New criterion for ‘Physical Commencement’ could see rise in lapsing development consents
While many recent changes to legislation in the construction and land development industries have sought to improve the economic effects of COVID-19, a significant amendment to the Environmental Planning and Assessment Regulation 2000 (NSW) (EPA Reg) has seen the barrier to ‘physical commencement’ heightened. The aim is to ensure that there is sufficient intention to see a project through to completion, however it may have more far-reaching implications, potentially slowing the industry with a rise in lapsing development consents.
The new guidelines will only affect development consents granted from 15 May 2020 and onwards. Those issued before this date will remain unimpacted.
Out with the old
In 1999, the term “substantial commencement” was replaced by “physical commencement” in the Environmental Planning and Assessment Act 1979 (NSW) (EPA Act). The intention was to relax the prerequisites that prevented a development consent from lapsing. At this time, the term was applied very broadly to include any “building, engineering or construction work relating to the building, subdivision or work”. In 2009, this section of the EPA Act was further clarified by the NSW Court of Appeal to “include all those activities associated with, and forming a necessary part of, the discipline of engineering”. Up until 15 May 2020, these included simple works like physical surveying and other geotechnical investigative tasks. Now however, it is much more difficult to obtain ‘physical commencement’.
In with the new
These new changes appear to be counterintuitive to recent amendments in the EPA Act that aim to alleviate time pressures and allow the land and development industries to move past the impact of COVID-19. Instead, developers and landowners now face several other hurdles to ‘physical commencement’. As of 15 May 2020, the following works that could be completed before a construction certificate was issued will no longer constitute ‘physical commencement’:
- Creating a bore hole for soil testing
- Removing water or soil for testing
- Carrying out survey work, including the placing of pegs or other survey equipment
- Acoustic testing
- Removing vegetation as an ancillary activity
- Marking the ground to indicate how land is to be developed
This amendment presents a more complex process to activating a development consent and may hinder or prevent some developments from even going ahead.
There is still some ambiguity around what is now classified as ‘physical commencement’ so it is best to seek legal advice or to consult your Certifier regarding the new minimum criterion for ‘physical commencement’. If you’ve found yourself affected by these changes, ES Design will be happy to walk you through available options to ensure your development consent does not lapse.