“It would be remiss of the government not to rely on the great work that we’ve done,” she said. “This is going to be there for generations to come, so let’s get it right at the start.”
Urban Design Forum joint president Katherine Sundermann said floor area ratios brought many benefits and should be mandatory in every activity centre.
Sundermann warned against a long-standing perception in Victoria that floor area ratios depressed the values of development sites and that a building site’s floor space should be used to the fullest extent. She said the certainty the ratios gave the sector was crucial for speeding up the delivery of housing.
Victoria’s planning system favours “deemed-to-comply” controls, under which a proposed building is green-lit if it meets certain height and setback rules. However, developers can apply to exceed these limits to increase the floor space across a project.
Sundermann said this approach inflated land values because the potential yield of a building site was seen to be far greater than may be desirable.
It also creates a “jelly mould” approach to planning, whereby developers have an incentive to fill a site as much as possible to make a return.
A floor area ratio control sets the yield of any given site, so developers know exactly how much floor space they can build when they buy land. It’s this certainty that helps speed up the delivery of housing. There may be instances where a developer can exceed a height limit, without increasing floor space, if the project involves a superior design.
“When yield is locked in, you’re able to respond to the specifics of each site and get better design outcomes,” Sundermann said. “You can actually have better separation between buildings so there’s more light. You can have more space for planting trees … It’s a no-brainer to implement.”
She said the current situation was just another example of Victoria lagging NSW, with apartment design standards also known to be stronger north of the border.
Pockets in Melbourne that have floor area ratio rules, overseen by councils, include South Melbourne, West Melbourne, the CBD and Moonee Ponds. Two of the state government’s 10 pilot activity centres also have them – Preston and Epping – where councils are already considering their use.
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Sundermann praised the mandatory controls in Preston but said Epping’s were a waste of time because they were discretionary.
SGS Economics and Planning senior associate Andrew Spencer told a seminar in October that strict limits on density through floor area ratio controls instilled clarity.
“We’re more likely to get more housing if we can agree to the price of land and the density [at the start].”
He noted that capping density “seems to be very anathema to planning in Victoria”.
“[But] wherever you’ve got a set of controls that can be exceeded, that does undermine confidence in the planning system,” he said.
Kris Daff, managing director of property developer Assemble, spoke at the same event. Daff said his teams liked working in Sydney because they could take a more bespoke approach to layout and design, which was harder to do in Melbourne, where competitors were motivated to bulk out sites.
“Whereas, philosophically, we won’t want to fill every corner, and hence won’t be able to pay as much for the land.”
Daff said knowing exactly how much floor area could be built on from the beginning was critical.
“It’d be much better if it’s just absolutely fixed and there’s no ability to vary that.”
Cath Evans, the Property Council’s Victorian executive director, warned that the viability of new housing projects was already extremely challenging, with a dwindling number of build-to-sell apartments in the pipeline.
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“Imposing blunt and inflexible floor area ratios in the current market poses a potential additional risk to the feasibility of new projects,” Evans said.
“Quality design is clearly important to attract purchasers and renters and will always be part of a developer’s consideration, but it’s critical that policies don’t push … new projects further out of reach.”
Planning Institute of Australia Victorian president Patrick Fensham said he supported floor area ratios being a planning tool in activity centres, and they should work in harmony with other controls, such as heights and setbacks.
A spokeswoman for Planning Minister Sonya Kilkenny said that as well as being in two of 10 pilot activity centres, floor area ratios were in the draft structure plans for the Suburban Rail Loop’s six development precincts. She said the proposed ratios could be exceeded only if a developer included public benefits like affordable housing.
Apartment design standards had been implemented under Labor, as well as a new fast-track approval pathway for developments demonstrating great design, she said.
“No government has done more for improving the standards of apartment designs. We’re already looking at floor area ratios in our plan for more homes.”
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