By Lee Capocchi
(Continued from Part 1)
The supply of housing has been constrained for years, with house approval numbers varying little over several decades, despite the increasing population, meaning the percentage of new houses against demand has decreased and is going backwards compared to population increases.
There are several reasons for this occurring.
1) Red tape. Commonly known as bureaucracy. Subdivide this into further parts:
- Every jurisdiction, State, Federal and Council, has different rules and regulations. This makes it a nightmare for builders and developers. Frequently some rules conflict with others and those charged with approvals get caught out, undecided as to which rule should apply. There should be a priority.
- Time taken for approvals: Councils and governments rarely employ enough staff and getting approvals, even for straightforward proposals involve lengthy delays. Even plans submitted by qualified architects can be delayed in what amounts to nitpicking. Adding a couple of staff to the council department to handle this will cost very little compared to some things on which councils spend. Money is recouped by faster development providing a rates return sooner.
- Conflicting overlays on sites cause delays. If it is possible to safely and properly construct a dwelling on a site, then the over-riding overlay should be flagged. For example, a “heritage tree” overlay requiring replanting to replace trees that are removed conflicts with a “Bushfire Management Overlay” requiring trees to be removed. Conflicting overlays should be flagged for the one taking precedence.
- There are 5 Bushfire Attack Levels (BALs) currently applied to construction and overlays and it generates an approach of habitat destruction and manoeuvring to reduce the level applied to a construction. Reduce that to 3 levels. Low, Moderate, Extreme, eliminating the minimal or zero one and get a team of architects and fire specialists to homologise constructions with the new rules and apply them nationally.
Do the same with wind forces design: Low, Moderate and Cyclone.
Do the same for flooding design.
Standardising reduces cost and improves simplicity and certainty.
- Set a standard for pre-fabricated and Modular homes that allow businesses to do so and any house so constructed will no longer require a separate building permit. Once a planning permit is granted, the house can be assembled on-site with a single initial and final inspection.
What is needed is a simple, but comprehensive set of rules, unified across a state, or preferably nationally, and published in full on a website so one check can be done to ensure compliance. A Gantt chart, or timeline showing which steps will be needed in which order. Big developers have this down pat, but a small tradesman developer, who may wish to build 3 units on a block, or a family choosing to create a new build (owner-builders) don’t have ready access to this or a comprehensive list of regulations. One council website distributes the rules and permit applications throughout the website with no easy way of knowing which applies to what and requires hundreds of “clicks” to find most of what is needed.
There should be one supplementary set of rules that apply to a specific council or area, and the statewide rules should indicate where another set of rules may apply. And that’s it. For example, an area has no reticulated water or sewage, so rules will apply to a development site to cover this. They should be simple, clear and readily available.
It has been proposed that “deemed compliance” for minor issues be taken within, say 2 weeks, and major issues should be referred to the developer (homeowner, builder or architect) in a similar time. How long does a qualified council planning officer need to read a set of plans and specifications for a standard residential construction when they know the rules thoroughly already.
If you are applying for a planning permit to construct a dwelling, you should not have to apply for a separate road crossing permit, a septic tank permit, and whatever else will be needed. One permit should apply to the entire development. All supplementary permits will be needed anyway.
2) Shortage of skilled labour is a critical issue with domestic constructions. One way to ensure adequate labour availability is to mandate minimum apprenticeship numbers or as a percentage of labour on all projects using government funding.
Builders and developers should be flagged if caught exploiting apprentices, failing to contribute to their superannuation or if apprentice turnover is high.
Land availability. For Greenfields development governments should have already selected parcels of land that are available from the maps and gone through the process of consultation and sorted the infrastructure requirements. This includes setting aside land for things like convenience stores, service stations, libraries and medical centres and sports fields in larger sites There is no point in taking years to sort this then releasing the land to major developers with no infrastructure requirements who then wait while prices increase. When a developer buys land on tender they get 12 months to commence construction or lose the rights and the land is returned to the government for the original purchase price. Concurrent with the sale the government also commences creating and building the government infrastructure so by the time people move in there are decent roads and public transport including transport linking services.
For brownfields developments, similar regulations should apply but only additional infrastructure is needed if already inadequate.
