The rules for lapsing periods for development consents are changed by the Environmental Planning and Assessment Amendment (Development Consents) Act 2010 (NSW), which commenced on 26 May 2010.

Reducing the lapsing period

Under the Environment Planning and Assessment Act 1979, most development consents lapse on their five year anniversary unless there is, before that date, "actual commencement" (in the case of uses) or "physical commencement" (in the case of development). At present a consent authority has power to reduce the lapsing period when granting consent (except in relation to staged development). The lapsing period for development consents to erect or demolish a building, or subdivide land may currently be reduced to as little as two years.

The amendment removes this power from 26 May 2010 until 1 July 2011 (or until any subsequent date prescribed by the Regulations).

It also operates retrospectively where a consent authority has already reduced a lapsing period and this is due to occur after 22 April 2010 (the amendment's introduction date). In such cases, the consent holder may disregard the reduction and rely on the full five year period.

The purpose of the amendment is to provide further stimulus to the development industry and prevent valid development from lapsing during current economic conditions. The changes include an opportunity for future regulations to further extend the stimulus after 1 July 2011.

Any consent holder missing out on this assistance remains entitled to apply for a one year extension of the lapsing period, under existing section 95A.

Codifying when development has "physically commenced"

The amendment also provides that regulations may set out circumstances in which work is or is not taken to be "physically commenced". This term has been extensively analysed by the courts and we would expect any statutory guidance on "physically commencement" to show:

  • the work must be more than merely preparatory
  • it must be consented work (ie not illegal or in breach of consent)
  • it must be commenced on the land in a physical sense (as opposed to off-site design and planning)
  • it must be real, positive and unequivocal as opposed to equivocal, notional or a sham.

It will be interesting to see how the proposed regulations deal with the other point highly emphasised by judges – that there is an element of fact and degree in every case.

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