A Sydney Morning Herald article last week on housing market inequalities caused by government rezoning is only half the story, according to activist Maire Sheehan.
“These developers are pushing the boundaries based on the known state government agenda to develop at all costs,” Sheehan told the City Hub. “Big developers hire people who know the system and can put their arguments behind closed doors as to why things should be swayed one way or another.
“No-one knows what’s going on in those conversations and a lot of those decisions in those meetings are based on judgement. There are not very specific rules involved and when you get decisions based on an individual’s judgement, people can be swayed one way or the other.”
The SMH story cited a Reserve Bank report saying that land zoning determines up to 70 per cent of a house’s value. Development restrictions therefore have been found to contribute to the runaway inflation of housing prices.
In Sydney, this adds around $490,00 to the cost of house.
Jimmy Thomson, who writes the Flat Chat columns on strata living for the AFR, says that zoning in the City of Sydney is a farce.
“NSW is a complete mess. We’re now having rezoning by stealth, driven by a company in San Francisco that pays no tax in Australia and I’m talking about Air B&B.
“We’re now having residential apartments encouraged by the government to be turned in de facto hotels. That’s just one tiny part of the zoning issue, but anybody who has bought into property in NSW with a specific zoning who thinks that’s something reliable they can depend upon for the next twenty years, they’re kidding themselves.
“Commercial interests will prevail over public policy every time.”
Manipulation of zoning decisions is indeed big business, according to Sheehan. She says that developers often arrange pre-DA (development application) meetings behind closed doors, in order to have Planning Controls altered and arrange rezoning in their favour.
“The context of that is the state government is pushing increased residential development for the increased population coming to Sydney and developers are the ones really benefiting from their decisions.”
“There are three clear examples in recent history where developers are getting in ahead of the game, before announcements are made on particular areas, before plans are signed off.”
Sheehan pointed out that the old Bourbon and Beefsteak building in Darlinghurst Rd, Kings Cross, had been zoned mixed use, but was regarded as hot property by investors.
“The proposal was to knock it down, rezone it as residential and increase the density of a high rise building. The developers went in and had a pre-DA meeting with the City of Sydney. They’ve come out with this plan and the locals are really annoyed about it, because it requires an up-zoning and a demolition.”
Another proposed development in Lord’s Road, Leichhardt has raised the hackles of residents and Inner West Council Mayor Darcy Byrne, so much so that he’s considering referring it to ICAC.
The area was zoned light industrial, being full of craft breweries, art studios and small startups.
“There is quite a mix in there,” said Sheehan. “A development company have bought a lot of it and are pushing to rezone it. Well the planning panel for the Inner West knocked it back on the basis that there was a lot of employment in that area. From there it went to the Department of Planning and Environment to get signed off. But it’s been there a while and hasn’t been signed off.
“In another case in Strathfield a business went to council and said they had a small technical issue that needed a tweak on zoning. They said ‘we should have special consideration because we’re a big employer’ and they presented a letter saying ‘here are our plans for the future’. So a report came back that said yes, that minor technical adjustment is no problem.
“Five months later it turns out the business had sold that land to a development company who wants to rezone and put in high rise residential
“The council did the assessment, but the decision was made by the Planning Department. The owner of land was saying one thing and doing something quite different several months later. And they got away with it.
“Is this corruption? Technically no. All this flexibility has been made legal. In other countries corruption has been made visible but in Sydney, and in Australia in general they’ve just changed the rules so they have this flexibility to make it all justifiable.
“And because it’s so embedded in the system it’s hard to untangle. The whole thing is complicated further by such things as the older generations locking young people out of housing. There’s a story in Crikey on how the Grattan Report says that those opposed to high density housing in established suburbs are partly responsible for driving up the cost of housing.”
In an apparent attempt to mitigate the opaque dealings of its bureaucrats, the Department of Planning and Environment has legislated Independent Hearing and Assessment Panels (IHAPS) to consider contentious development applications, from the first of March this year.
Councillors, property developers and real estate agents will not be part of these panels.
Although fifteen Greater Sydney councils already use IHAPs, it’s been on a purely voluntary basis until March.