Government land, such as disused military bases and properties, if released, should not be sold off in its entirety. Space must be reserved for a mix of high rise and single-story public housing and tenders let for the construction. The government retains ownership of these buildings and the titles of the land on which they sit. This is cheaper than buying a complete project from private developers and contracts can be let to small scale builders for the single and 2 story homes and must mandate a certain amount of public space and local facilities such as convenience stores. A reasonable percentage of single-story dwellings must be built to a mix of accessibility and disability standards. The government must also setup linking public transport to prevent these developments becoming car-only spaces. The same rules for apprenticeships must apply.
Both low-rise and high-rise must include high energy-efficiency in design and appliances and must include solar and batteries and preferably community batteries which would reduce demands on infrastructure feeding the area and also reduce home operating costs.
Change some regs to allow construction and installation of prefabricated homes of pretty much any size, where homes can be constructed in factories and installed or assembled on site. Quality is easily maintained under these scenarios, and you have effectively created a new industry, leaving on-site construction to the skilled builders you have created to do the custom and specialised work that is required for difficult sites and for the architects designing something different. Factory builds are faster and cheaper!
Lighten up and let people build “granny flats” in any yard big enough to hold one as long as it is safe, energy efficient, and still leaves enough uncovered land. Remove the restrictions that it must be a dependent relative.
3) While we are talking about new builds let’s tackle the elephant in the room: Builders insurance. It isn’t worth the paper it is written on and such as it is it fails all homeowners, and councils waiting for site-improved-value rates. People are reluctant to build or buy a new build house when there is effectively no product guarantee.
It is well known what happens when something goes wrong, to both consumers and all levels of government. Houses with faults that never get fixed which detract significantly from the value of the house. Houses which never get finished no matter what arrangements are made. Houses that are complete but uninhabitable. And people who are stuck with lemons, while still paying mortgages and council rates or land tax for years and, most likely, rent on another house while they linger in no-man’s land, losing all their savings and money getting no home in which to live.
There is a simple solution: Scrap the current system and replace it with something more like comprehensive car insurance and, at least, like normal house replacement insurance as used by most homeowners. It should incorporate something like the original 7-year warranty and it should cover everything right up to a complete rebuild from the ground up, including replacing a faulty slab or foundations if that is the cause of the problem – and this does happen.
Effectively the builder pays the first and subsequent years of insurance, until the homeowner moves in, and the homeowner pays the subsequent years as per normal house insurance, but the builder is responsible for any insurance excess applied to a claim in those 7 years. If the builder goes out of business or disappears, etc, then the insurance company will source another builder. If the original builder does the repairs, then all is well. If they do not do so, then they may be refused subsequent insurance, or find their premiums have gone up.
Let the insurers manage the risk, just like they do with car repairs. They will vet the builders for quality providers and not give contracted work to those that fail the quality tests. Shonky builders will be unable to get insurance which means they will not be permitted to build. Same with any builders contracted to make repairs. It will clean up the industry and ensure houses are constructed to a better standard. It will protect the buyer and make sure that houses, once started, are completed, even if a different builder takes on the job of completion. In fact, just like car repairs, it is envisaged that a new class of specialist builders will arise who specialise in fixing or completing these homes.
Of course, the claims process should be simple, fast and transparent, just like car insurance. The need to spend years fighting over a claim, and time, money and energy in Civil Administrative Tribunals will be abolished except for rare instances, which also frees up those institutions for other cases.
It is not unreasonable for Governments and Councils to be made self-insurers, just like above, for situations where development is approved on substandard land, such as flood plains or where soil subsidence may occur. On this particular matter we can only hope as the track record of those authorities is abysmal, again with the consumer being hung out to dry.
4) Now a brief look at public housing. Victoria has commenced a large public housing project. But the closer one looks the less confident we can be that all is roses.
It beggars belief that, during both a state and national shortage of housing the (Victorian) State government is demolishing existing hi-rise units first. It makes no sense to evict hundreds of families when there is no reasonable alternative to the existing accommodation and effectively kicking people out of their communities and kids out of their schools for the several years during the construction period. Where will they go? Can they afford the alternative to public housing?
What should be happening is take some of the adjacent open land and start constructing the new high-rise units as close to alongside the existing one as possible. If the existing structure contains, say, 100 units, the new one should have around 130 to 150 units or more, with the lower levels being full disability units and the next few levels being accessible units. There should be at least half a dozen crisis accommodation units included in the building. Then, when completed they can demolish the old tower block and reinstate the public spaces.
