Page 5177 - Week 14 - Tuesday, 28 November 2017
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… were particularly concerned about the impact of these changes on housing affordability and infill. The industry has told us that it will lead to a major reduction in townhouse development in existing suburbs. I am concerned that the perverse outcome of this new change could be McMansions in inner city suburbs rather than the missing middle—smaller dwellings such as townhouses and terraces, that we know our community actually want in our city.
The government did not even consult before they brought in this 300 per cent change. They did not consult with the Master Builders association, who could have given them a bit of a glimpse of what would happen with this change. They did not consult with the Property Council. They did not speak with those who would be most in the know, those working on the ground and in the sector, who would be able to give them a bit of insight into how these changes would impact on the sector.
Had they consulted, they would have found out prior to estimates, prior to the community day when Master Builders and the Property Council appeared, that townhouses are a good urban infill option, particularly in the older, established suburbs where streetscapes are not necessarily suited to unit developments but prime for a terrace, which is where the schedule 1 land is situated.
This 300 per cent increase to the lease variation charge will hinder these urban infill developments. Prior to this change, if a developer bought a block in a suburb such as Dickson, Turner or any suburb built before 1971 to convert to units, they would have faced a strata title change of $7,500 a unit for the first three units and $5,000 a unit after that. This charge is hiked to $30,000 per unit.
For a six-unit development, for example, this will push the bill just for the LVC component from $37,500 to $180,000. This increase will move many developments from viable to unviable, or many developments from affordable to unaffordable if they go ahead. This is a perverse outcome. This is not what we should be looking for. The cost associated with an eight-dwelling development, as another example, would jump from $47,500 to $240,000, once again moving development from viable to unviable and potentially, if it goes ahead, housing from affordable to unaffordable. Either way, this 300 per cent increase does not address affordability in any way. It is the complete opposite of helping affordability. It is clear that increasing LVC by 300 per cent can make a lot of developments, if not all developments, unviable.
Despite this, the government has decided on the creation of a dual occupancy LVC of $60,000. We have already seen in the short period after this was announced in the budget a rush of development applications being put in—152 of them, in fact, to October this year—by developers desperately trying to beat this increase. That is up from 90 developments in 2016-17 and 60 development applications in 2015-16. We have had 152 just up to October, as developers have tried to beat this projected increase.
Too often we have seen policy on the run like this: policy development without proper consultation, without talking to the people who will understand the impact on the market. As the now CEO of Master Builders said during the budget estimates:
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