Approvals process needs to change, and quickly: Triguboff

NSW’s planning department is happy to go to court and lose, as long as it tried to limit the production of units, writes Meriton managing director Harry Triguboff.

Meriton apartments at Waterloo in Sydney. Picture: Gaye Gerard

The apartment market is shifting dramatically, and in a way that very few outside the industry would realise.

It all has to do with investment and the sudden shift in activity by those who want to buy property, which I believe is drying up as developers face more legal and tax barriers.

I can see that the number of units that we are leasing is constantly diminishing. Most of the units which are being leased at Meriton are leased to small investors, and these people are now selling more than buying. Also, some investors are moving into the units that they were previously leasing.

In my business, this happens daily and consistently. At the same time, the number of new investors who buy units to rent are very few, and this means that the country loses every day.

Conflicting policy settings are partly to blame. It is unfortunate that the Treasurer and the Reserve Bank don’t work together. Each accuses the other. They must decide how to fix the economic situation together – and start fixing it.

Meriton is leasing, at present, 25 brand new units every week. The rents are coming down a little in Sydney. The prices have stopped rising for now – which goes back to the settings which are feeding into the pressures on developers.

The problem with NSW’s planning department is that they are not concerned with how much is produced in Sydney. They are, in fact, happy to go to court and lose, as long as they tried to limit the production of units.

In my opinion, if they lose they should pay all the costs that the developer sustained while fighting to get their projects approved. It is not enough to charge councils the costs of litigation.

The interest on land which is not used because of council fights, as well as the various costs like land tax, water rates and council rates should be scratched. If we did it like this, the councils would think twice before they sabotaged approvals.

If we, as developers, fight the council and lose, we bear all these costs automatically. I think that they should be treated the same. This would speed up reform. Rather than seeking to find out all the little problems with the planning department, which would take ages, we must instil simple rules. We certainly have a lot of catching up to do.

The biggest problem with building in Sydney is that no one knows if there will be an approval, or what timeline it will be grated in. In Surfers Paradise, they have six months to approve a project, but in that market we know from the first day. In Sydney, we sometimes don’t know for years.

There is no logical reason for delays given. The weakness of the councils is shown up in the frequency of their losses in court.

Harry Triguboff is founder and managing director of Meriton Group