29 November 2024 

In this Edition...

1. Tier 1 Accelerated TOD Precincts – a good basis for policy reform – the good, the bad and what can be done

2. Greens wave through Help to Buy and Build-to-Rent Bills 

3. Urban Taskforce honours John Kinsella AM

...and much, much more.

4. Quote of the week 
5. NSW Government Unveils Plans for 1,400 New Homes 
6. APRA Retains 3% Mortgage Serviceability Buffer Despite Industry Pushback
7. City of Sydney takes steps to block feasible housing supply
8. Council watch
9. Urban Taskforce in the news
10. Members in the news

1. Tier 1 Accelerated TOD Precincts – a good basis for policy reform – the good, the bad and what can be done 

Premier Minns and Minister Scully have led the charge with the Housing Delivery Authority and a very welcome new planning pathway for projects with a construction value greater than $60 million (greater than $30 million in regional NSW). Projects that meet the eligibility criteria (to be published mid December 2024) will be assessed by DPHI’s State Significant Development assessment team under David Gainsford and determined by the Minister for Planning (or his delegate).

This new Housing Delivery Authority is a shining light for housing supply – but its three heads, Simon Draper, Kiersten Fishburn and Tom Gellibrand - could have a mountain of work to do following the release of the Transport Oriented Development Accelerated Precinct finalisation reports and associated documents this week.

The HDA is a policy that pushes through red tape, seeks to speed the system up and deliver feasible results which manifest themselves in housing construction.

The Infill Affordable Housing changes to the Housing SEPP have also been a success – as evidenced by the number of applications for SEARs. The reason for its success is that the affordable housing is not a straight “gift” or dedication of GFA to the CHP or the Government.  The Developer continues to own the land, or can even sell it, as long as the requisite GFA is made available to the CHP to manage for the purpose of affordable housing for 15 years.  The developer gets paid the discounted rent, less a further management fee to cover the CHP’s costs.

When the HDA was announced, the key was “optionality”.  No-one was being pushed into this assessment pathway. It is an option (a positive one) for applicants.

TOD Accelerated Precinct announcement – the good

• The completion of the rezonings associated with the Tier 1 TOD precincts have now been completed and the industry now has certainty.
• The Government has acknowledged that the originally proposed Housing contributions were way too high and has reduced the base contribution rate to 3% (dedicated land or cash) in perpetuity.
• There will be no need for a design competition in Tier 1 TOD precincts, provided the applicant is using a quality architect (details to be determined by the NSW Government Architect).
• Projects and sites located within the T1 TOD precincts will still be eligible for consideration by the new HDA.
• For many projects, this announcement will be good news. 

