A Critical Win for Housing Development In Sydney

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A Critical Win for Housing Development In Sydney

23 June 2020 (Sydney, Australia) – UDIA NSW Chief Executive, Steve Mann, welcomed today’s announcement that the s7.11 contribution cap in the Hills and Blacktown will be extended to 31 December 2020 at an increased rate of $50,000.

“The cost certainty for developers will enable the industry to continue to deliver housing supply in the North West,” said CEO Steve Mann.

Infrastructure contributions, better known as s7.11 contributions, or the former s94 contributions, are currently capped at $45,000 until next week on 1 July 2020. This announcement means the NSW Government has a set a new cap on contribution rates at $50,000 in Blacktown and The Hills council areas until the end of 2020, which could have doubled to over $100,000 per lot in some areas.

“This extension means the industry has avoided a doubling of developer contributions in North Western Sydney during one of the largest economic challenges of our time,” said Mr Mann.

UDIA NSW identified the opportunity to repurpose the AIF to deliver a double dividend and has worked with the Department of Planning to achieve:

  1. Funding local infrastructure to create jobs on the ground, and
  2. Support an extension of the cap on development contributions to deliver more jobs and housing supply.

To take advantage of the extension, developers will be required to commence construction by the 30 June 2021. UDIA believes this may need to be extended to achieve the sustained housing-led recovery we all want to see beyond COVID-19.

Even with contributions capped at $50,000, taxes and charges represent a growing percentage of the costs of new housing, now up to 30% of the total price of a new home in Western Sydney.

“We estimate this measure will support the delivery of between 1,600 and 2,500 residential lots across Blacktown and the Hills creating between 4,800-7,500 jobs,” said Mr Mann.

Earlier this year, the Productivity Commissioner announced a review into infrastructure contributions will be completed by the end of 2020.

“We keenly await the outcomes of the Achterstraat Review, and will call on the government to implement appropriate reform quickly, and before the end of the AIF to prevent further loss of jobs from our industry due to a dwindling supply pipeline,” said Mr Mann.

The NSW Government also announced an additional $75 million in Accelerated Infrastructure Funding to unlock nearly $70 million in developer contributions to put local community infrastructure on the ground. UDIA NSW has previously reported there is over $2.65 billion in developer contributions sitting with Local Councils across Greater Sydney, the Illawarra and the Hunter Region.

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Media Contact: Mia Kwok media@udiansw.com.au 0435 361 697