Land Developments Explained

How does land development work? A simple guide

In this article, we’ll cover the most frequently asked questions relating to:

Land Development & PSP
Planning Permits
Plan of Subdivision & Engineering
Construction breakdown and main causes of delay
Practical Completion (PC)
Statement of Compliance (SOC)
Title
Settlement

What is ‘Land Development’?

Land development is the process of going from a paddock to fully serviced residential lots (blocks of land), ready for the builders to start construction. It is often a lengthy process taking several years; from initial zoning of the land for residential development, to builders starting work on your new home.

How does it all begin and what is ‘PSP’?

In designated growth areas, areas which the government and planning authorities plan for new homes and amenities, the development process starts with a Precinct Structure Plan (PSP). Within the PSP the government sets out a framework for development of a new suburb, with substantial work done by consultants including town planners, engineers, servicing authorities (e.g. transport, sewer, water supply, electricity supply, stormwater management etc.) and government agencies such as the Education Department. The PSP then seeks input from landowners and developers. Following a review period, the government is ready to adopt a Precinct Structure Plan for a new suburb.

Do you always need to wait for PSP?

No. Some areas are already zoned for residential subdivision. If a PSP is already in place, the developer can sometimes go straight to a planning permit, which usually requires development under a Development Plan or other structure plans.

What is the purpose of a planning permit?

Following government gazettal of a PSP, developers must then go through a planning permit process which sets out a lot more detail and establishes Council and government requirements for development.

The permit application will set out details such as the number and sizes of lots, the widths of all roads, land for creeks and waterways, wetlands, parks, walking and bicycle paths, and where required, schools and community facilities. The planning permit process generally takes up to two years but can take longer if issues arise. Common causes of delay include resolving servicing difficulties, dealing with future flooding or stormwater management issues, or resolving funding of essential infrastructure such as roads and community facilities.

Does the government choose how many lots go on a project?

Yes. During the PSP period, authorities will dictate how many homes per hectare are required. It is then passed on to the developer and consultants who decide on overall land sizes to best suit the market.

How do you rezone and develop the land?

The rezoning and development of land involves payment of government charges such as ‘Growth Areas Infrastructure Charge (GAIC)’ and ‘Windfall Gains Tax’. On larger developments this can come to millions of dollars and is paid by the developer or original land owner before the first homes are built.

What is involved in a planning permit?

A planning permit for subdivision will set out the conditions for subdividing and development of a site. Typically, a planning permit will include requirements for:

Design and construction of local streets, stormwater drains, sewerage, supply of drinking water and where applicable, recycled water, electricity supply and provision of telecommunications (NBN)
Payment of contributions to Council for infrastructure such as major roads, parks and open space, sporting facilities, community centres
Payment of contributions to authorities for stormwater drainage, external sewer and water supply infrastructure
Areas that require preservation and management of native vegetation or habitat for native fauna
Removal of native vegetation or habitat, often requiring payment for “offsets” to ensure equivalent areas are set aside and preserved elsewhere
Dealing with matters of aboriginal heritage on the site – this may be a requirement to salvage and record artefacts in the soil, or preserve items such as middens, burial sites or scar trees
Environmental management such as provision of water quality wetlands and control of environmental conditions during construction.

The planning permit has been granted, what happens next?

Once the developer has a planning permit, they can proceed with getting a plan of subdivision (POS) prepared and engineering plans. These go through approvals with Council, Melbourne Water (or your state’s water authority) and the local retail water company (eg. South East Water, Greater Western Water, Yarra Valley Water). Once engineering designs have been approved, construction is allowed to proceed.

What is a ‘Plan of Subdivision’ (POS)?

It’s a plan which allows the developer to take a section of land on the project and divide it into two or more blocks of land. This plan will clearly demonstrate the dimensions of each subdivided lot, easements (services) and more.

What is the ‘Engineering’ document?

This is a more detailed plan for road, drainage, sewer, water, electricity and telecommunications.

Larger projects will have multiple plans of subdivision and engineering documents prepared as they break up the project into stages, slowly obtaining approvals as they sell each stage. This document allows you to clearly see what you’re committing to in terms of overall size, services, fall on the land and dimensions.

Who does the civil construction works?

Once the documents are obtained and approved, the developer then tenders the works to a civil engineering contractor to construct the roads and services. These companies are specialists in civil construction.

How long should construction take once construction begins and what can cause delays?

Construction generally takes 6-12 months depending on the complexity of works and items such as:

External works - outfall sewers and drains, constructed wetlands, external roads and intersections
Ground conditions - hard basalt rock such as in the north and west of Melbourne is particularly slow to work through
Weather conditions - a rainy period can slow works by months
Approval delays - sometimes parts of the works will require additional approvals which can slow down construction
Supply of materials such as pipes, concrete and crushed rock. In 2021/2022 this was a major cause of delays due to a shortage of materials and skyrocketing costs.

What is Practical Completion (PC)?

When construction is finished and all roads, services etc are put in, it is referred to as ‘Practical Completion’ or ‘PC’. This is when a walkthrough will be scheduled, so the authorities can physically see that the area has been constructed. From here, a more detailed check commences.

What is a Statement of Compliance (SOC)?

Once Practical Completion is achieved, there is usually a period of 4-8 weeks where the developer must complete requirements for audits on the works and completing other requirements to gain “consent to statement of compliance” (SOC) from Council and other authorities. This often requires individual inspections from authorities such as the electricity provider. In the event the inspection is a fail, it will require rebooking and may delay settlement.

When will a title be issued?

Finally, the developer will obtain a Statement of Compliance, which confirms that all requirements under the planning permit for that stage have been satisfied and that the plan may be registered. Once the developer has a SOC then the plans of subdivision may be lodged with Land Victoria for registration (titles office); another process that usually takes one to two weeks. Once titles are issued, settlement will be called.

How long do I have to settle once titles are received?

Your contract to purchase a lot from a developer usually specifies a period of time from registration of the plan of subdivision (eg. it’s usually 14 days from registration). At this time, you will be required to pay the developer the balance of the agreed price for the land, and you become the registered owner of the land.

Produced by BuyFair Property Group in collaboration with EGIS Group and Openlot.com.au

BuyFair Property Group provides off the plan investment plans and education. With Australia’s first ‘Investor Centre’, BuyFair Property Group offers up to date education and guidance on all the main components of property investment.

EGIS Group has an experienced team of urban development engineers and planners advising clients and delivering development projects in Melbourne, Sydney and South East Queensland. You will find Egis at www.egis-group.com

Openlot.com.au is Australia’s leading off-the-plan platform. Discover land for sale, house & land packages, townhouses for sale in Australia with estate info, releases & settlements, construction updates and more.

Definitions & Terminology

Paddock – a field or plot of land enclosed by fencing or defined by natural boundaries.

Consultant - a person who provides expert advice professionally.

Gazettal - Gazetted Localities are the officially recognised boundaries of suburbs (in cities and larger towns) and localities.

Permit - an official document giving someone authorisation to do something.

Growth Areas Infrastructure Charge (GAIC) - an official document giving someone authorisation to do something.

Windfall Gains Tax - From 1 July 2023, a windfall gains tax (WGT) applies to land that is subject to a government rezoning resulting in a taxable value uplift to the land of more than $100,000.

Hard Basalt Rock - Basalt is a volcanic rock that has a low silica content, dark in colour, and is very rich in iron and magnesium.