Developer Contributions in NSW: What Sections 7.11 and 7.12 Add to Your Project

Every new dwelling puts weight on things the council pays for. Roads, drainage, footpaths, a bit more pressure on the local park and the community hall. The idea behind developer contributions is simple enough. If your project adds demand for that public infrastructure, you chip in toward it. The mechanism is less simple, and it's one of the costs owners most often leave out of their sums when they picture what a subdivision or a dual occupancy might clear.

We put these numbers into every feasibility we run, because a contribution can be a rounding error or it can be the line that decides whether a project stacks up. It sits in the Environmental Planning and Assessment Act 1979, and it comes in two forms, section 7.11 and section 7.12. Which one applies to you isn't your choice. It's set by the contributions plan your council has adopted for the area.

Section 7.11: paying for a measured demand

Section 7.11, still widely called section 94 after its old number, is the older and more precise of the two. It lets a council levy a contribution where it can show a nexus, a genuine link, between your development and demand for a specific piece of infrastructure. The council works out, in a contributions plan, what new development in the area will need and what each new lot or dwelling should contribute toward it.

Because it's tied to measured demand, a section 7.11 contribution is charged per additional lot or per additional dwelling, and it can be substantial. The contribution isn't on your existing house. It's on the net new demand you create. Subdivide one lot into three and you're generally levied on the two additional lots, not all three. Build a dual occupancy where a single house stood and you're levied on the one extra dwelling, with a credit for the one already there.

The amounts are set locally and they vary a lot between councils. There's a ceiling on how far a council can go without extra scrutiny. A contributions plan that charges more than $20,000 per lot or dwelling, or more than $30,000 in designated greenfield and urban release areas, has to be reviewed by IPART before the council can impose it. Plenty of plans sit below those caps, and some sit well below, but in high-growth councils the per-dwelling figure can be right up near the ceiling. The only way to know yours is to read the contributions plan that applies to your land.

Section 7.12: a flat percentage of what you build

Section 7.12, formerly section 94A, takes a different route. Instead of proving a nexus, the council charges a fixed percentage levy on the cost of carrying out the development. It's the fallback where measuring demand lot by lot is impractical, and it's simpler to calculate, because it's just a percentage of your build cost.

The percentages are capped by regulation, and the caps are modest. Nothing is payable where the cost of the development is $100,000 or less. Above that, the levy runs up to 0.5 per cent where the cost sits between $100,001 and $200,000, and up to 1 per cent where it exceeds $200,000. So on a development with a genuine cost of, say, $900,000, a section 7.12 levy at the full 1 per cent is $9,000. That's the maximum. A council can adopt a lower rate, and the levy applies to the assessed cost of the works, which above the thresholds usually has to be backed by a quantity surveyor's cost report rather than a number you nominate yourself.

A council applies one or the other to a given development, not both for the same infrastructure. Which one you face depends entirely on the contributions plan in force for your site, so two identical projects in neighbouring council areas can carry very different contribution bills.

A worked example

Say you're turning a single house on a standard lot into a dual occupancy, and your council runs a section 7.11 plan with a residential contribution of $18,000 per dwelling. You're adding one dwelling, so the contribution is roughly $18,000, payable with a credit for the existing home. That's before the build, on top of design, approval and construction, and it falls due at a set point in the process rather than at the end.

Now put the same project in a neighbouring council that uses a section 7.12 levy instead, with a build cost of $600,000. At 1 per cent that's $6,000. Same physical project, a $12,000 swing in the contribution, purely because of which plan applies. This is the kind of variance that makes people who work out what a developer will pay for their land treat the contributions line as a real input, not an afterthought. It feeds straight into the residual value, the same way subdivision civil costs do.

When it's payable, and the contributions people forget

Timing matters. Local contributions are typically required before the release of a construction certificate or, for a subdivision, before the subdivision certificate is issued. In practice that means you carry the cost early, funded rather than deferred to settlement, which is why it belongs in your cash-flow plan and not just your profit line.

Two more points people miss. First, contributions can apply to complying development done under a CDC as much as to a full DA. The faster approval pathway doesn't exempt you from the levy. Second, section 7.11 and 7.12 are local contributions. Larger or regionally significant projects can also attract state and regional infrastructure contributions, a separate system with its own rates, and those are worth checking if your project is sizeable or sits in a designated growth area.

If you want the actual rules rather than a summary, the levies themselves live in the Environmental Planning and Assessment Act 1979, and the individual rates live in your council's adopted contributions plan, usually downloadable from its website. The EP&A Act on the NSW legislation register sets out the framework. The dollars are always local.

Reading your number properly

Contributions rarely make or break a project on their own, but they're big enough that guessing them is a mistake, and they're one of the more common reasons a back-of-envelope feasibility comes in optimistic. On a single extra dwelling they might be a five-figure sum. Across a multi-lot subdivision they compound. A planner or a quantity surveyor can pull the exact figures from the applicable plan and cost report, and it's worth getting that early rather than discovering it at construction certificate stage.

The broader point sits behind every project we assess. The end value, the headline of a development, is the easy number. The contributions, the civil work, the professional fees and the tax on the way out are the ones that decide whether the project is worth doing at all, and this is exactly the terrain our planning and development management work covers. Contributions are one line in that ledger, but they're a line you want to see before you commit, not after.

PropertyThrive works the whole ledger on your block for free, contributions included, and shows you the real numbers for a build, a sale or a development partnership. Book a free assessment and you'll have your answer within 24 hours.