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Welcome to The OMB Law Board, the podcast where legal insights meet practical advice. Hosted by Simon Bennett, Managing Partner at OMB Solicitors, this show delves into what you can expect when engaging with OMB Solicitors. Specialising in property law and commercial law, OMB also boasts dedicated teams for estate planning, contested estates, body corporate matters, litigation, and family law.
Each episode features in-depth discussions led by experienced team leaders, some with over 20 years of expertise. You'll gain valuable knowledge on initial consultations, cost assessments, timelines, and the importance of clear communication and confidentiality in legal matters.
Join us to break down barriers and navigate your legal journey with confidence. Tune in for expert advice, client stories, and tips on how to prepare for your legal needs. The OMB Law Board is your trusted source for all things legal.
(upbeat music) and welcome back to the OMB Law Board. I'm Simon Bennett from OMB Solisters and today I've got with me Damian Gwyn,(...) Managing Director at Certainty Wealth. Damian, welcome to the podcast. Thank you very much for having me. Yeah, thanks, Damian. And it's great to have you here and you've been a friend and a client and we've worked in conjunction, our two companies, and I wanted to talk to you as part of our property series to get an understanding from the other side of the fence. A lot of our viewers might be buyers of property, but apart from being an investment advisor and all those things, you're a property developer as well. Yes, that's right. Certainly Wealth does a whole bunch of things. We wear a whole bunch of hats. So property development is one of those. We advise our clients into buying property directly, either outside of super or inside of super. We have a funds management business that powers a lending arm and also our development business as well, which is obviously what we're here to talk about today. Yeah, fantastic. So, you know, with so much on your plate, it must be hard to juggle, but you've got a good insight from the property developer perspective and it's a challenging environment at the moment. Tell us some of the things as a property developer that are, you know, causing you to lose a little bit of sleep at night and make projects hard to get off the ground. Look, I think the hot button issue in development is the housing crisis. So that's getting plenty of airtime in mainstream media and social media as well.(...) And that's really affecting how we're approaching new acquisitions and where we're positioning our business over the next sort of three, five, ten years. I see housing affordability as a key driver in the market moving forward. So where you can afford to buy a home for under $650,000 and get a job, then that's really where we want to be investing.
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So that's affecting our acquisitions. That's pretty challenging. It's historically been challenging to get developments to stack up. But that aside,(...) that's really where we're looking to go. In terms of what can be done about it or what's making it difficult as a developer,
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I've had some great help from OMB over the last three years in terms of getting, one,(...) development approvals out of council.
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Two, once we have the approvals out of council,(...) developing the site and getting titles out of said council.(...) And we never wanted to be a developer that complains about local authorities.(...) But the reality is Australia,(...) and we're operating in Queensland and New South Wales, we're constantly quite vigilant in Victoria and even Tasmania, South Australia.
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Australia has a systemic issue when it comes to the availability and resourcing of local government to be able to approve and push through houses, units, townhouses, whatever the case may be. And is that causing some price pressure on your development stock? Yeah, absolutely. If we take,(...) we're doing a 250 lot subdivision down at Paul Macquarie.
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So we bought that with a DA approval for 207 lots in 2020.
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We had the great news last Friday that the first stage of 30 lots was we finally got titles issued on that. So that's a long time. I mean, you bought it four years ago. That was four years with a development approval in place. And we got our registration recently and we got our first lot of settlements coming up for you this week. Correct.
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So why so long? So put that into context or tie it back into your question, does that have issues with upward pressure on pricing? We bought that in our feasibility with a view that we'd be selling those lots of $245,000.(...) The average price in that estate now is $400,000. So it's had a massive effect and we cannot afford to deliver those lots for any cheaper because of the holding costs that we've incurred over the last four years and the post-COVID construction inflation that just slammed the industry. So at $400,000,(...) we have our buyers and clients and people from outside the industry saying, boy, those developers are going really well.(...) There's in fact less profit in it at that high price than there was when we initially went in. So I hear holding costs through delays and the obvious construction cost increases are two of the main elements causing price pressure on you. Correct. Absolutely. And for the investors out there, this means they're not going to get the stock at the price that they were hoping to get it at previously and put the upward price pressure. Yeah, it's a it's a triple whammy because you've got your blocks of land that have increased in price significantly. You've got your build price that has increased significantly as a result. So where they were hoping to build a house for $300,000, they're now looking at $500,000. That's a small amount of money. And then and compounding that is your interest rate increase from sort of three percent to five and a half percent.(...) The people who were looking to buy and we had under contract two and a half years ago, they simply can't afford to build the house that they were planning on building on the blocks that we're developing.
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And that's where we've realized the problem from a property developers point of view for the moment. How important is some of that early interaction you had with OMB in getting your documentation, your contracts right? How you know now you're looking at the back end of that process four years later. How important is that been?
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It's important. We had a court case, a pretty substantial court case with a bunch of our buyers in Port Macquarie in this in this instance where they were challenging our right to rescind contracts under the sunset clause, which had well and truly lapsed under OMB's advice. We offered to meet them halfway on our costs, which I just thought was a fair thing to do. But from a legal perspective, it was incredibly shrewd and we got to mediation. In fact, we didn't quite get to trial, but it was an 18 month journey and it was acknowledged by the other side once settlement took place that our case, our strategy was incredibly sound. And we were in a good place for trial and frankly, we wouldn't have had that if it wasn't for OMB. Yeah, and we won't get into details too much on specifics because obviously being aware that there's confidentiality restraints and things like that. But I think the essence of what you're saying is that by getting in early and doing hard work on a development point of view and a legal point of view in conjunction at the start has provided protections at the end when documentation is challenged and has to be exact and correct. Undoubtedly. That's fantastic. Well, Damien, I really appreciate you taking the time to join us today here on the OMB Law Board.(...) Your insight into property development has been fantastic. And I'm sure the audience has really enjoyed listening to you. And so thanks for your time. And we look forward to speaking to you again. Maybe about a bit more investment advice next time. Sure. All the investment advice will be general in nature.(...) Thank you very much for having someone appreciate it.