Do the same for each block needing upgrades.
Forget making a percentage “affordable units” because this is public housing. It should be all public housing. And unless there is a shortage of labour and materials, they can also be building new tower blocks where there is currently none, such as in those designated high-density areas, such as Box Hill and the like where the outer rail loop will go. Do not put them in some out-of-the-way place, but right in the thick of the development zone as part of the community. We need literally hundreds of additional public housing units in many towers around Greater Melbourne (and every other capital city in our country). The Federal government should be contributing to this as well as part of their building houses policy.
These projects should be properly tendered for construction to occur on public or government owned land. The contractor gets the profit from the tender and that is it. One proviso: No company, regardless of size, can get such government contracts unless they provide their tax records for at least 3 years to show they full tax on profits without artificially minimising those profits or offshoring expenses and tax or profits. No developer or construction company that has donated to a political party should have the right to submit a tender. Public housing will not be constructed on private land, whether it is a tower block of units or sites in a new estate. The government buys the land first, then contracts the builders.
Full stop.
References
Pilbara housing company looks to modular houses as solution to Australia’s shortage, ABC News
Prefab housing promised 50 years ago as solution to housing supply crisis, ABC News
The out-of-the-box solution to Australia’s housing problems, ABC News
Developers Rule: affordable housing turns out to be unaffordable, Michael West Media
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Another excellent article demonstrating that government bureaucracy has come to dominate residential housing for its own financial advantage. Most of the above ”solutions” are the common sense approach that is rarely found among government desk jockeys wanting to occupy their hours between lattes.
Sadly, the demise of the trades apprenticeship system on NSW can be dated to the Wran era, when the Eversleigh Railway Workshops were made redundant by government bean counters having sufficient foresight to see the end of their respective noses. No apprenticeships means no tradespeople in 30 years. QED.
Our local experience at the NOtional$ dominated NSW Armidale Regional Council is that a simple subdivision plan is delayed for MONTHS because ….. well, because ….. WE have been promised action by today, but I have not been holding my breath.
Actually the hidden agenda of the NOtional$ is to create the feral electorate of New England as a theme park of a 19th century rural slum of genuine, original, authentic buildings and rotting infrastructure to obfuscate the lack of action by successive NOtional$ MPs in representing the best interests of the voters because they have been managing their own pecuniary interests.
However, regardless of the above sense, the importance of removing the financial incentive for wealthy individuals and corporate entities to invest in residential housing needs to be removed, or at least reduced, so that other persons, especially young families and later age singles of either gender, can afford to continue living in Australia rather than SE Asian countries.
@New England Cocky. Thank you.
One tale that keeps popping up is dividing QLD into 2 states. The suggestion has been raised several times, although no-one seems to support it when challenged.
It would have 2 effects. One is effectively a Gerrymander and the other would be to further marginalise First Nations people.
As it stands, they face worse housing shortages than the rest of Australia and what housing they have is so sub-standard that, short of desperation, or neurons, most would not want to live there.
As mentioned in one of the supporting articles, pre-fab housing can be trucked into almost anywhere and rapidly assembled, keeping costs down.
Glad you liked the articles.
Tim Wilson and Angus Taylor have both attempted to dress up changes to capital gains tax as being a tax on housing.
Seerla economists have called them out and pointed to that fcat that a capital gain on flipping houses is a windfall profit and should be treated as any other forms of income. They say that fully taxing capital gains would not increase the cost of housing but, on the contrary, would deliver more revenue which can be put into building new homes and it would also remove the incentive for investors to churn houses as short term investment opportunities.
Great article, good sense.
For me, in construction for >50 years, from bottom to top, the land barons cum developers must be brought to brook. The era of ‘stick building’ is long gone, as are ‘McMansions on postage stamps’. Oz needs urgently to move to building the majority of houses as modules built in factories, then shipped to a site readied with foundations and services – ‘plug-n-play’. This could also apply to small-medium rise apartments.
As is the case in so many other areas of complexity in human society, China provides an example of best-practice efficiency in housing construction. Chinese factories construct modular units which when ready are transported to site, assemblers assemble, and, voila!, within 12 hours the job is done.
Is Australia deeply invested in this pattern of construction? It would seem not. The play of self- and competing interests mitigates, always, against streamlining efficiencies.