Delays are plaguing new land estates across Melbourne, prompting concerns thousands of buyers are at risk of losing their blocks of land under sunset clause provisions.

Many in the development industry have blamed local and state government for lagging title timeframes, which have ballooned beyond 15 months for new lots in major greenfield estates, according to a recent report from the Urban Development Institute of Australia.

“The planning system in Victoria is plagued by inefficiencies, but the system really breaks down after a planning permit is issued,” said Danni Addison, the institute’s Victorian chief executive.

In order to secure finance for a project, lots in new estates are typically sold in advance, or off-the-plan. And lengthy delays can pave the way for developers to trigger sunset clauses to claw back lost money by reselling lots at a higher price.

Domain is aware of new estates in the city’s west, north and south-east where land purchasers have had their contracts terminated, in some instances more than two years after handing over a deposit. In one case, a group of landowners has launched legal action against their developer in a desperate bid to hold on to their properties.

Max Shifman, chief operating officer at Intrapac, one of Australia’s largest land developers, said under-resourced council planning departments and a shortage of skilled tradespeople, such as sewer contractors, were behind delays.

“Just a few years ago, one could expect to comfortably deliver the first stage of a subdivision within nine to 12 months of receiving planning approval; today it takes 24 months or more to achieve the same thing,” Mr Shifman said.

He said delays carried enormous financial consequences, in some cases costing hundreds of thousands of dollars per week.

“Unfortunately, the current delays mean that the only way that some developers can recoup the losses experienced at no fault of their own is to cancel the contracts and resell at a higher price,” he said, adding that Intrapac has not cancelled any of its contracts.

In response to a booming population and housing affordability problems, the state government set out to unlock huge tracts of land on the city’s fringe for residential development, promising 100,000 new lots by the end of this year.

But greenfield developers buying up those land parcels are now running into unexpected waits getting connected to basic utilities, such as electricity and water, according to Ms Addison.

She said lagging title timeframes and “ominously low levels” of stock available for sale had driven up lot prices in Melbourne, which accounts for 40 per cent of the country’s greenfield market. Research commissioned by the institute shows the city’s median lot price jumped 31 per cent in a year to $330,000.

The Association of Land Development Engineers said the industry was hampered by a lack of resources within authorities, resulting in delays at every step from initial servicing agreements to sign-off.

“While the state government sets targets for the delivery of greenfield land in order to increase supply and competition to tackle the affordability problem, it is disappointing that those targets and goals are not shared by all government bodies,” president Mark Fleming said.

Roughly one quarter of Melbourne’s new greenfield estates are in Wyndham, in the city’s west. The council’s director of city operations, Stephen Thorpe, said delays were partly caused by unprecedented levels of applications in growth areas. The council was working to reduce them, he said.

“The creation of new communities in greenfield areas involves highly complex processes, including many stakeholders, which need to oversee the delivery of infrastructure and development that is safe, functional and of a high quality.”

A state government spokesman said: “A record number of lots are being delivered as a result of Andrews Labor Government programs to streamline council approvals. Further work is now targeting delays in power company approvals.”

allison.worrall@domain.com.au