TOD announcement – the bad

• Urban Taskforce strongly opposes the dedication of land or GFA in perpetuity. This TOD policy requires up to 18% on some “key sites”.  This will destroy the feasibility of development.
• All sites located inside the designated Tier 1 TOD precinct boundaries are ineligible for the successful infill affordable housing bonus.  This is different to the 37 Tier 2 TOD station precincts, where applicants are eligible for both the uplift as well as the infill affordable housing bonus provisions. The removal of eligibility for this infill affordable housing bonus provisions of the Housing SEPP for these Tier 1 TOD accelerated precincts effectively means that there are a number of sites that are worse off in terms of permissible housing yield.  Over the last 12 months, many developers have been preparing applications within the Tier 1 TOD precinct areas based on the availability of the infill affordable housing bonus policy of this government.  They had the rug pulled from under them, wasting hundreds of thousands of dollars in the preparation of designs, planning reports and associated application documentation.
• The Tier 1 TOD precinct finalisation reports and associated documentation detail a large number of “nominated sites” where the “contribution” will be much higher – sometimes 5%, sometimes up to 10%, in some cases as high as 18% - dedicated land in-perpetuity. As noted above, this represents a massive new State Government tax on new housing supply, during a housing crisis, and it shows that in some cases at least, those preparing these rezoning details are out of touch with the financial realities of our sector and the difficulties we face in producing a feasible, deliverable housing supply outcome. 
• The finalisation reports (and government decisions on these precincts) have relied on a very loose, high level third party feasibility analysis, which has been grossly extrapolated to “justify” the affordable housing levies to apply to nominated sites.  Further, there is no recommendation that the land should be dedicated (as a gift without any recompense), to a CHP or a determining authority as is required by this scheme. Time will tell, but where the feasibility of development does not stack up, these “key sites” could remain vacant or undeveloped.
• Urban Taskforce was concerned when the EIEs were published in July that the imposition of affordable housing levies were both far too high, and were to be made in perpetuity, and they risked crippling the outcomes from the Tier 1 TOD program.  DPHI gave mixed messages on what “in perpetuity” means – but it now seems clear that this involves the dedication of GFA (the handover of land or cash). This is quite different to simply mandating that a CHP to manage the property for the purpose of providing affordable housing at a discounted rate in accord with the requirements.
• Where the property continues to be owned by the developer but is managed by a CHP, that then applies a discount to market rent for affordable housing tenants.  Where the developer continues to own the property they still get 65-70% of the market rent for the property for the life of the property.  Under the TOD program as published, this is NOT the case. It is simply a tax.  You hand over the keys or the cash and get no rent. That is why we oppose the “in perpetuity dedication” model the government has adopted.
• The application of affordable housing contributions above the standard 3% at “key sites” appears to be random. There appears to be no direct correlation to the increase in permissible height or FSR and the levy to be applied.  It appears to have been based on gut feel and guess work. There is no apparent correlation to the increase in potential housing yield and the levy to be applied. 
• There are still some sites that did not get any increase in height or density, have had their access to the infill affordable housing bonus extinguished, and now must hand over 3% of housing yield to the Government.  These sites should be identified and excluded from the rezoned TOD precincts. Right now, these land owners are MUCH WORSE OFF than they were a week ago.

TOD announcement - What can be done?

1.Re-instate the Infill Affordable Housing bonus provided in the Housing SEPP to all TOD precincts

The NSW Government had already implemented the infill affordable housing bonus policy, which allows for a proportionate contribution (20-30% increase in height and Density and a proportionate contribution of 10-15% of total yield to affordable housing for 15 years).  This policy continues to apply to the Tier 2 TOD sites. This works.

The infill affordable housing policy introduced by Planning Minister Scully late last year has been well supported and will deliver a stimulus to housing supply and to the affordable housing stock as well.  Under the SEPP, the developer does continue to own the property, and they do receive the discounted rent paid by eligible tenants to the CHP (less a management fee charged by the CHP).

Just last week, the NSW Government was signing the virtues of optionality.  The HDA will receive Expressions of Interest – hence any application will necessarily be feasible. Developers should have the option of using assessment pathway or going through the normal route of Council assessment and panel determination.

The Government should re-instate the infill affordable housing policy for all TOD areas. 

There should be an option to go with the TOD rezoning or to go with the infill affordable housing SEPP policy. This should particularly apply where the outcome of the precinct rezonings results in height/density/yield lower than that which was previously available under the infill affordable housing policy. Urban Taskforce worked closely with DPHI and Minister Scully to iron out the feasibility wrinkles associated with the early iterations of this policy and it is working well today.

2.  Allow a Transition period for the end of the Infill Affordable Housing SEPP provisions

Notwithstanding the industry’s clear preference for remedy 1 above, at the very least, in order to maintain good faith with those who have: placed options on the purchase of property; who have made purchases to consolidate land parcels; who have spent tens of thousands of dollars on preparing DAs to comply with the Government’s infill Affordable Housing bonus policy; or those who have actually made applications for SEARs (Secretary’s Environmental Assessment Requirements), they should have access to the Infill Affordable Housing Bonus provisions of the Government’s Housing SEPP for 6 months.  This would allow them to make a clear choice – keep progressing with the Infill Affordable Housing Bonus provisions OR take advantage of the new TOD Rezoning heights, densities and associated affordable housing levies.

3. Use the HDA to run an independent feasibility ruler over the TOD advice regarding the feasibility of the rezoning rules and be willing to allow for greater height or density (or a reduced affordable housing obligation) to ensure a more feasible outcome and delivery of more market and affordable housing.

