An Open Letter to Victoria State Treasurer

Dear Treasurer?

I hope this letter finds you well. ?It took me a while to finally write this open letter to you. I am sure you would have received many letters for recommendations from our construction and development industry bodies and groups. However, this letter is to express my true feelings and challenges as a property developer over the last few years. I do hope this could help you and our policy makers to understand us property developers and the industry challenges we are facing as a group in a fresh light.

Like many developers who follow their dreams and passion of property developments.?I have shifted my career from a corporate accountant to become a property developer, left behind 10 years professional qualifications and experiences to start as a property developer. In the last 10 years, I have experienced numerous challenges, however what I found most challenging is the tax changes that imposed on development projects and overall industry including increased foreign levy surcharge, building levy, change of off plan sales stamp duty, windfall tax etc.?I almost feel like I am going back to my old profession.

On top of all the tax changes, ?all property developers including myself have also experienced many challenges and enormous pressures, the most recent one is measures during Pandemic. We were excluded from Job keeper program which put us property developers under tremendous pressure to sustain cash flow for our staff and operating in general. From there, we have encountered slow sales resulting from the changes of stamp duty on off plan sales, foreign levy surcharge, extra building levy, construction cost escalation, labour shortage etc.

There is no doubt we are a group of people with tough characters and strengths. To me and to many property developers out there, our jobs has much deeper and profound meaning which is building peoples’ homes.?We do take pride of what we do and we do also understand the responsibilities we hold. However, with the current extremely challenging environment, we do feel we can’t absorb the challenges on our own and we do need our policy makers’ help.

As we all know property industry made up close to 50% of our state revenue. We property developers are very proud to be the frontline of this contribution. This is the money we fund our schools, hospitals, infrastructure, roads and bridges etc. Those projects will make our state more sustainable and liveable, make our residents have better quality lives and our Victoria as favourite state to live in.

However, at current time with all the reasons explained above, very few projects could be able to qualify funding requirements for presales, therefore to start construction during Pandemic, especially our apartments market. The flowing effect of that is we are facing stock shortage in the market in near future. In fact our current rental market vacancy rate is less than 1%, which is not healthy, leaving many families with nowhere to live in between rentals.

As much as our state government has committed to build-to- rent projects, many residents still prefer to live inner-city suburbs where have the most amenities and infrastructures, where people are familiar with the communities. With our increasing mental health population, it is very important we could provide the supports to our residents to live where they are familiar and where they feel supported and part of the communities.

In order to do that, we need to review our planning policies in these inner-city suburbs to provide better economical land coverage and easing height restrictions, which would allow more apartments to be built in those suburbs where people prefer to live.

Streamline of planning approval and building permit approval process would help more properties to be built cheaper with less holding costs, and provide more stocks to the market quicker to help to ease increasing pressure of the rental market. It would also help the market to avoid any sharp property price increase.?

A state government backed stress fund which could help property developers with distress projects and constructions.?This will ease the negative impact from being excluded from job keeper programs, delayed in projects due to Pandemic, and escalation in construction costs. This will also ensure projects to be built and more stocks to be released to the market.

The last not least, we would appreciate to have an overall review on all factors that affect development and construction industry, from tax, levy to planning policies and timeline of Authorities. The overall balance approach will keep the industry healthy, therefore provide affordable, quality homes in a timely manner to our Victorians. ?

We do see our state government as our parents, not only to regulate us to make sure we carry out right procedures and policies, but also to support us at challenging time to get us back on our feet. Considering how much pressure we handle and how much tax we contribute collectively, how important we are as a group to our state economy and our housing market, we are a group need help and supports when time is needed, which is now.

Treasurer, we do understand It is difficult time for all industries not only just our construction and development industry, we also understand the difficult task for you to balance our state economy as a whole. However as an industry which provides people’s housing, that is essentials part of people’s life. It is very important we get the balanced approach.?I do sincerely hope you would consider the suggestions in the letter and be able to provide us help during this challenging time.

On another note, I would like to take this opportunity to thank you and our Premier for on-going supports and efforts to improve equality in our construction industry. As a woman property developer, in the last 10 years, I have seen great improvements in our working environment, and noticeable difference with more women colleagues working in the team who bring fresh, creative and more collaborative approach to the industry. So thank you both along with our state government for the on- going supports and efforts. ?Thank you!

From a hard-working and sincere property developer

Best Regards

Penny Sun