News - Our Perspective

Affordable Housing : The hidden barrier

36 0049 FITZROY AFFORDABLE HOUSING REDUCED Page 1

The current debate about affordable housing has pre-occupied the community, media and government for the past few years as prices have spiralled ever upwards.

The intense discussion has missed one key issue – the huge impost caused by governments at all levels. The cost of designing, gaining the various permissions to build a property is also a major contributor to housing costs. The cost of direct and indirect Government taxes, charges and duties are hidden undercurrent in the tide of rising house prices. It is hard to determine the exact amount. The authors of the latest and most detailed investigation for the Senate in 2008, almost threw up their hands trying to work out the combined impost of fees, stamps duties, land tax and council rates. By one estimate, government charges could comprise 40 per cent of the cost of the house.

Peddle Thorp Design Director Peter Brook said owners of investment properties can take advantage of capital gains tax and negative gearing, but it would surprise many to know the extent of the fees and charges that are already paid to government.
“The owner of a new property has to pay a whole set of charges and new ones were constantly on the horizon,” he said. "These charges include the cost of site purchase, land tax and local government rates during holding phase, the planning application fee, and the planning development levy". Mr Brook said in order to meet government compliance costs during the design process, a raft of planning consultants, designers and engineering consultants needed to be employed. The Government has also introduced a special planning level for any project over $1 million. For a large project this would amount to many hundreds of thousands of dollars. And this is non-refundable even if a permit is not issued. Mr Brook said there was also large holding costs during the planning process and since it was typical for the planning process to run over several years so holding costs are substantial.

Other costs include:

  • Compliance with new planning standards. These have increased the area of apartment spaces and therefore increased construction costs. We estimate that apartment areas must increase by 10% to comply – which would have a corresponding increase in costs and sale prices
  • Documentation requirements to meet building standards. The engineering and design standards in building regulations have been constantly increased in recent times. This has also increased building costs. Australia would have arguably the most stringent construction standards in the world.
  • Costs to seek approval through all the authorities that have jurisdiction over the building process
  • In addition, the cost of providing infrastructure has been shifted from the government sector to developers. This can be a major project cost and typically covers items such as:
    • a sub-station to feed into the electrical grid
    • drainage and water retention. 
    • an open space levy which alone can be 5% of project cost
    • site and precinct landscaping
    • providing for neighbourhood amenity
    • Upgrade of roads, including traffic controls
    • Building permit application fee

Added to which GST is often added to the mix.

Mr Brook said the exact figure charged by governments is hidden in a byzantine raft of charges from the three tiers of government. “We need a process that encourages great design to create great places, however, we currently have a process that has layer on layer of taxes and costs. The current debate has ignored that reality,” he said.
 

Read Article
Panorama: The future of modern living May 30, 2018

Peddle Thorp Architects is proud to be the designers of the newly unveiled Panorama building in Whitehorse Road, Box Hill.

Design director Peter Brook said the design aimed to integrate some of the best design and innovation.

Read more
Read Article
How Peddle Thorp designed the openable roof at Melbourne Park Tennis Centre January 25, 2018

When Djokovic and Nadal finished their marathon tennis match at the Australian Open, the tennis centre provided a fantastic backdrop to their sporting...

Read more
Read Article
Architects designing developments for their own backyards December 1, 2017

Clique Ivanhoe by Ocean Dior has been designed by an architect who lives in the same suburb...

Read more
Read Article
Cairns Aquarium Opens to Acclaim November 9, 2017

The first aquarium in Australia for 17 years opened in Cairns late last month. Designed by Principal...

Read more
Read Article
Splash, Craigieburn Opens To The Public October 20, 2017

The 'Splash' Aqua Park & Leisure Centre officially opened today!

Read more
Read Article
Affordable Housing : The hidden barrier October 6, 2017

The current debate about affordable housing has pre-occupied the community, media and government for the past few years as prices have spiralled ever upwards....

Read more
Read Article
First AFL game at Mars Stadium August 17, 2017

Ballarat is now AFL ready, with its first football game set to be played on newly launched Mars Stadium in Creswick Rd, Ballarat. Featuring the Eureka grandstand...

Read more
Read Article
Mantra Epping Hotel Melbourne Announced for 2019 July 20, 2017

Located right near Melbourne’s new wholesale fruit, vegetable and cut flower market and The Northern Hospital, construction is due to start in the latter part of...

Read more