Holding costs for property development in Australia: what a delayed DA really costs and how to fund it

A development site doesn’t pause when the paperwork does. Rates arrive on schedule, the insurer wants renewing, the planner invoices monthly and the loan keeps accruing. The feasibility study was built on a timetable, and the cost of missing it is rarely in the spreadsheet.

This guide breaks holding costs into line items, shows how long a delay really runs, works through an illustrative month-by-month example and explains how to fund the wait so it doesn’t come out of your trading account.

What are holding costs in property development?

Holding costs are everything it costs to own land or unsold stock while it earns nothing. They fall into two groups:

• Fixed outgoings that run on the calendar: council rates, water and sewer charges, insurance, land tax, site security, fencing, slashing or maintenance.
• Project costs that run until approval: town planner, surveyor, architect, engineer and other consultants, plus DA and application fees.
• The cost of the money: interest on whatever you borrowed to buy or hold the site.

The first group is the dangerous one, because nothing you do speeds it up. A three-month slip repeats the same monthly bill three more times. Our page on pre-construction costs covers what has to be paid before a builder starts; this guide is about what keeps ticking while you wait.

How long will you really hold the site?

Plan on the approval path, not the best case. The NSW Department of Planning reports that average assessment times have fallen from 115 days to 84 days, a 31-day improvement as at 31 May 2026. From 1 July 2026 it expects councils to average 90 days from lodgement, tightening to 80 days from 1 July 2027 and 65 days from 1 July 2028. Councils at 90 days or more are flagged as underperforming.

Read those figures carefully. They are state averages from lodgement, so they don’t include the weeks of design and consultant reports before you lodge, requests for further information that stop the clock, amendments, or finance and sale timing after approval. A site that needs a concept, a DA, a construction certificate and a construction loan can sit for six months or more before the first excavator arrives. Other states publish their own timeframes, and rezonings take far longer, so check your own council’s current performance data.

What does each line item look like?

Line item	How it behaves	What to check
Council and water rates	Fixed, billed quarterly or annually	Your latest notice; vacant land can be rated differently from improved land
Land tax	One annual bill, set by your holdings at the snapshot date	State, owning entity and total holdings; see our land tax guide
Insurance	Annual premium, often higher on vacant land or sites with demolition	Public liability and, once works start, contract works cover
Consultants	Staged invoices that grow with every amendment	Fee schedules that include re-submissions
Security and maintenance	Monthly	Fencing, signage, slashing, hazard reduction
Loan interest	Monthly or capitalised	Whether it is paid, prepaid or added to the balance

Land tax deserves a second look because it is a snapshot, not a monthly cost. Revenue NSW says the tax applies for the whole following year and isn’t pro-rated. In Queensland, the QRO says companies and trustees are liable once taxable land value reaches $350,000, against $600,000 for individuals. Holding a site in the wrong entity, or settling a day before the snapshot, can add a full year’s bill. In Victoria, the SRO says vacant residential land tax now applies to all vacant residential property in the state from 1 January 2025 where a property has been vacant for six months or more in the previous calendar year, so check whether that affects finished but unsold dwellings.

How does the loan structure change the cash you need?

Interest is the one holding cost you can partly structure. There are three common arrangements, and they affect your cash very differently while the site is idle:

• Monthly interest: cash leaves your account every month from settlement. Simple, but it is the worst fit for a site with no income.
• Prepaid interest: a block of interest is paid up front and comes out of the funds you receive.
• Capitalised interest: interest is added to the balance instead of being paid. On our loans this applies for up to the first 6 months, so there are no repayments in that period, then interest is paid monthly on an interest-only basis. Our capitalised interest worked example follows a balance from settlement to payout.

Capitalising isn’t free money. The balance grows while the clock runs, and the property’s equity has to cover the grown balance, not just what you received. If approval slips, the extra months after the capitalised period are paid from your pocket unless the loan was sized to include them. That is the mistake worth designing out.

Illustrative example: a six-month DA, month by month

Illustrative: A small developer in regional Victoria owns a debt-free commercial yard through a company. The company has just settled on an adjoining lot and plans a four-townhouse project, and needs cash for the approval period. To fund the hold, the company takes a private first mortgage over the yard, sized for the cash needed during the DA, with the exit being a construction loan from a bank once approval lands. Figures are round numbers for planning only, not a quote.

Month	What happens	Cash costs that month
1	Settle; survey and concept design	Consultants $9,000; insurance $1,200; rates $1,100
2	Lodge DA; fees paid	DA and application fees $6,500; rates $1,100
3	Council asks for more information	Consultants $4,000; rates $1,100
4	Amended plans lodged	Consultants $5,500; rates $1,100
5	Referral agencies respond	Rates $1,100; security and slashing $600
6	Approval issued; banks asked for construction finance	Consultants $3,000; rates $1,100
Total		about $35,500 plus land tax, plus interest on the loan

Three things stand out. Consultants and fees make up most of the bill, so the “cheap” months aren’t cheap if there is an amendment. The table leaves out land tax, which could land as one bill during the six months. And it leaves out interest, which is set in the Letter of Offer: with capitalised interest, none is paid in the six months, but the balance has grown by the end.

If approval had taken nine months instead of six, three more months of rates, security and consultant top-ups follow, and the capitalised period has ended. Anything beyond month six would need cash or an allowance written into the loan from the start. Ask for the longer scenario to be modelled before you commit.

How should a small developer fund the wait?

In rough order of how well they work:

1. Put the holding costs inside the loan. Include consultants, fees, rates, insurance and the expected land tax in the amount you borrow, so the cash is there when each bill falls due.
2. Size for the slow case. Add a buffer of two or three months over your best estimate. Open terms mean a late approval costs more interest, not a default.
3. Fund from equity you already own. A property-secured loan on a debt-free yard, shop or house doesn’t depend on the idle site earning anything. Our land bank loans page explains how this works for sites waiting on approval.
4. Plan the exit before you borrow. Typically it is a bank construction facility after approval, a sale of the approved site, or sale of other stock. Our exit strategy guide covers how to test it. If an approval is close to expiring, read what to do when a development approval is about to lapse.

For many owners the useful question isn’t “how much does the site cost?” but “how many months can my funding cover if council takes longer than expected?” If you can name your site, the DA stage, what you own outright and when the next bill falls due, see what your property could support.

Common mistakes with holding costs

• Budgeting the approval date, not the finance date. Banks need an approval plus tender prices before they commit, so the hold continues after the DA.
• Forgetting the snapshot date. One bill per year, sometimes larger than all the monthly costs combined.
• Leaving consultants’ re-submission fees out of the plan. One request for information can double the spend.
• Funding holding costs from the trading account. This slows the day-to-day business just when you most need it moving.
• Assuming interest is deductible in the same way everywhere. Whether holding costs are deductible or added to the cost of the land depends on how the site is held, so confirm it with your accountant.

Key terms at a glance

• Holding costs: cash outgoings from owning land or stock that isn’t yet earning.
• Capitalised interest: interest added to the loan balance instead of being paid, for up to the first 6 months on our loans.
• Snapshot date: the moment a state counts your land for land tax.
• Exit: how the loan is repaid, such as refinance to a construction loan or sale.

Cover the wait before it costs you

Delays are normal in development; being caught without the cash isn’t. Cost the site month by month, build the slow case into the loan and pick the exit before the first invoice arrives.

When you enquire, there’s no credit check, your details go to one direct lender, not a pile of lenders, and a secured-lending specialist reads your file personally. Fill the form in accurately, with the site, what you own outright, what’s owing and your best and worst timetable, and you’ll get an answer that holds up. Find out where your site stands, or start your enquiry here.