In the property sector, the escalating social and economic effects of the COVID-19 pandemic are not limited to the landlord-tenant relationship but extend to all stakeholders in the Australian residential, retail and commercial property markets. The Commonwealth and state and territory governments have swiftly implemented a number of initiatives for developers, buyers and sellers in a bid to return confidence and certainty in the property sector. Government response to fast-track developments In an effort to keep the economy moving, the NSW Minister for Planning and Public Spaces announced (on Friday, 3 April 2020) that NSW will implement the Planning System Acceleration Program to cut red tape and fast-track planning processes. Details are expected soon but for now, we know the Program intends to: Create more than 30,000 construction jobs in the next six months Fast-track assessments of State Significant Developments (including hospitals, schools, waste management facilities, energy generating facilities and correctional facilities), rezonings and development applications (DAs) Support local councils and planning panels to fast-track local and regionally significant DAs Introduce a single, central place for industry to progress projects that may be stuck in the planning approvals system Clear the backlog of cases in the Land & Environment Court with additional Acting Commissioners to assist Invest $70 million to co-fund vital new community infrastructure in North West Sydney (including roads, drainage and public parks) and unlock plans for the construction of thousands of new homes. The acceleration program is likely to have significant ramifications for the construction industry and should help to restore developer confidence in the market sufficient to enable the developers to proceed with proposed developments. Coupled with a recent order allowing construction sites to operate on weekends and public holidays, this program is an important step from the NSW Government to curb productivity losses and maintain investment flows throughout the property sector. Buying and selling property Increased caution and practical challenges have impacted the number of property acquisitions and disposals hitting the residential, retail and commercial property markets. Other public and private sector initiatives – including substantial government stimuli, and banks offering interest rate cuts for home loans and mortgage repayment deferrals of up to six months – have been implemented to encourage investment in the property sector. Although it’s likely that the property market’s performance will be impacted by the COVID-19 pandemic, these measures will ensure the property sector doesn’t come to a grinding halt. Considerations for property developers, buyers and sellers during the pandemic Despite uncertainty and a lack of confidence in the Australian property sector, continued public and private sector initiatives will ensure investment is attracted and retained. Developers Remain confident in the industry and the increased government initiatives to proceed with development proposals, including the fast-track approval process Act on market need to support your business and the wider community, and innovate to seize new market opportunities. Buyers Only transact if your financial position is secure and/or you have sufficient capital or other liquid assets as a safety net If purchasing property as an investment, consider the current market challenges of procuring a favourable tenant who will pay rent on time, comply with other leasing covenants as well as the ban on Airbnb and other short-term letting options The search, filter and negotiation processes in property acquisitions is more difficult now that all public inspections and auctions are prohibited, so purchasers must do their homework. Sellers The current market performance, coupled with the prohibition on public inspections and auctions, may mean it is difficult to find a purchaser The likely market slowdown may also impact the sale price. Sellers will need to be realistic. The above content is commentary rather than legal advice and was prepared on the basis of applicable legislation, government programs and initiatives that were in place as of the date of publication. Given the ongoing evolution of both the COVID-19 pandemic and frequent consequential changes to the various laws and programs within all Australian states and territories, readers should seek legal advice on the current situation as applicable to their specific circumstances before taking any action in relation to the above.
