On 5 October 2023, the NSW Department of Planning and Environment (DPE) published new Guidelines for the Withdrawal of Development Applications (Guidelines). These Guidelines come as the NSW Government stands on the precipice of a major housing crisis which is projected to lead to a shortfall of 134,000 homes over the next five years based on data prepared as part of the National Housing Accord.

In this article, we unpack what the new Guidelines mean for the development application (DA) assessment process and explore practical steps councils can take to ensure compliance.

What is the statutory basis for withdrawing a DA?

Section 40 of the Environmental Planning and Assessment Regulation 2021 (EPA Regulation) allows an applicant to withdraw a DA via the NSW Planning Portal at any time before the application has been determined. This gives applicants the option to withdraw a non-compliant or deficient DA on their own accord or at the council's request.

Why has the withdrawal of DAs become problematic?

DPE has identified an increase in the number of DAs being withdrawn before final determination. Since July 2021, a total of 9,040 DAs have been withdrawn across NSW, with some individual councils recording as many as 200 withdrawals during this period.

The withdrawal of a DA is not an inherently bad outcome if done in the right circumstances. In the case of a clearly deficient DA (as opposed to a DA which a council thinks might not be approved), withdrawing a DA can save a council's time and resources by avoiding the need to assess the DA. This outcome is supported by the DPE's Development Assessment Best Practice Guide 2017 (Best Practice Guide) which urges councils to encourage an applicant to withdraw a deficient DA found after lodgement.

To reduce assessment time frames, some councils have gone so far as to incentivise the withdrawal of deficient DAs at the preliminary assessment stage by offering refunds or partial refunds on DA lodgement fees.

While the early withdrawal of a DA can free up a council's resources, DPE's concern is that some councils may be encouraging the early and unnecessary withdrawal of a DA to improve the council's DA processing timeframes and statistics. This practice will likely exacerbate the housing shortage crisis in NSW by slowing DA determination rates and reducing the number of housing projects in the construction pipeline. A culture of refusing DAs can also lead to dissatisfaction from applicants who want their 'day before the consent authority' before determination and can increase costs before the DA is even submitted.

What are the requirements under the new Guidelines?

The new Guidelines seek to accelerate the development assessment process in NSW, while ensuring that councils remain compliant with the Best Practice Guide.

When assessing an applicant's request to withdraw a DA under the new Guidelines, a council must be satisfied that the request is consistent with six key principles:

  • councils in NSW can contribute to the challenge of addressing the state's housing shortage through their responsibilities as local planning authorities
  • the expeditious assessment and determination of DAs creates a pipeline of development proposals with housing opportunities
  • councils in NSW are required to devote appropriate resources to their planning and assessment teams to ensure development applications are assessed and determined within reasonable timeframes, consistent with the Environmental Planning and Assessment (Statement of Expectations) Order 2021 as issued under section 9.6(9) of the Environmental Planning and Assessment Act 1979 (EPA Act)
  • councils must not engage in practices that delay assessing applications, including unnecessarily asking applicants to provide information not necessary for the assessment or seeking the applicant to withdraw the proposal
  • the request to withdraw a DA is consistent with the Best Practice Guide and the request is not intended to enhance the council's performance data outcomes
  • data from the NSW Planning Portal will continue to be used to show how councils perform in assessing developments.

The nature of these principles appears to indicate that there are examples of councils engaging in unnecessary requests for information and 'practices of delay', together with withdrawal requests which may not be justified.

How will these Guidelines be enforced?

There are several enforcement avenues under the EPA Act and Local Government Act 1993 (LG Act).

Section 23A(3) of the LG Act requires a council to consider any relevant guidelines published by the Department Chief Executive before exercising its functions. If a council fails to properly consider the new Guidelines, it will be open to the Minister for Planning and Public Spaces (Minister) to find that the council has not met the Minister's expectations in relation to council performance. Such a finding may be grounds for the Minister to appoint a planning administrator and/or regional panel to exercise the council's functions under the EPA Act.

What are the key takeaways for councils?

As a first step, councils should familiarise themselves with the new Guidelines and ensure that their DA assessment procedures align with the Best Practice Guide.

Some practical tips for councils under the Best Practice Guide include:

  • dedicating resources to the pre-lodgement stage of the DA process to ensure assessment officers receive an 'assessment ready' DA
  • formalising DA assessment timeframes within the council
  • resolving design and compliance issues during the pre-lodgement stage where practical
  • standardising the processes and procedures to reduce assessment timeframes
  • investing in digital management of assessment processes.

Councils should also consider other powers available before requesting the withdrawal of a DA, including requesting additional information from an applicant under section 36 of the EPA Regulation.

It remains to be seen how these new Guidelines will be enforced in practice. Council officers should take care when issuing a request to withdraw a DA and consider obtaining legal advice to ensure that council policies are consistent with the Guidelines and principles of administrative law.

This publication does not deal with every important topic or change in law and is not intended to be relied upon as a substitute for legal or other advice that may be relevant to the reader's specific circumstances. If you have found this publication of interest and would like to know more or wish to obtain legal advice relevant to your circumstances please contact one of the named individuals listed.