Recent amendments to the Environmental Planning and Assessment Act 1979 (EP&A Act) will soon render interim occupation certificates for partially completed buildings a thing of the past.
Under the current system, interim occupation certificates are issued by the principal certifying authority1 to authorise the occupation or use of a partially completed building. Alternatively, where an existing building has undergone a change of use resulting in a change of Building Code of Australia classification, interim occupation certificates can also be used to permit this new use over part of the building.
However, from 1 September 2018, a developer who has an existing development consent will not be able to obtain an interim occupation certificate for a partially completed building, or part of a building.
For example, under the old regime, if a basement car park was largely completed, but you were still constructing the ground floor retail premises and the residential above, you could obtain an interim occupation certificate for the partially completed car park. However, under the new system, you can only obtain an occupation certificate where the works undertaken to the building, or part of the building, are complete. So, an occupation certificate could only be issued when the basement car park was complete.
This will likely cause significant delays for developers seeking to realise returns as they will need to ensure that any consent condition which requires compliance "prior to the issue of an occupation certificate" are met quicker than would otherwise be the case.
However, interestingly, section 6.10(1) of the EP&A Act (formerly section 109H(2)) now removes the requirement that preconditions in complying development certificates and planning agreements must be met prior to the issue of an occupation certificate.2
Interim occupation certificates have been subject to significant debate in recent years.
The White Paper: A New Planning System for NSW issued by the NSW Government in 2013 raised various concerns regarding the use of occupation certificates. In particular, the White Paper stated that:
- there was confusion over when an interim occupation certificate should be used
- there was a general reluctance to issue a final occupation certificate where an interim certificate was already in place.
This was why the Planning Bill 2013, which was heralded as being a once-in-a-generation overhaul of the planning system, did not make provision for interim occupation certificates.
Despite the Planning Bill stalling in the Upper House and subsequently lapsing, the issue of occupation certificates arose again as a result of the Independent Review of the Building Professionals Act 2005. The Final Report issued in late 2015 cited the same issues as were previously identified under the White Paper, and ultimately recommended that the current regime relating to interim and final occupation certificates be replaced.
Transitioning to the new regime
The changes to the EP&A Act relating to building and subdivision commenced on 1 March 2018, however, under the current transitional arrangements, the operation of these provisions have been deferred until 1 September 2018. From this date, any consent holder will no longer be able to obtain an interim occupation certificate.
While we are unsurprised that the EP&A Act has introduced changes to the occupation certificate regime (given that this has been in the works for some time), we are concerned that industry has not been given sufficient opportunity to transition and respond to the new system.
This is particularly true given that many projects, which have existing development consents, have been approved, planned and financed on the basis of staged completion, where a number of interim occupation certificates are issued for parts of a building, followed by a final occupation certificate for the whole of the building.
Therefore, it makes sense that the postponement period either be extended beyond 1 September 2018 or that alternatively existing consents be grandfathered so that projects commenced under the old regime can be completed in accordance with the old building certification provisions.
Overall, we think that this will enable a smoother transition to the new regime imposed under the amended EP&A Act. It also mirrors the transitional arrangements that were implemented when the requirements for occupation certificates were first introduced in 1998.
The implications of this change will be felt differently from to developer to developer, however, we urge any developer who is acting under a consent, but has not yet obtained an interim certificate to consider how these changes will impact their project.
We similarly advise anyone considering commencing a new project to seek advice about how to factor the new occupation certificate process into project stages and contractual milestones.
1 The principal certifying authority is the consent authority, the council or an accredited certifier.
2 It may be the case that such matters are to be dealt with in the Environmental Planning and Assessment Regulation 2000 when it is amended (see section 6.10(3) of the Environmental Planning and Assessment Act 1979).
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