Uncapped infrastructure charges through Section 94 changes could halt property purchases: UDIA

Changes to infrastructure charges by the NSW government are expected to be a hurdle for developers planning new projects because of the uncapped nature of the charges. 

The NSW government's changes to Section 94 of the Environmental Planning and Assessment Act, which allows local councils to levy contributions for public amenities and services because of new development, will now be uncapped.

This would mean that feasibility studies of new projects become too uncertain.

At a meeting in Sydney with Minister for Planning and Housing, Anthony Roberts, Urban Development Institute of Australia's NSW chief executive Steve Mann said the uncapped component had already sent reverberations through the development industry, reported The Australian Financial Review.

Mann said its members, including some major developers, had said they were not likely to make any acquisitions until there was more clarity on the infrastructure charges.

"There is now a serious concern about prospective acquisitions," Mann said.

"The uncapping of Section 94 contributions and making more areas liable to pay state infrastructure contributions without any transparency as to what this cost will be, will directly impact on investment confidence," he said.

He drew similarities with the 2003-04 boom when excessive taxation, of up to 50 percent of the value of a home, led to a supply drought.

The way infrastructure charges will be devised is currently being reviewed by the Independent Pricing and Regulatory Tribunal, the AFR reported.

Mann said he suspected this review could take as long as another 12 months, hurting the delivery of affordable housing in the state.

The NSW government will allow councils to borrow more money for infrastructure spending at a reduced interest rate. It will support up to $500 million in additional borrowing by councils by halving the cost of borrowing for eligible projects.