The big question will be – how willing will the HDA be to over-ride the parameters dictated by this rezoning? Kiersten Fishburn would need to be willing to be convinced that her TOD team got it wrong. I am hopeful that that she will be. Simon Draper (Secretary of the Premier’s Department) and Tom Gellibrand (CEO of Infrastructure NSW) will be holding the torch high for the Premier and Treasurer on housing supply and will hopefully deal with the anomalies we have identified.

4. Don’t nominate any more Tier 1 Accelerated TOD precincts under the current framework

If Government is going to turn off the availability of the successful infill affordable housing bonus in Tier 1 Accelerated TOD precincts, then industry would prefer that DPIE simply stopped with the Tier 1 TOD Accelerated precincts. Instead, focus on supporting the Housing Delivery Authority and support their oversight of spot rezonings.

2. Greens wave through Help to Buy and Build-to-Rent Bills

One day they are stuck in the mud and the next, they're doing somersaults… 

In an unexpected turn, the Federal Greens have announced their acquiescence and will not oppose the Help to Buy and Build-to-Rent Bills introduced by the Federal Labor government.

The Help to Buy Bill 2023 is a Commonwealth shared equity program that aims to make homeownership more accessible by enabling eligible Australians to purchase a property with government support, effectively reducing the upfront costs and loan size. This has never been popular in Australia with many choosing to not commit to a long-term relationship with the Government for what is often the biggest purchase in their lives – a home. However, if well targeted, this will make it easier for the target cohort to purchase new homes and is now law.

The separate Treasury Laws Amendment (Build to Rent) Bill 2024 introduces measures to provide tax incentives to build-to-rent projects, consisting of 50 or more dwellings, that are made available for rent to the general public. According to the media release by Treasurer Jim Chalmers and Minister for Housing and Homelessness Clare O'Neil, this legislation will support the delivery of around 80,000 new homes to rent.

To be eligible for the tax incentives, homes must be retained under single ownership for at least 15 years with a minimum 10 per cent of dwellings made available as affordable tenancies. Tenancies must now be offered for five years, with affordable tenancies (rented at 74.9 per cent or less of market rate) to be managed by a community housing organisation. No-fault evictions also disqualify homes from this tax incentive with misuse penalties applying.

BTR developments constructed or under construction before last year’s Budget are eligible for these incentives provided the other criteria is met. This federal legislation joins state-government initiatives designed to support the build-to-rent sector and address the housing supply crisis towards the 1.2 million new, well-located homes targeted under the National Housing accord.

The Greens traditionally advocate for stronger action on housing, but have resisted the two bills, citing concerns that they don’t go far enough to relieve the housing affordability crisis. Greens leader, Adam Bandt, had previously stated that without collaboration between the Labour government and the Greens to “fix” capital gains and negative gains taxes, introduce rent caps and promise more public housing, The Greens would vote against these Bills.

The Greens’ Max Chandler-Mathers said this week, that they would take the fight to the next election after having “pushed as far as possible”. But there are real questions surrounding the Greens’ motives for their sudden gymnastic prowess, and whether the decision to change was a pragmatic decision to avoid further electoral backlash.

The Urban Taskforce advocates for the federal and state governments to back up these advancements in national housing policy with action that aids project viability and streamlines the planning system in the near-term so that these enacted Bills can become tangible outcomes within the National Housing Accord period.

3. Urban Taskforce honours John Kinsella AM

John Kinsella AM, Managing Director of Billbergia accepts the 2024 Urban Taskforce, Property Person of the Year Award

The Australian property sector came together on Wednesday night at the Four Seasons Hotel in Sydney to celebrate John Kinsella AM, Managing Director and founder of Billbergia, as the recipient of the Urban Taskforce Property Person of the Year award 2024.

This year’s award coincides with Urban Taskforce’s 25th anniversary as the peak industry representative in the property development sector. It brought together industry leaders, development proponents, investors, and policymakers to celebrate excellence and leadership in the property development industry and to raise funds for the Warrah Society and the St Vincent’s Prostate Cancer Research Centre.

