Legislation to make value capture deals between developers and councils in New South Wales more transparent will soon be introduced to state parliament.

Changes to the Environmental Planning and Assessment Act will introduce tighter controls, following concerns that the deals, known as Voluntary Planning Agreements (VPAs), are increasing new apartment prices.

Changes to the VPA system will be a feature of planning reforms to be released shortly. A ministerial direction will be sent immediately to all councils requiring them to prepare comprehensive VPA policy linked directly to a clear infrastructure plan.

New South Wales Planning Minister, Rob Stokes, said the government supported VPAs but there was growing concern that the development industry was “being held to ransom” by some councils demanding excessive sums without any identifiable infrastructure plans.

“Industry has raised concerns about the lack of consistency and the practice of councils with voluntary planning agreements,” Mr Stokes said.

“In certain circumstances we have a case where assessment process are being held to ransom, increasing costs for new home by up to thousands– a cost being borne, in the end, by home buyers,” Mr Stokes said.

“Often, the money is used to cross subsidise other areas of local government, rather being used for what it’s meant for – local infrastructure.”

VPAs are a mechanism under Section 93F of the Environment Planning and Assessment Act available to councils to secure funding for infrastructure as part of a planning proposal or development application.

The proposed changes would encourage councils and developers to work together from the outset of a development proposal, considering what infrastructure is needed in the local areas to support development, and how much it will cost.

Mr Stokes said a developer and a council should enter into a VPA voluntarily, based on agreed public benefits associated with new development.

“Councils should be able to capture a reasonable share of the uplift in value from a rezoning, to help pay for community facilities and amenities,” Mr Stokes said.

“However, there needs to checks and balances.”

The ministerial direction, practice note and planning circular will be available for public exhibition until late January 2017 with opportunity for public submissions.

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