect, hidden and ambiguous taxes.
Add to this the cost, frustration and delays caused by constipated bureaucratic processes and red tape that ties developers in knots, and it is little wonder we have a problem.
There are direct taxes (GST, stamp duty, land tax, council rates), as well as hidden and ambiguous taxes (excessive infrastructure, zoning restrictions and planning delays and uncertainties). The burden in Tasmania is about 40 per cent of the construction cost of a newly built dwelling.
For a build of $300,000, the extra cost is about $120,000, according to Housing Industry Association senior economist Shane Garrett.
Among the biggest delays and impediments to development is local government, which shows no understanding that delays add costs to developments.
Having a large supply of land blocks available would solve many of the problems with supply and affordability.
Many opportunities exist to develop blocks in fringe areas where services already exist. The current urban growth boundaries should be reviewed, and neighbouring titles amended where existing infrastructure and capacity exists or can easily be provided.
The Government and community have nothing to lose by doing this, because it would involve private investors and developers using their own funds to provide additional land and housing that would be controlled by natural market forces of supply and demand. This would provide a lot more housing stock in the medium term, which should in turn regulate prices and allow Tasmania to grow.
Rules should be changed to allow ancillary dwellings, dual-occupation homes and micro-apartments to be developed quickly at higher densities.
Allowing high-density zoning within existing residential zones — when it is to provide a mix of social housing — would make projects viable for developers.
Urban growth boundaries need to be reviewed to identify greenfield sites for development where infrastructure needs to be constructed or upgraded.
Planning authority should be removed from all councils and given to a State Department of Planning, Development and the Environment, which could operate through Service Tasmania offices. This would provide a consistent approach and remove the impediment of aldermen and councillors sometimes basing decisions on emotion and personal preference, rather than compliance with the planning scheme.
This should also provide faster assessment and approval times, which can be painfully slow.
Blockages that slow or prevent development applications for subdivisions and unit developments — such as costs, funding or timing — could be removed by establishing a means for the State Government to engage directly with developers.
One way to help get these projects and remove the “blockers” could be by establishing a Premier’s Development Fund to provide loans or pre-sale deposits to developers to get projects off the ground.
These loan funds could be recycled every 12-18 months, depending on the length of the project, to provide support for growth and development.
Re-sale deposits could be used by the Government to add to their existing housing stock.
Paying and releasing these deposits to developers would allow projects to be started earlier, overcoming funding as a major problem for developers.
Existing residential sites suitable for Government and private development should be identified for infill development. Incentives could be provided through the Premier’s Development Fund so sites could be developed sooner.
Apart from initial funding and incentives to get projects off the ground, the remaining work and investment would be done by private developers. There would be very little risk or work required from the Government to produce more housing stock.
Though a great deal of land rezoning is necessary, the process is ridiculously long and the time taken must be massively reduced and the process overhauled.
The planning processes for modest residential developments are scandalously slow. It takes many months to process development and building approvals. This is extremely frustrating and often costly, frequently resulting in a development not proceeding.
The time taken for small residential developments — say, between two and 12 residential units — is taking many months and sometimes years to gain approvals, due to antiquated bureaucratic processes.
There is a reluctance to make decisions, unless paperwork has legal opinion that gives a council the confidence to decide. In many cases, these small developers simply give up.
There is a gross lack of resources in council planning departments. Statutory timeframes should be provided for development applications and building plans to minimise abuse of the Request for Information (RFI) process. To speed up the process, all departments should assess or review applications at the same time, rather than in order through the various departments.
Many RFIs are just unnecessary revenue-raising costs. For example, traffic impact statements and bushfire assessments are required for developments, when these have already been provided as part of a prior subdivision approval.
TasNetworks’ role needs to be reviewed. The costs and delays caused by the TasNetworks monopoly should be deregulated and competition introduced.
If planning stays with local government, one dedicated planner should be assigned to each proposal, so the procedure is streamlined, not stopped just because someone is on leave. As things stand, the approval and handover process can come to a halt because a council officer is on holidays or unavailable.
Developers run full-time businesses and costs don’t stop accumulating just because someone is on leave.
Hank Petrusma, a director of EIS Property, has been in the real estate industry for 47 years. He was the member for Hobart in the Legislative Council from 1982-92, and has been a patron and supporter of community organisations, including foundation chair of Common Ground, which developed accommodation for homeless and low-income Tasmanians.
The planning processes for modest residential developments are scandalously slow