This accolade recognised Mr Kinsella's decades of transformative work creating communities across Australia and his extraordinary contributions to the property and construction sector. John has been a prominent figure known for his humility, humour and work ethic. This accolade highlights not only John’s character, but the social impact and lasting legacy of Billbergia precinct-making developments.

In addition to his professional achievements, he was praised for his ongoing philanthropic efforts, including long-term support for HOPE for Cambodian Children, a charity co-founded by John, that supports displaced children in Battambang, Cambodia. Work that was recognised in 2018 when John was made a Member of the Order of Australia.

The event raised over $100,000 for these charities, underscoring Mr. Kinsella's commitment to giving back. John’s care for the work of these charities shone through as he led and inspired pledges of support.

The prestigious award is voted on by peers in the property, construction, and development industries. Mr. Kinsella, ever humble, shared the honour with his family, brother Bill (who sadly couldn't make it), son Joseph, and his executive team at Billbergia, including Rick Graf.

Over 400 industry leaders attended the black-tie event, masterfully hosted by comedian Rob Shehadie, who lightened the mood at a time when the property sector is overcoming significant challenges. NSW Minister Steve Kamper served as the guest of honour, applauding Mr. Kinsella’s philanthropic contributions and discussing initiatives to utilise surplus government land for affordable and social housing, through Landcom and beyond.

In the interview hosted by Rick Graf, John spoke of the inefficiencies of housing delivery, the collaborative nature of the industry and emphasised the importance of partnerships and innovation in shaping Australia's property landscape.

This year’s celebration highlighted not only John Kinsella’s industry leadership but also the sector’s resilience and collective generosity. As the evening concluded, the mood was one of optimism, with attendees inspired by a shared commitment to innovation and giving back to the community.

A few snaps from the evening

4. Quote of the week

5. NSW Government unveils plans for 1,400 New homes

The Minns Government has this week announced a further boost to housing supply through its $6.6 billion Building Homes for NSW program, unveiling plans to deliver sites capable of accommodating an estimated 1,400 new homes.

The program's latest tranche includes:

The release of 11 sites in Greater Sydney found in the original Land Audit, includes a site in Menai and another in Haberfield that have transferred to Homes NSW, set to deliver approximately 242 homes, including 130 social and affordable dwellings, Sites in Rooty Hill, St Leonards, and Chatswood under investigation by Landcom, with potential for 850 homes, including over 80 affordable units, and sites in Darlinghurst, Turramurra, Frenchs Forest, Wakeley, and Wallarah which will be partnering with private developers for new housing projects.

Also included are 22 sites across Sydney and regional NSW, where Property and Development NSW (PDNSW) have invited developers and the public to participate in a Registrations of Interest campaign.

Finally, an additional nine sites under Homes NSW in Eastwood, North St Marys, Parkes, Riverwood, Smithfield, Sylvania, Telopea, Toongabbie and Wallsend, providing100 new homes. These shovel-ready sites are planned to begin construction in early 2025.

This move represents a "whole-of-Government effort" and another piece in the housing crisis puzzle. It slots together with other recently released or finalised plans to deliver housing within the National Housing Accord period. Whether it will come close to the NSW Targets, is still unknown.

The ROI is open until December 14, 2024, and submissions can be made through the NSW Government website.

6. APRA Retains 3% Mortgage Serviceability Buffer Despite Industry Pushback

The Australian Prudential Regulation Authority (APRA) has maintained the current 3% mortgage serviceability buffer, despite widespread calls from industry stakeholders to reduce it. This announcement is a blow to improve affordability at a time when inflation is decreasing, and all expectations of the next interest move are that it will be downward.

The serviceability buffer requires banks to assess whether borrowers can meet repayments if interest rates rise by 3%. Lowering the buffer would increase borrowing capacity and stimulate the housing market by boosting sales.

APRA attempted to justify its stance by citing persistent vulnerabilities in the financial system.  

APRA’s decision comes amid a Senate inquiry into Australia’s financial regulatory framework, with a report due in December.

Urban Taskforce is very disappointed at APRA’s over-cautious approach to easing the buffer. APRA are now part of the problem – not the solution to the housing affordability problems in Australia. Easing the prudential buffer down from 3% is just the type of relief that Australia needs to begin address housing affordability and improve market liquidity.

