In simple terms, a section 173 Agreement is an agreement between the council and a land owner that typically regulates the development and / or subdivision of land in some manner.

Many property developers regard section 173 Agreements as nothing more than another regulatory burden – and if the point of the Section 173 Agreement is to confirm open space contributions, works to be done by the developer and other obligations then I can understand that.

However, there are opportunities to use section 173 Agreements to increase the profitability of a development project.

A typical planning permit requires that a developer completes the building work (i.e. gets a certificate of occupancy) then waits a week or two for council sign off, potentially waits another week or two for mortgagee consent to the subdivision then lodges the Application for Subdivision (typically two weeks to process) then waits another two weeks for settlement.  That’s 6-7 weeks of holding costs with a completed project sitting empty.

In some cases, a section 173 Agreement might allow this period to be substantially shortened and the holding costs reduced.  It also means you can get your profits out and start on the next project earlier.

The advantage of a section 173 Agreement is that you may be able to get council to approve the subdivision BEFORE the building work is complete.  Granted, there are some fees and requirements associated with registering the Agreement.  Typically the fees are less than the holding costs and the time taken to get everyone to sign off is spent while the builder is doing the building work and essentially dead time anyway.

Hence, with the subdivision already registered, when you get your Certificate of Occupancy, you can trigger your off the plan settlements with 14 days’ notice.

That’s 2 weeks delay – not 6 or 7 weeks.

If you are interested in exploring this strategy in your next development please contact Lewis O’Brien.

There are some other ways you might be able to profit from the use of a Section 173 Agreement in the video you can watch here.