Your Consent Has A Clock: Physical Commencement In NSW

YOUR DEVELOPMENT CONSENT WILL NOT WAIT FOREVER.NSW: confirm expiry and valid commencement requirements.

Five years sounds like a long time to start a project. It is not, when the site needs finance, a builder, a construction certificate and a tenant to move out first. Every year a NSW development consent sits unused, the risk that it lapses quietly grows, and a lapsed consent is not a delay. It is the loss of the approval, and with it the value you paid for the site.

The trap is specific and it catches people who think they have preserved the consent when they have not. In New South Wales, survey pegs and soil testing do not stop the clock.

The deal question: has the consent actually been activated?

NSW Department of Planning's guide to the post-consent process puts the rule plainly: your development consent usually lasts five years after it is given, a consent authority may reduce that when granting the consent, and if that happens you may seek to extend the approval period by another year from the consent authority. The consent will not lapse if building, engineering or construction work is physically commenced on the land before the lapsing date, and the commencement of the work must be lawful and related to the development consent.

Two words in that paragraph do the work. "Lawful" means the work has to be work you were entitled to do, which in practice means a construction certificate is in place and the required appointment and notices have been made. "Related" means the work has to relate to what the consent approves.

What does not count

Here is the part most students have never read. Clause 96 of the Environmental Planning and Assessment Regulation 2021 sets out a list of acts that are not taken to be physical commencement, and the Housing Industry Association's summary of lapsing of development consents in NSW reproduces it: creating a bore hole for soil testing, removing water or soil for testing, carrying out survey work including the placing of pegs or other survey equipment, acoustic testing, removing vegetation as an ancillary activity, and marking the ground to indicate how land is to be developed.

Those are exactly the works a developer does first. A geotechnical investigation, a feature and level survey, a bit of clearing, some pegs and paint marks. Do all of that and, on the regulation as written, the consent has not been physically commenced. This stricter test applies to development consents granted on or after 15 May 2020; it does not apply to consents granted before that date.

What council guidance treats as real commencement

Clarence Valley Council's guidance gives a practical version for a building: physical commencement is achieved by appointing a principal certifier, obtaining a construction certificate and pouring the footings or slab after the first inspection is passed. It also notes other ways commencement may be achieved, such as constructing a required flood mound, or constructing a driveway under a driveway approval where the consent requires a vehicular crossing, and it states plainly that there is no extension beyond five years. The Department's guidance adds the condition that the commencement of the work must be lawful and related to the consent, so work done before a construction certificate exists does not secure the consent.

The Department's post-consent guide adds the procedural layer: once you have the construction certificate and have appointed a principal certifier, you submit an Intention to Commence Work through the NSW Planning Portal, and you must give two days' notice before you intend to start.

Can you get an extension?

Read the Department's wording carefully, because the answer is narrower than people hope. Where a consent authority reduced the approval period when granting consent, you may seek to extend it by another year from the consent authority. There is no general right to extend the standard five years. Council guidance in the same vein states that the legislation does not allow for any extension beyond five years.

There was a temporary exception. NSW Department of Planning's published COVID-19 response changes explain that consents granted from 25 March 2020 to 25 March 2022 had a five-year lapsing period that the consent authority could not reduce, that consents granted before 25 March 2020 that had not already lapsed had their lapsing date extended by two years, and that consents which lapsed between 25 March 2020 and 14 May 2020 were revived and extended by two years from the date they lapsed. That is history with a defined window, not a current general rule.

The trap: buying a site with a stale consent

The first version of the trap is buying a site on the strength of an existing consent without checking when it started to operate, whether the conditions reduced the period, and what has actually happened on the ground. A consent close to its lapsing date can be worth much less than it appears, and the price you pay should reflect that.

The second version is the one that costs the most. A developer buys a site with a consent expiring soon, arranges a survey, a geotech report and some cleaning up, and believes the consent is now preserved. On the regulation as it has applied since 15 May 2020, those acts do not amount to physical commencement. By the time the error is discovered, the consent has lapsed and the whole approval must be sought again against current controls.

The third version is subtle: work is done that is not related to the consent, or is done before the construction certificate exists, so it cannot be lawful commencement of the approved development.

The checks a capable student would run

1. Find the operative date. Read the consent and the conditions to establish when it started to operate and whether the period was reduced.
2. Set a calendar alarm at 12 months before the lapsing date, not on the day.
3. Check what evidence exists on site and whether it is construction work or one of the excluded preparatory acts.
4. Confirm the lawful sequence for your project: construction certificate, principal certifier, intention to commence work, then real works.
5. Brief the certifier on what you intend to do first, and confirm they agree it constitutes commencement before you rely on it.
6. Keep dated evidence of the works and the inspections, because the onus of establishing that a consent has not lapsed sits with the person relying on it.
7. Price the alternative. If the consent is close to lapsing and you cannot lawfully commence, what does a fresh development application cost in time and fees?

The Think Property Club lesson

A consent is an asset with an expiry date, and like any assumption in a feasibility it needs an owner, a review trigger and evidence. Developers who hold several sites for years are the ones who need this discipline most, because a stale consent can look like upside in a valuation and behave like a liability in a due diligence report. You are not expected to decide whether your consent has lapsed. You are expected to know that the question exists, to ask your planner and certifier the right question, and to have the evidence in a file when someone asks you to prove it.

Your next actions

• Confirm the operative date and lapsing date of every consent you hold or are buying, in writing.
• Ask your principal certifier what the first lawful, consent-related works would be and how they will be evidenced.
• Book the construction certificate and certifier appointment early enough to leave real time for construction before the lapsing date.
• Set a review trigger at 12 months before the lapsing date on your project documents.
• If commencement is not realistic, get a fresh development application costed before the consent lapses rather than after.

Learn with Jason & AmyBuild practical small-scale property development skills with experienced mentors.Enquire now

Photo: Pexels, free to use under the Pexels licence.