For now, because of APRA’s conservative dogmatism, banks must continue assessing borrowers’ ability to meet repayments at rates 3% above current loan rates. While exceptions are allowed, these apply to only 5% of new loans.

7. City of Sydney takes steps to block feasible housing supply

As reported in the Daily Telegraph this week, the City of Sydney Council has introduced more development controls which will act as a further block to the production of feasible housing, while forcing the preservation of many smaller run-down apartments and homes in the City of Sydney.

The costs of renovation in the City CBD context are enormous.  What replaces these smaller run down apartments must have a market for their purchase – or the replacement of the old stock won’t happen.

Under the proposed changes to the local environment plan, developers will be restricted from reducing the number of dwellings by more than 15% when redeveloping existing residential flats.

This misguided interference is a reaction from perceived issues regarding the 'loss of affordable housing', targeting redevelopments that replace smaller apartments with larger ones. It is misguided because all supply improves housing prices – not necessarily in the immediate proximity, but throughout Sydney.  Further, we have extensive affordable housing contribution arrangements to deal with the issue – so this is just another overreach by the City of Sydney.

Despite a 13% rise in housing in the last six years, City of Syndey Mayor, Clover Moore feels that there is an uneven spread of housing increases in the area. The City's strict limitations on height, FSR, land use and the armada of taxes, fees, charges and contributions might have a little more influence than a few larger home typologies.

Community responses to these fickle controls have been mixed, with fewer than expected supporting the proposal.

Arbitrary limitations on development will skew finance for housing away from community needs. 

*Please note, the below link may be paywall protected

8. Council Watch

Lake Macquarie City

It is good to see a proactive Mayor with his finger on the pulse of their LGA, making moves to provide for their community. Lake Macquarie Mayor Adam Shultz has announced plans to host a Housing Forum early next year, aiming to address housing supply and affordability concerns.

The forum will bring together key stakeholders, including affordable housing providers, not-for-profit organisations, the development industry and government representatives, to collaboratively explore solutions to the region’s housing crisis.

The forum reflects a collaborative approach to tackling the complex issue of housing affordability, ensuring Lake Macquarie remains a welcoming home for generations.

This sort of willingness to understand the times we live in and act to resolve them is as admirable as it is refreshing. Urban Taskforce would like to see more councils in Greater Sydney following this leadership from one of NSW most beautiful coaster regions.

9. Urban Taskforce in the news

News10 consulted the Urban Taskforce on the newly finalised Tier 1 Accelerated TOD precincts. In response to the required number of dwellings that must be affordable housing being lowered to 3%, Tom noted, 

Tom speaking with Lachlan Kennedy on 10News, 25 November 

Urban Taskforce continues to champion the redevelopment of Rosehill racecourse:

10. Members in the news

*Please note these articles may be paywall protected

“… Lendlease has given part of Melbourne’s CBD a boost with a laneway transformation and revitalisation of two A-Grade office buildings located opposite Flagstaff Gardens, Brights & Park comprising of 469 and 485 La Trobe Street...read more... 

To read more, click here:                    The Asean Developer, 22 November

… Ceerose Founder Plots 31-Storey Haymarket Hotel. This project will be a 31-storey mixed-use hotel and commercial development, with ground floor food and drinks premises, concierge, hotel lobby and turntable loading area; Level 1 function spaces; Level 2 podium bar, pool area, amenities and landscaping; and 28 levels of hotel floorspace on upper levels (335 keys).​​​​..read more...

To read more, click here:                       The Urban Developer, 27 November

“…This latest mixed-use development from Meriton is more than just a shopping or dining destination; it's a community hub where people can connect, indulge, and explore …read more...

To read more, click here:                         Sydney Times, 25 November

“…Goodman has put its foot on a 12,530sq m freehold site with 9909sq m of building improvements. But according to Colliers’ Michael Crombie and the team that inked the deal alongside CBRE, the location has set the new benchmark price for the industrial core investment market ...read more... 

To read more, click here:              The Urban Developer 28, November